Southeastern Wisconsin financial service industry news
Tuesday, January 20, 2015
MGIC posts large 4Q recovery
Milwaukee-based MGIC Investment Corp. today reported fourth quarter net income of $74.4 million, or 19 cents per share, a significant recovery from a loss of $1.4 million, or 0 cents per share, in the fourth quarter of 2013.
Total revenues were $240.4 million, down from $251.9 million in the same quarter last year. MGIC wrote $227.7 million in net premiums in the fourth quarter, up from $204.1 million in the fourth quarter of 2013.
For the full year, MGIC reported net income of $251.9 million, or 64 cents per share, a recovery from a loss of $49.8 million, or 16 cents lost per share, in 2013.
The company reported 2014 revenue of $941.8 million, down from $1 billion in 2013. Net premiums written for the full year were $882 million, down from $923.5 million in 2013.
As of December 31, 2014, MGIC recorded 6.7 percent delinquent loans, excluding bulk loans, an improvement from 8.9 percent delinquency as of December 31, 2013.
The company reported full year losses incurred of $496.1 million, down drastically from $838.7 million in 2013, which it attributed to fewer new delinquency notices received, favorable reserve development and a lower claim rate on new notices.
"I am pleased to report that in 2014 the company continued to build on the progress we have made regarding many of the challenges we have been facing,” said Curt Culver, chief executive officer and chairman of MGIC. “Notably, we have returned to annual profitability while maintaining a solid statutory capital position and low expense ratio. For the year, new insurance written and risk in force increased while new delinquent notices, paid claims, and the delinquent inventory decreased. I am encouraged by the positive trends in home prices and employment and am enthusiastic about the opportunities for growth and success for MGIC, and the mortgage insurance industry, in 2015 and beyond."
Culver, who is retiring March 1, said he expects more refinancing activity in 2015 compared to 2014 as homeowners take advantage of attractive interest rates.
“I’m stepping out here, but I’m more optimistic relative to volume than what I’ve stated here and as far as the company,” Culver said in a call with analysts this morning.
Management thanked Culver during the call for helping to turn the company around during the Great Recession, and position it for future success.
Credit unions celebrate 2014 achievements
Wisconsin’s 165 credit unions made $2.9 billion in small business loans in 2014, according to the new 2014 Scorecard released by the Wisconsin Credit Union League.
Credit unions and system partners in the state provide more than 10,000 part-time and full-time jobs, with a total annual payroll totaling more than $400 million.
The state’s credit unions have $27.3 billion in total assets and more than 2.5 million members.
The Scorecard also detailed the financial institutions’ efforts to save members money through fewer and lower fees, lower interest rates on loans and higher interest rates on savings when compared to banks. According to the WCUL, the total statewide savings afforded to members using these strategies was $104.7 billion in the third quarter of 2014, compared to Wisconsin banks.
In addition, according to the report, Wisconsin’s credit unions volunteered more than 40,000 hours to community organizations and raised more than $1 million for local causes in 2014.
Edge Advisors opens Appleton office and adds RIA service
West Allis-based Edge Advisors LLC has opened an office in Appleton and has also added a registered investment advisory arm.
The accounting and consulting company focuses on the dental and health care industries. The Appleton office will initially include three employees, and Marshall Watry, CPA, will lead the office.
Edge Wealth Advisors, the new RIA affiliate, offers individual wealth management and retirement plan services for businesses. It is based in West Allis and managed by Rob Joyce, who has more than 10 years of trading, investment and wealth management experience, a master’s in economics and a Series 65 certification from FINRA.
Edge, which was founded in 2012, has 18 employees and $1.3 million in revenues. It has also recently added marketing and brand development as client services.
“Our new Appleton office and Edge Wealth affiliate business (are) part of a plan to continue to expand the range of services we offer clients and increase our on the ground geographic reach,” said Mike Bark, CPA, CVA, MST, Edge Advisors co-founder and principal. “Through acquisitions and organic growth, we’ll continue to add new client capabilities, employees and locations in 2015.”
Reinhart expands financial institutions group
Milwaukee-based Reinhart Boerner Van Deuren s.c. has added experienced attorneys James Sheriff and John Reichert to its Financial Institutions practice group. The group counsels clients on mergers and acquisitions, capital raising, regulatory compliance, IPOs and corporate governance.
Sheriff has more than 30 years of experience representing large, publicly held banks and holding companies, as well as privately held community banks and thrifts. He also serves as general counsel to the Community Bankers of Wisconsin. Sheriff previously served as vice president and general counsel of a commercial bank in Pennsylvania, and was a director of M&I Bank FSB from 2009 to 2011. He holds a J.D. from Duke University School of Law and a bachelor’s from Boston University.
Reichert regularly counsels financial services companies, presidents, directors and other senior bank executives. He previously spent eight years in varied retail banking, operations and senior management positions at area banks. Reichert holds a J.D. from Marquette University Law School and a bachelor’s from the University of Wisconsin-Milwaukee.
The financial institutions practice group also includes Robert Henkle, Jr., James Bedore, Thomas Myers, Brian Carroll, Benjamin Lombard, Eric Hagemeier and John Tokarz.
"The expansion of Reinhart's Financial Institutions practice group with the addition of these two talented attorneys builds upon our strong banking practice," said Reinhart chief executive officer Jerome Janzer. "Banks, holding companies, thrifts and other financial service clients will be able to leverage our comprehensive expertise to accomplish their business objectives. As the banking landscape continues to change, it will be critical for these institutions to have strategic counsel that can help them navigate increasing industry complexity and a dynamic regulatory environment."
Wisconsin banks announce acquisitions
In a New Year that promises upheaval in the banking industry, transactions involving two Wisconsin banks were announced Friday.
Green Bay-based Associated Banc-Corp announced it has agreed to Eden Prairie, Minn.-based risk and benefits consulting firm Ahmann & Martin Co., which would be merged into its benefits subsidiary, Associated Financial Group. The transaction, expected to close next month, is valued at about $48 million, with incentives that could increase the price by $8 million if certain contingencies are met.
Associated Financial Group offers consulting on employee benefits, business insurance and human resources, and some individual and private insurance services. It has about 240 insurance specialists across the company’s three-state footprint, with $49 million in annualized insurance-related revenues.
With the addition of Ahmann & Martin, Associated Financial Group will have 370 employees serving about 14,000 clients, which would make it one of the top 50 insurance brokerage firms in the country.
Several key Ahmann executives will become leaders in the combined company. Dean Hildebrandt, current CEO of Ahmann, will become president and CEO of the new company, reporting to William Bohn, Associated Banc-Corp executive vice president and head of Private Client & Institutional Services, which includes Associated Financial Group. David Martin, benefits principal at Ahmann, will become executive vice president and lead Associated Financial Group’s overall benefits strategy. Richard Ahmann III, property and casualty principal at Ahmann, will play a key role in the integration of the businesses. All three executives will join the Associated Financial Group board of directors.
"There are many aspects to this new partnership that will contribute to our continuing success," Bohn said. "Perhaps the most significant are the client-centric values and common culture inherent in both organizations. Our shared priority on client relationships and innovative strategic solutions creates a powerful value proposition as we go forward together."
The combination will provide centralized management of financial risks for clients, according to Phillip Flynn, president and chief executive officer of Associated Banc-Corp.
"The addition of this fast-growing and respected company to the Associated family enhances our ability to offer clients unique, comprehensive solutions to meet their insurance and financial risk management needs," he said. "As we look forward, we will continue to seek ways in which we can prudently grow our capabilities and drive greater client and shareholder value."
Also on Friday, Rosemont, Ill.-based Wintrust Financial Corp. announced it has completed the previously announced acquisition of Delavan-based Delavan Bancshares Inc. for $38 million.
Delavan Bancshares is the parent company of Community Bank CBD, which has branches in Delavan, Sharon, Lake Geneva and Clinton. Community Bank, which has about $210 million in assets and about $168 million in deposits, will now be merged into Wintrust’s subsidiary, Hartland-based Town Bank.
Wintrust also in April acquired 11 Talmer Bank and Trust branches and the Pewaukee branch of THE National Bank and folded them into Town Bank. Wintrust includes 15 community banks with more than 135 branches.
"This transaction allows us to expand and complement our growing market presence in southeastern Wisconsin,” said Edward Wehmer, president and CEO of Wintrust. “We look forward to continuing with the community banking approach that CBD has established and to providing local communities with an expanded array of products and services."
"We are excited to begin our partnership with a successful organization that is like-minded in its philosophy of offering individually focused customer-oriented retail and commercial banking services with financial capabilities to support further expansion,” said Michael Murphy, president and CEO of Community Bank. "The transaction allows us to focus on serving our customers, while at the same time providing them with access to a wider range of products and services. We are pleased to join the Wintrust family."
PNC reports lower 4Q profits
The PNC Financial Services Group Inc. reported fourth quarter net income of $1.1 billion, or $1.84 per diluted share, down from $1.1 billion, or $1.87 per diluted share, in the fourth quarter of 2013.
Fourth quarter revenue was $3.9 billion, down from $4.1 billion in the fourth quarter of 2013.
For the full year, the Pittsburgh-based parent company of PNC Bank reported net income of $4.2 billion, or $7.30 per diluted share, down from $4.2 billion, or $7.36 per diluted share, in 2013.
Full-year revenue was $15.4 billion, down from $16 billion in 2013.
The company significantly decreased its provision for credit losses in 2014, to $273 million, compared with $643 million in 2013, reflecting overall credit quality improvement.
"PNC had a successful year in 2014," said William Demchak, chairman, president and chief executive officer. "We added customers, grew loans and deposits, increased fee income and capital, and reduced expenses. While the near-term revenue environment remains challenging, I like how we are positioned heading into 2015. We are a year further into the execution on our strategic priorities and continue to make important progress across the board. We enjoy a strong capital position. We have a more liquid balance sheet. And we expect our continued execution to drive long-term shareholder value."
PNC Bank has 34 branches in the Milwaukee market.
Southport Bank names Weyers CEO
Kenosha-based Southport Bank has named Russ Weyers president and chief executive officer.
Weyers replaces Timothy Schadeberg, who filled the role from May 2011 to December 2014. He has more than 25 years of banking and leadership experience. Weyers was group senior vice president at Cole Taylor Bank from 2011 to 2014. He previously served as executive vice president of Racine-based Johnson Financial Group and president and chief operating officer of Johnson Bank and has also worked in senior commercial lending positions at Bank One in Kenosha and Firstar Bank in Milwaukee.
“This is a positive new chapter in Southport’s story, and the board is extremely pleased and excited to have an experienced banking leader in Russ,” Guttormsen said. “He is as committed to this community as the board is and Southport Bank will once again focus on quality lending and excellent banking service. Southport Bank’s future is directly linked to the success of businesses and families in Kenosha County. Moving forward, we’re going to show our commitment to Kenosha.”
Weyers holds a bachelor’s in finance from University of Wisconsin-Oshkosh and an MBA from Marquette University.
“Southport Bank is a great organization that will work hard every day to make a difference for its customers and community,” said Weyers. “The Board and Southport’s employees have worked hard to restore the bank’s sound financial foundation and can now focus on delivering the best local service we can to our clients. Businesses and families in Kenosha value relationships and people who understand what makes this community unique,” Weyers added. “We’re going to demonstrate that in everything we do.”
Southport Bank has three locations in Kenosha County.
Quad/Graphics to acquire Massachusetts book manufacturer
Sussex-based Quad/Graphics Inc. announced that it will acquire Courier Corp. of North Chelmsford, Mass., the nation's second-largest book manufacturer, for approximately $260 million.
The acquisition accelerates Quad/Graphics’ three-year strategy to transform its book platform, which the company announced earlier this week.
“We are excited about the opportunities ahead with Courier as part of our company and the value it creates for both our companies’ clients and shareholders,” said Joel Quadracci, Quad/Graphics chairman, president and chief executive officer. “Courier has a legacy of superior quality and exceptional customer service, and is a well-known innovator in every aspect of book production, from content management to printing, binding, distribution and integration with electronic media.”
Quad/Graphics expects the acquisition to close by mid-year after which James Conway III, Courier’s chairman, president and chief executive officer, will join Quad/Graphics as president of the book division. Courier has about 1,600 employees, but Quad declined to comment on how its employees and locations would be integrated following the acquisition.
Courier was an early adopter of the digital print technology that is rapidly changing the dynamics of the book industry. According to Quadracci, Courier pioneered the development of customization solutions that now bring class-specific versions of academic textbooks to millions of students each year.
“The company has continually reinvested in its platform, and with our previously announced investment in 20-plus digital presses and integrated systems, together we will accelerate a broad industry transition to a print-on-demand, zero-inventory model,” Quadracci said.
Conway added: “After a careful and thorough evaluation process, the Courier board has determined that the transaction with Quad/Graphics maximizes value for our shareholders. The board strongly believes that this transaction achieves that result, providing a substantial premium for our shareholders.”
Quad/Graphics will pay Courier shareholders the equivalent of a total purchase price of $20.50 per share, consisting of cash and shares of Quad/Graphics Class A common stock. Each Courier shareholder will have the right to elect to receive cash or Quad/Graphics common stock, subject to proration in the event that shareholders elect to receive more than 54 percent cash or more than 46 percent stock. Quad/Graphics will pay an aggregate amount consisting of approximately $129 million in cash and about 4.8 million shares.
“I am delighted to bring Courier together with another company that shares our values, offers complementary capabilities and opens up a world of additional opportunities,” Conway said. “We are confident that the combination of our two companies will create the most opportunities for customers and employees well into the future. Like Courier, Quad/Graphics represents the very best in technology and service for the 21st-century marketplace. The addition of Courier’s four-color offset presses, digital inkjet presses, end-to-end process management and integrated software solutions further enhances Quad/Graphics’ efforts to transform the book industry to the benefit of publishers and readers everywhere.”
Bank Mutual reports 42 percent earnings increase in 4Q
Brown Deer-based Bank Mutual Corp. reported higher fourth quarter and full-year net income, driven by an increase in net interest income.
The bank reported fourth quarter net income of $3.8 million, or 8 cents per diluted share, up from $2.7 million, or 6 cents per diluted share, in the fourth quarter of 2013.
The 42 percent increase in net income was mainly driven by a decrease in total interest expenses, an increase in net interest income and a lower loan loss provision due to improving portfolio credit quality. However, the bank reported higher occupancy and equipment costs and higher other non-interest expenses.
For the full year, Bank Mutual reported net income of $14.7 million, or 31 cents per diluted share, up from $10.8 million, or 23 cents per diluted share, in 2013.
The bank attributed the year-over-year increase to higher net interest income, lower provision for loan losses, lower compensation-related expenses and lower losses for expenses on foreclosed real estate. However, Bank Mutual reported a non-recurring charge of $518,000 in the first quarter of 2014 related to state income taxes, as well as lower net mortgage banking revenue and higher occupancy and equipment costs.
Net interest income in the fourth quarter of 2014 included a $512,000 call premium the bank received on a mortgage-related security that was called by the issuer. Without that income, the net interest margin for the year would have been two basis points lower, the bank said. In addition, Bank Mutual’s net interest margin has benefitted from an ongoing restructuring of its balance sheet.
"Efforts to restructure our balance sheet the past few years have clearly paid off in 2014, resulting in our highest net interest margin as a public company, as well as a fourth-straight year of higher earnings," said David Baumgarten, president and chief executive officer. "However, this period of restructuring is drawing to a close and we expect our net interest margin to be slightly lower in 2015. We also expect our non-interest expenses to be higher in 2015. We are confident, though, that growth in our loan portfolio, which has averaged 7.3 percent annually the past three years, can continue to fuel an improvement in earnings in 2015, as will modest improvements in our non-interest sources of revenue."
The bank’s total assets remained flat at $2.3 billion in 2014.
Bank Mutual Corp. is the third largest financial institution holding company headquartered in Wisconsin based on total assets. Its subsidiary bank, Bank Mutual, operates 75 banking locations in Wisconsin and one in Minnesota.
Workshop to address valuing your business
BizTimes Media will host an interactive workshop designed to help business owners value their businesses and prepare them for sale.
The program, “What’s your business really worth—are you building a sellable company?” will be held on Thursday, Feb. 5, from 7:30 to 9:30 a.m. at the Sheraton Hotel, 375 S. Moorland Road in Brookfield.
Experts will offer information, advice and tools to help business owners increase the value of their companies and prepare them for a sale or acquisition.
Joel Nettesheim, principal, and Nancy Mehlberg, manager, at SVA Certified Public Accountants, will explain the concept of a “sellability score.” Panelists Daniel Eder, president of Reliable Door and Dock Inc. and Jim Lindenberg, owner and president of Lindy Enterprises, JML Holdings and Legends of the Field, will discuss their firsthand experiences with selling their companies.
For more information or to register, visit www.biztimes.com/nextstage.
New hires and promotions
Racine-based Johnson Bank has hired Mark Rose as vice president-private banking for the bank’s new Mequon office. He has 20 years of banking experience, the past 10 of which were in private and business banking. Rose currently serves as vice president on the board of directors at Arts at Large Inc.
Pewaukee-based Jannsen + Co. has added Morgan Franz to its accounting team. Franz holds a bachelor’s in business administration from the University of Wisconsin-Whitewater and just completed a master’s in professional accountancy, also from UW-Whitewater.
Jannsen + Co. has added Nicole Preston to its accounting team. Preston holds a bachelor’s in accounting and a master’s in taxation from DePaul University in Chicago. She earned her CPA in 1997 and served as a tax manager at a financial services firm for about seven years. Preston has more than 15 years of public and private audit, accounting and tax experience.
Jannsen + Co. has added Lynn Rhode to its accounting and payroll teams. Rhode earned an associate’s in accounting from Moraine Park Technical College and spent almost 23 years doing bookkeeping and running payroll for several landscaping companies.
Jannsen + Co. has added Pamela Tarasewicz, CPA, to its accounting team. She previously worked in tax management and compliance for 18 years at Ernst & Young. Tarasewicz holds an associate’s in accounting from Milwaukee Area Technical College, a bachelor’s in accounting from Lakeland College, and a master’s in tax from the University of Wisconsin-Milwaukee.
This exclusive news bulletin is compiled by BizTimes Milwaukee reporter Molly Dill. This bulletin is published every Tuesday morning. Send financial services industry news and tips to firstname.lastname@example.org or call her at (414) 336-7144.
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