Archive for February, 2009
February 25th, 2009
Fifty companies on the Star 60 stock index have reported earnings this quarter and only 14 have reported 2008 quarterly net incomes above 2007 levels.
In fact, the past 12 Star 60 companies reporting have reported declines.
The downward spiral of corporate profits is following the trend that started this time last year. In January, February and March of 2008, 36 of the 59 companies that reported earnings reported increased net incomes.
In April, May and June, that fell to 33 out of 58. In July, August and September, 32 of 59 were still reporting increases. In October, November and December, though, only 25 of 58 reported growing bottom lines.
The companies that are weathering the recession best so far? Monsanto Co., CLARCOR Inc., Woodward Governor, United Technologies, AmerisourceBergen, Union Pacific, Exelon Corp., Allegiant Travel Co., Verizon, Honeywell, UPS, Thermo Fisher Scientific, Dean Foods and EnPro Industries.
If there’s a silver lining it is that several of those companies are among the MOST important to the local economy. United Technologies is the second largest non-public employer in the area with 2,900 employees between Hamilton Sundstrand and Taylor Co. Both AmerisourceBergen and Woodward Governor have more than 1,000 local employees. Exelon Corp. is the largest employer in Ogle County and Honeywell is the largest employer in Stephenson County.
In many cases, the companies reporting declining incomes at least still make money. The number of companies losing money outright though continues to grow. Twelve companies have reported losses already this quarter compared with nine in fourth quarter 2008.
February 24th, 2009
In this stock market there appear to be no safe bets right now. I occasionally am asked for ideas on investing, and I tell them I am in no ways an expert or even that knowledgeable. Former colleague, Nate Legue, though turned me on to an interesting site.
Mutual Fund Facts About Individual Stocks — www.mffais.com — tracks trends in mutual funds. Essentially, what stocks are mutual fund managers buying and selling?
I plugged in the Register Star’s Star 60 stock index on Feb. 23 and found mutual fund managers were most bullish on Las Vegas-based Allegiant Travel Co. It was owned by a small group of funds — 168 compared to the 2,242 that own General Electric stock — but 63.1 percent of those funds have been adding Allegiant shares recently while just 34.2 percent were selling.
The other Star 60 companies in the top five that were buying rather than selling? Beloit, Wis.-based Regal Beloit Corp., Ecolab, Dean Foods and Deluxe Corp.
I first ran the Star 60 through the site on Jan. 24 to see if the site was updated often and to check on the movement of fund managers. At the end of January, fund managers were banking — it turns out incorrectly — in a rebound of financial stocks. The top five added-versus-sold stocks in January were tire maker Titan Interantional Inc., Ford Motor Co., and U.S. Bancorp, JPMorgan Chase and AMCORE Financial.
At the end of February, all five of those stocks were being sold by a greater percentage than those buying.
There’s more consistency at the bottom end of the scale. The five stocks being sold far more than bought in both January and February were Sears Holding Corp., Bon-Ton Stores Inc. and Parker Hannifin. The other two at the bottom end at the end of February were General Motors Corp. and suddenly struggling Boeing Corp.
The site cautions that some of the information can be up to a year old so investors should not make decisions based on the information. Still, it’s information is far better than mine.
February 23rd, 2009
The FDIC seized Silver Falls Bank of Silverton, Ore., Friday, already the 14th bank taken over this year.
Last year there were 25 banks seized by the feds, the most in the decade, but based on the activity so far this year that number will be far surpassed as the waves of failed loans continue to wash out once mighty institutions.
So far this year, it has been almost entirely small banks being wiped out. Only two of the 14 banks taken over had more than $1 billion in assets and those two were California banks with miniscule market shares.
I looked up the most recent data available on all 14 banks — Sept. 30 — and most were in shaky but OK shape as of Sept. 30, 2007, and were just overwhelmed over the next 12 months.
Silver Falls turned a $1.5 million profit in third quarter 2007, but in third quarter 2008 the bank lost $3 million. It’s loss allowance to non current loans plummeted from 141 percent to 20.6 percent and assets and real estate owned to overall assets soared from 0.81 percent to 16.5 percent. That final stats means that the $24.3 million of the banks $147 million in assets was stuff it had foreclosed on.
Corn Belt Bank and Trust of Pittsfield was one of four taken over on Feb. 13. It swung from a $3.1 million profit to an $18.1 million loss in a year. It’s loss allowance and non current loan levels were OK as of Sept. 30, it was just running out of money. Corn Belt’s total risk-based capital ratio as of Sept. 30, 2008, compared to 10.27 percent as of Sept. 30, 2007. Regulators like to see banks at 10 percent for that category.
Corn Belt was the second Illinois bank seized this year. National Bank of Commerce of Berkeley was shut down on Jan. 16. Its third quarter 2007 profit of $4.5 million fell to a $53 million loss in third quarter 2008. The biggest red flag on National Bank’s condition was in its deposits.
When the public loses faith and begins pulling money out a bank is forced to borrow deposits or CDs from other institutions to keep capital levels up so it isn’t taken over by the FDIC. Doing so does help a bank’s cash reserves but it has to pay interest on the deals, hurting profitability. In September, 2007, $53 million of National Bank’s $323.9 million in deposits were “brokered” or 16.4 percent. As of September 2008, National Bank’s brokered deposits had grown to $187 million out of $422 million, or 44.3 percent.
February 10th, 2009
On Feb. 22, we are planning to run the list of the largest property tax challenges and the final results in Boone, Ogle and Winnebago counites.
This year, because of the poor real estate market and the fact that, because of how property tax assessments are timed, most people in the area saw their home assessments rise, there were an unusually high number of property tax challenges filed in Boone and Winnebago counties.
The list of the property owners seeking more than $100,000 in reduction is more of an annual battle. The Register Star, in my 13 years here, has never published the whole list. This year, Betsy Fritscher has written about Ecolab in Roscoe seeing a nearly $700,000 reduction. That is significant but — here’s a preview — it isn’t near the largest reduction.
Hamilton Sundstrand’s assessed valuation on its 4747 Harrison Ave. plant was reduced from $6.65 million down to $3.63 million. Assessed value is one third of fair market value so basically Hamilton Sundstrand was able to convince the Winnebago County Board of Review that it’s property was worth about $10.9 million instead of $20 million.
That’s several teachers salaries worth of tax dollars that the Rockford School District 205 won’t be receiving this year.
