Tag: money

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First Horizon, TD Bank Merger Deal Off

(Photo: Samuel X. Cicci)

One of the region’s biggest financial institutions won’t have a new name after all. On Thursday, First Horizon Corporation and TD Bank Group announced they had mutually agreed to terminate their merger agreement.

“While today’s announcement is unfortunate and unexpected, First Horizon will continue on its growth path operating from a position of strength and stability,” said First Horizon chairman, president, and CEO Bryan Jordan in a statement. “Our strong capital position, disciplined credit quality, expense control measures, and well-diversified and stable funding mix have enabled our business to navigate challenging banking industry dynamics and remain focused on executing our client-centric growth plan. We continue to develop and expand deep client relationships across all of our markets, which include some of the fastest-growing U.S. markets, while maintaining a strong, asset-sensitive balance sheet well-positioned for the current rate environment.”

First Horizon had announced in February 2022 that it would be acquired by Toronto-Dominion Bank and its subsidiaries in an all-cash transaction valued at $13.4 billion. However, the acquisition had been delayed twice — to an ultimate May 27th deadline — due to pending regulatory approvals. With the deadline approaching, the companies were not confident about hitting that date, and TD could not provide a new projected timeline in which regulatory approvals might be obtained. Because of that uncertainty, the two companies decided to call off the merger. It would have made TD the sixth-largest bank in the United States, measured by assets.

“This decision provides our colleagues and shareholders with clarity,” said TD Bank Group president and CEO Bharat Masrani. “Though disappointed with the outcome, we move forward with a strong, growing franchise in the United States, servicing more than 10 million customers across our footprint. I want to thank First Horizon for their partnership over the last several months and wish them enormous success for the future. Above all, I want to thank our colleagues at TD Bank, America’s most convenient bank, for their tremendous efforts and steadfast dedication to the bank, the millions we serve and the communities in which we live and work.”

The termination agreement means that TD will make a $200 million cash payment to First Horizon (on top of a “$25 million fee reimbursement due to First Horizon pursuant to the merger agreement”).

First Horizon’s share price had dropped about 40 percent over the last few months, far below the $25 per share that TD had offered when the merger was announced. The stock closed at $15.05 on Wednesday and fell almost another 40 percent, currently sitting at $9.24.

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News News Feature

2022 U.S. Dollar Review

In high demand (Photo: Reynaldo #brigworkz Brigantty | Pexels)

Fish in the ocean probably don’t have a sense that they’re underwater, just as we don’t think much about being surrounded by air all the time here on the surface of earth. Nevertheless, those environments are critical to everyday life for fish and people, even if they are easy to ignore.

Similarly, everything we do economically is tied to the U.S. dollar, and it’s easy to forget how important it is to our daily lives. Americans have to think even less about other currencies than most global citizens because oil and a great deal of international trade is priced in dollars. Nevertheless, the U.S. dollar is not a fixed measure but fluctuates in value frequently — against other currencies, commodities, and anything else priced on a large scale worldwide.

The best-known index of the dollar’s value is the DXY index, which compares the dollar against six other major currencies. According to the DXY index, the dollar has appreciated by about 30 percent over the last ten years and is up 10 percent this year alone. A strong dollar might seem like a good thing, and it does make imported goods cheaper and international vacations more affordable. However, dollar strength can create problems throughout the world, including here in the U.S.

When the dollar rises, exports from the U.S. are less affordable, which hurts U.S. businesses. The price of oil becomes less affordable for the world, as global oil trade is still almost always priced in dollars. This makes goods more expensive even in the U.S., since oil is critical to almost every aspect of production and transportation in global trade. Smaller countries feel even more pain, since they often issue dollar-denominated bonds, which become more expensive to service and ultimately pay off.

Several phenomena can cause dollar strength. The demand for the dollar is uniquely strong, since it is required to settle so many sorts of international payments throughout the world. Also, when geopolitical tension rises, investors tend to buy up dollars and U.S. treasuries as a safer place to park money. But perhaps most importantly, demand for the dollar is driven by interest rate differentials, since currency traders prefer holding currencies that generate the most “carry,” or net interest on investment in the currency.

The Fed has quickly and consistently hiked interest rates in 2022, and the carry created by these rising interest rates means that demand for the dollar went even higher this year. The Fed’s actions pushed USD up almost 20 percent at one point in 2022 alone, which is a startling move for an asset class that is typically much less volatile.

The natural swing of the dollar up and down over time suggests you probably want some exposure to non-dollar assets like international stocks at all times. If the status of the dollar as the reserve currency or treasuries as the reserve asset is meaningfully challenged then non-dollar assets can do some real work in your portfolio.

The dollar was up 20 percent in 2022, but since the peak it has fallen about 10 percent on expectations the Fed will pause or cut rates in the future (reducing the carry). As one consequence of this, the international indexes we follow are dramatically outperforming U.S. markets in Q4 of this year.

Fish may not be able to diversify out of water and we can’t diversify away from air, but we can definitely diversify our investments. As Nobel Laureate Harry Markowitz once said, diversification is the only free lunch, and it’s likely that international exposure could be increasingly important to your secure financial future in the years to come.

Gene Gard CFA, CFP, CFT-I, is Chief Investment Officer at Telarray, a Memphis-based wealth management firm that helps families navigate investment, tax, estate, and retirement decisions. Ask him your questions or schedule an objective, no-pressure portfolio review at letstalk@telarrayadvisors.com. Sign up for their next free online seminar on the Events tab at telarrayadvisors.com.

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News News Blog News Feature

Gender Pay Gap Narrows In Memphis As Pay Falls for All

(Photo by Igal Ness on Unsplash)

Memphis-area women earned 83 percent of their male counterparts in the workplace from 2000-2019, according to new research from the Pew Research Center.

(Credit: Pew Research Center)

The pay gap in Memphis narrowed during that time, according to the research gathered from census records, based largely on the fact that pay for men in the area fell over those 19 years.

Credit: Pew Research Center

For all male workers 16 years old and older, median annual income fell from about $54,000 to around $47,800. Income for males in the 30-49 age bracket fell sharpest here, from a median of about $58,500 to about $49,600.

Pay for all female workers fell slightly from 2000 to 2019. Pew says the median annual income for women in 2000 was around $40,000 and fell to about $39,600 in 2019.

The city’s gender pay gap (83 percent) was one point above the national average of 82 percent. For the gap, Memphis ranked the city 86th out of the 250 metros Pew studied for the report.

See results from more metros here.

Napa, California, where women make 98 percent of that of their male counterparts, ranked at the top nationally. The Houma/Thibodaux area of Lousiana, where women earn 58 percent of males, ranked last.

However, Pew reports that wages for women are catching up across the country.

(Credit: Pew Research Center)
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News News Blog News Feature

Greater Memphis Chamber Releases Record-High April Jobs Report

(Credit: Gerd Altmann/Pixabay)

Memphis received a boost with the latest round of new jobs data for metropolitan areas nationwide.

According to a report by the Greater Memphis Chamber’s Center for Economic Competitiveness, April saw the Greater Memphis region reach a record-high level of 661,400 jobs. The numbers continue an upward trend from March of this year, when the region recovered all the jobs that were lost during the Covid-19 pandemic.

National job growth continued to rise slowly in April at 0.3 percent. Greater Memphis’ job growth continued on par with the national average in April 2022 seasonally adjusted nonfarm payroll estimates. And between March and April 2022, local seasonally adjusted estimates rose by 2,300 jobs (0.35 percent).

(Credit: Greater Memphis Chamber/Source: St. Louis Federal Reserve, numbers are preliminary and seasonally adjusted)

Select peer metro areas have also seen a full recovery to March 2020 employment figures. And per the April 2022 report, Greater Memphis’ growth percent relative to March 2020 (+1.05 percent) surpasses that of Birmingham Metro (+0.15 percent), Louisville Metro (+0.31 percent), and Oklahoma City Metro (+0.67 percent).

(Credit: Greater Memphis Chamber/Source: St. Louis Federal Reserve, numbers are preliminary and seasonally adjusted)

Locally, the construction sector has seen the largest growth, of 7.59 percent over March 2020. Hospitality and leisure industries are still playing catch up, but have improved to just -1.97 percent short of March 2020 levels, with much of the summer season still to come. Per the report, education and health have been inert, with an average of 5 percent less employment than March 2020.

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News Blog News Feature

Groups Threaten Lawsuit On Money Bail Reform

Credit: Shelby County Jail/Facebook

Several groups called Shelby County’s money bail system unconstitutional in a letter issued Tuesday and urged leaders to meet with them about the practice or face a lawsuit by year’s end. 

The letter is from the American Civil Liberties Union (ACLU), the American Civil Liberties Union of Tennessee (ACLUT-TN), Just City, and The Wharton Law Firm. It paints a picture of a broken system that favors those with money to get out of jail and disproportionately affects poor, Black, and disabled detainees.    

“Jailing people simply due to their inability to afford a sum of money is unconstitutional and harmful public policy,” said Andrea Woods, staff attorney with the ACLU’s Criminal Law Reform Project. “Shelby County officials should embrace this opportunity to remedy the county’s discriminatory, wealth-based detention practices. We would rather see smart systems fixes now than be forced to bring these issues to court.”

The letter says pre-trial release is a fundamental right under the state and federal constitutions. Tennessee law requires judges to treat money bail as a “last resort,” it says. Except for “extreme circumstances,” all criminal suspects have the right to some sort of conditional release from jail before their trials. 

Shelby County’s system, however, keeps “hundreds of people” detained because they cannot afford bail. This can lead to loss of employment, housing, education, health care, and child custody, the groups said. 

The county’s current pre-trial system can hold a person for “weeks or longer” without a bail hearing with counsel, according to the groups. Ability to pay is not considered when bail is set, “leaving those who cannot afford to pay detained indefinitely, even if they are not a flight or safety risk, while those who face the same charges but can afford to pay money bail are freed until trial.”

“Because of this community’s dependence on money bail, the Shelby County Jail is full of people who cannot pay for their freedom,” Josh Spickler, executive director of Just City, said in a statement. “There are proven alternatives to this counterproductive system, tools and policies that have worked in other cities just like Memphis to reduce crime, save money, and help people.

“These methods work, but they require leadership. Today, we are inviting Shelby County leaders to join us for a long-overdue conversation about safe and effective alternatives to the money bail system. We hope they’ll join us.”

The letter threatens litigation and demands reform for the county’s bail system. It says the groups “prefer to work with you to resolve our concerns but stand ready to explore other options” if the county does take action. 

That action — an answer to a meeting request from the groups — needs to take place before December 31st. If not, “we have no choice” but to file a lawsuit.  

“We cannot and will not sit idly by and let this easily corrected problem persist,” reads the letter. 

Instead of the current system, which the letter says “does not promote court appearance,” the groups want (among other things):

• bail hearings no later than 24 hours after a person’s arrest

• no money bail set unless proof exists that the person will not return for trial without it

• a consideration of ability to pay for bail before it is set

• affordability for bail means the person can pay the bail amount within 24 hours without borrowing money

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Politics Politics Feature

Bank Shots

At some point during Monday’s regular public meeting of the Shelby County Commission, one of several petitioners for this or that largesse suggested that what the commission could do for the greater community would be to serve as a bridge over the existing gap between haves and have-nots.

That set off Commissioner Wyatt Bunker, who several weeks back warned of creeping “Marxism” and this time saw yet another leveling mechanism at work. “That’s not what we do,” he said.

Whether Bunker liked it or not, that’s what the commission did on Monday. Indeed, the body functioned like nothing so much as the board of directors of a taxpayer-funded bank, ruling thumbs up here (as in funding the bond issue for a University of Memphis-area commercial development) and thumbs down there (in declining to reconsider a black-owned firm’s proposal for a school-construction contract), while hedging its judgments on two other contested matters involving public money.

On those latter two matters: The commission forgave a $1 million loan to the Memphis Rock ‘N Soul Museum after forcing its director to make concessions on limited free admissions for students and Shelby Countians at large; it also tentatively released the first component of a community development grant in the LeMoyne-Owen College area, hinging the deal on what looked to be a pro forma follow-up by the office of county mayor A C Wharton.

(The commission’s decision to defer to Wharton to ensure that the LeMoyne-Owen project’s finances turned out to be in order made an interesting contrast to the cityside situation, where an ambitious new council is unlikely to cede any additional authority to an already impressively powered Mayor Willie Herenton. (See this week’s Viewpoint)

Undeniably, political considerations crept into the essentially financial decisions made by the commission on Monday. As an example: Pressure for the Highland Street TIF (tax-increment financing) proposal from the University of Memphis and its boosters has been formidable indeed, and Commissioner Mike Ritz, who for weeks has been the major holdout on that particular TIF, pleaded in vain that, in the strict sense of the term, no “blight” (obligatory under the terms of the grant) really existed on the strip.

Later, when Jeffrey Higgs, executive director of the LeMoyne-Owen College Community Development Corporation, was making the case for his own project, he made a point of looking Ritz’s way and insisting that “real blight” was to be seen in his territory. A smiling Ritz pointed back, signaling his agreement.

Ultimately, the only holdout on the LeMoyne-Owen project was Bunker, who, apropos several of the commission’s judgments — past, present, and, presumably, future — lamented that the body seemed to have become a charitable institution: “We save colleges, we save museums, we save roller coasters … ”

In protest, Bunker attempted to halt deliberations on the LeMoyne-Owen project by invoking the dread Rule 33, whereby any member can ask for an automatic two-week deferral on an agenda item. For a variety of reasons having to do with federal deadlines, that would probably kill the project, responded county financial officer Jim Huntzicker. Presumably in order to keep peace with his commission mates (Deidre Malone had been heard to remark, concerning the future of Rule 33, “I’m going to get rid of that!”), Bunker ultimately relented.

A purely political judgment of sorts is finally what thwarted the hopes of the black-owned Salton-Fox Construction Company for restoration of its contracting role in a $50 million school-construction project. Henri Brooks, usual champion of African-American causes, withheld what would have been her decisive “yes” vote on grounds that to give it would be to provide cover for the company’s role as a mere “front” for a white-owned enterprise. “I’m going to call it out,” she said.

(Salton-Fox, apparently now exonerated of complicity, had first found itself in the crosshairs when it was identified as the donor of campaign contributions to public officials in connection with the case of former commissioner Bruce Thompson, now under federal indictment for extortion and scheduled to be tried in March.)

The commission’s last act on Monday was both political and financial. By an 8-3 vote (dissenters were Herenton allies Malone, Brooks, and Sidney Chism), the commission approved Commissioner Steve Mulroy‘s resolution insisting on January 31st as an absolute deadline for Bass Pro Shop to put up or shut up on its bid for The Pyramid. (See “In the Bluff,” p. 10.)

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News

Where’s the Cheapest Gas in Memphis?

The cheapest gas in town? Well, according to GasPriceWatch.com, today it’s a Mapco on Danny Thomas, which has regular priced at $2.79 a gallon.

The website is a handy and helpful tool, worth checking before you head out to fill up your tank. Differences in prices can vary up to 20 cents a gallon between stations only a few blocks apart.

You simply type in the name of the city or area where you want to check prices and the stations (and their prices) pop up on a Google map. For the record, if you’re willing to drive to West Memphis, you can save a bunch.

Check it out.

GasPriceWatch.com
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Opinion The Last Word

The Rant

CREDIT: Chan Vargas | dreamstime.com

A Florida man says that his son was taken advantage of by a Florida Panhandle strip joint. Seems the father gave his son his credit card to celebrate his graduation from Georgia Tech, and the boy ran up a $53,000 tab. This appears to be a case where the strippers were the ones who got a “happy ending.”

I guess the young man, catapulted to an undergrad degree at the tender of age 24, did not learn the economics of real life in school — chief among them is to never give strippers a free shot at your credit card, no matter how drunk you are.

Much like their brethren the lawyers, strippers quickly size up a potential client for how much they can fleece from them, based on how much money they have and how stupid they appear to be.  

I have always supported honest entrepreneurs, especially when pitted against the stupid. It is good for society when money is not left too long in the hands of idiots. It is God’s way of getting money into smarter folks’ pockets. For the less religious among us, I call it economic Darwinism, and it often happens one crumpled $5 bill at a time. As the old saying goes, “A fool and his money are soon parted.” In this case, a fool and his dad’s money were soon partying.  

I do understand these men who spend silly amounts of money in strip clubs. I have had friends whose longest female relationships have lasted two table dances. Men go to these clubs to make themselves feel important because they are lacking in self-esteem or personal affirmation. They are paying for the illusion of being a big shot, and they convince themselves that these women actually think they are attractive. They usually get buyer’s remorse when the stripper’s cooing and ego-stroking ends, which invariably happens when the guy’s money runs out. Who knew?

Surprisingly, the government, which likes to wet its beak in all vices, has yet to devise a way to muscle in on the strip-joint business. They’ve done better with our other bad habits. The feds pay farmers to grow tobacco, then tax cigarettes, and then push lawsuits against cigarette manufacturers. Governments are also into gambling big-time now, sponsoring their own state lotteries (akin to running numbers) and licensing casinos. And of course, there is booze, where government takes an inordinate cut via taxes on alcohol sales. It is best to view the government as a mob boss without the protection racket — or moral consistency. 

I don’t go to strip clubs, but it’s not because I have any ethical opposition to them. The average stripper is doing the best she can with the assets she has to make money and provide for her famiy. And I respect that — especially her assets. Basically, I don’t go simply because I am too cheap.

As for the Georgia Tech grad, it sounds like he got a master’s in finance that night — for $53,000! Welcome to the real world, son! Pain is an excellent teacher, and often, in a society that makes excuses for bad behavior, it can be the only teacher. Of course, ridicule helps, which is what I do. It is my way of giving back.

Experience is how we learn life’s lessons. Experience delivers certain harsh truths to us Homo sapiens (and straight sapiens, too). This incident taught a young man the most valuable lesson in life: Don’t be an idiot.

See, everyone has a role in our society, even strippers.

Ron Hart is a columnist and former resident of Memphis.

Categories
Opinion

Get Wise: Monetize

Ethics codes are so yesterday. Tennessee Waltz, Main Street Sweeper, Tarnished Blue, Tarnished News, and “Same Game Different Name” have thrown politicians, cops, and journalists into a hopeless state of confusion.

Ethics shmethics. What they need is a fee schedule to help them fairly and honestly value their services in today’s ever-changing marketplace.

Well, Mr. Monetize is here at your service.

Dear Mr. Monetize: What would Kant say about all of this?

Immanuel Kant, a founding member of the Memphis City Council, is famous for his “categorical imperative,” which reads in part: “Act only according to that maxim whereby you can at the same time will that it should become a universal law.”

Because of the confusing structure and irregular syntax of this sentence, it was later amended by ordinance on a unanimous vote to read: “Do what you can get away with as long as you can point to somebody else who had an even better deal.”

Dear Mr. Monetize: I’m an elected official who’s bad at math. How many ways can I monetize?

A bunch. There are 13 City Council members and 13 county commissioners plus 14 city and county school board members. Like Kant said back in the day, each one of you is a potential independent contractor or consultant-to-the-max under universal law. Multiply all those numbers and the result is a really big number.

Dear Mr. Monetize: So how much should I charge for services?

It depends on the nature of the service, the timing, and the size of your cojones. But these guidelines should be useful. Prices are subject to change without notice, and holiday discounts may or may not apply. Coupons may not be used in some situations.

Consulting: The sky’s the limit! A monthly retainer of $5,000 is entirely appropriate. On an annual basis, $100,000 and up is more like it. The “contingency fee” or “finder’s fee” of one-half of 1 percent may yield a better return if the contract is large and the client is generous, stupid, or desperate. Step one is to print some business cards that list your occupation as “consultant.”

Setting up a meeting: A fee of $20,000 is standard, plus the cost of food, drinks, and napkins if required. (A mark-up should not be charged on those items, however.) For a simple office meeting, a fee of $1,000 for the first consultation is reasonable and customary.

Phone call to mayor: $100, plus carrier charges.

Phone call to cuss out reporter: $500, plus carrier charges. The fee must be returned if the reporter bites back.

Phone call to constituent: no charge. But remember: leads, leads, leads!

Phone call to assistant U.S. attorney Tim DiScenza: oops! Wrong number.

Personal visit to member of quasi-public board with power to dispense monies in excess of $10 million: $750 per visit. If provider is a member of board, fees are tripled.

Sucking up to mayor: job paying at least $80,000 a year plus pension benefits.

Insulting or cussing out mayor: $50 per television interview, with an additional $50 each time the clip airs. Get residuals!

Dear Mr. Monetize: I’m a cop who knows some bad shit that went down in the department. What should I do?

Get in line.

Dear Mr. Monetize: I am a print journalist. Recent actions of the City Council, the County Commission, and federal prosecutors regarding so-called strip clubs have caused a certain amount of shrinkage, if you know what I mean, in our publication, which used to feature full-page pictures of sexy young women with huge monetizers. What can I do?

You could start with that picture at the top of this page.

Categories
News News Feature

Pay For Grades

It was like old times, in more ways than one, at an assembly at East High School this week. On stage, U.S. senator Lamar Alexander sat next to former Grahamwood Elementary School principal Margaret Taylor, who sat next to Mayor Willie Herenton.

Alexander gave a heartfelt speech about his long friendships with West Tennesseans Herenton, Taylor, and the late Alex Haley, author of Roots, which became a television epic before today’s students were born. Taylor unabashedly hugged Herenton, whose support for optional schools and Grahamwood in particular was vital when he was superintendent 25 years ago. And Herenton, who was greeted with a standing ovation, talked inspiringly about the importance of education to the 900-plus students in the audience.

The man of the hour, however, was another Memphian who’s been around a while — businessman Charles McVean, a 1961 East High graduate and benefactor of the Greater East High Foundation to the tune of approximately $2 million. A few years ago, McVean had an epiphany: He could give $1 million to his college alma mater, Vanderbilt University, which has an endowment worth over $1 billion. Or he could give it to East to pay for extra support teachers, facility improvements, and direct payments to students who make good grades and tutor other students.

Pay-for-performance was the most interesting new wrinkle. The idea was to pay students up to $10 an hour for tutoring and as much money as they could make working at McDonald’s for working harder on their homework instead.

On a modest scale, it appears to be working. A total of 110 students are involved as either tutors or “scholars” who make a commitment to good grades and good behavior in exchange for some of McVean’s cash. A similar program, with a different benefactor, Dr. Jerre Freeman, is being implemented at Whitehaven High School. And on Monday The New York Times reported that 25 public high schools in New York City are paying up to $1,000 to students who do well on Advanced Placement exams. Philanthropists are funding the program.

Alexander, a Vanderbilt graduate who was governor of Tennessee and U.S. Secretary of Education before winning a Senate seat in 2002, likes McVean’s merit program and doesn’t mind seeing his gifts staying in Memphis instead of going to Vandy.

“Charles can see every day real results from the way he spends his money,” said Alexander, a proponent of merit pay increases for teachers when he was governor. “Our biggest challenge in American education is kindergarten through 12th grade.”

Cash-for-performance, so long as it isn’t paid for by government, is “a terrific idea,” said Alexander. “I’m for what works.”

Alexander met Taylor during his first term as governor. He wanted to visit a Memphis public school, and Grahamwood was so popular at the time that parents, most of them white, camped out at the Board of Education offices to get spots in the optional program. Taylor said Herenton suggested Grahamwood even though “it was controversial” because every other school coveted such attention. Taylor, who is in her 80s, works as a tutor and support teacher in algebra classes at East five days a week.

In the movies, there would be hundreds of East students and tutors earning college scholarships each year, but reality is not like that. East is as racially segregated as it was 40 years ago, but now there are almost no white students. There are actually slightly fewer tutors this year than last year due to graduation losses and the commitment that is required. “It takes a while to train them,” said Bill Sehnert, a McVean hire who works full-time at East. And tutors are now starting to work on ACT preparation and in classes besides algebra, in effect plugging one leak only to find another one somewhere else.

“It doesn’t do any good to pass algebra and flunk English,” Sehnert said.

McVean, a commodities trader who has seen his personal fortunes rise and fall many times, is undeterred. The Greater East High Foundation got off to a rough start when it came out of the gate a few years ago and basically had to start all over. A less determined person might seize upon the program’s partial successes, claim a victory, accept some applause, and bow out. Instead, McVean wants to focus attention on the large number of less-motivated students who aren’t buying into the program and being served.

“The secret to success in any business,” he said, “is to find a good idea and leverage it.”