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Jax Daily Record Monday, Mar. 2, 201512:00 PM EST

FirstAtlantic takes unique approach to public listing

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by: Mark Basch Contributing Writer

FirstAtlantic Financial Holdings Inc., the Jacksonville-based parent company of FirstAtlantic Bank, became a public company last week with a unique approach.

FirstAtlantic’s stock began listing on the OTCQX, without offering any new shares to the public.

The OTCQX is the highest of three market tiers run by the OTC Markets Group Inc. The OTC markets are a place for smaller companies to list their shares without having to meet the requirements of the more established New York Stock Exchange or Nasdaq market.

We can truly say FirstAtlantic’s listing is unique because, according to the OTC, FirstAtlantic is the first community bank to go public on the OTCQX.

“The OTCQX marketplace is the best place I can find for a company like ours’ shares to trade, shy of Nasdaq,” said Mitchell Hunt, president and CEO of FirstAtlantic.

FirstAtlantic has about 6 million shares outstanding, according to its annual report, and Hunt said the bank has 330 shareholders.

“Our existing shares are eligible for trade,” Hunt said. “We did not issue any new shares.”

Hunt said the stock listing creates a more efficient way for those 330 stockholders to sell their shares, if they desire, and also increases the transparency of FirstAtlantic’s finances for investors interested in buying stock. The company is still not required to file reports with the Securities and Exchange Commission, but its financial reports are filed with the OTC. You can find them on the market’s website at otcmarkets.com.

The reports show that FirstAtlantic had net income of $2.4 million, or 42 cents a share, in 2014.

FirstAtlantic opened in 2007 and has grown, with the help of acquisitions, to eight branches in Duval, Clay and St. Johns counties. It had $385 million in assets at the end of the year.

FirstAtlantic’s stock became available for trading last Monday under the ticker symbol “FFHD,” but no shares were actually traded as of Friday, according to OTC data. The data shows the best bid to buy shares was at $8.31 each, but the best offer to sell was at $10. So there was no match, and no trades made.

Hunt wasn’t surprised by that.

“It’s just going to take time for a few orders to get placed and word to get out,” he said.

Hunt is hoping that trading will grow as the bank grows. He also hopes the company will get big enough in the future to qualify for a Nasdaq listing.

“We aspire to get there someday,” he said.

Stein Mart plans 11 new stores this year

Stein Mart Inc. last week said it plans to open 11 new stores this year, up from its previous estimate of 10.

The store openings include two in Florida, but the Jacksonville-based fashion retailer isn’t giving specific location details of those stores yet.

Stein Mart did say it will open its first San Francisco area store in March in Cupertino, Calif.

The company opened nine new stores last year, finishing fiscal 2014 with 270 stores in operation.

Interline reports loss after litigation

Interline Brands Inc. last week reported fourth-quarter sales rose 6.6 percent to $415.8 million. However, after litigation-related charges of $20 million, the Jacksonville-based marketer of maintenance, repair and operations products reported a net loss of $9.6 million.

As Interline had announced, the litigation costs related to the settlement of a class-action lawsuit alleging the company violated federal laws by sending unsolicited fax advertisements. Interline denied any wrongdoing in the settlement.

Aside from the legal costs, Interline Chairman and CEO Michael Grebe said in a news release that it was a good quarter for the company.

“Overall, 2014 was a transformational year as we continued to make foundational improvements across our business in technology, supply chain programs, salesforce capacity and productivity, and most importantly, our customer value proposition. As indicated by our performance for the fourth quarter and the full year, these investments continue to drive strong financial results, and position us for continued growth,” he said.

St. Joe reports loss after pension charges

The St. Joe Co. on Thursday reported a fourth-quarter net loss of $11.1 million, or 12 cents a share, due mainly to costs associated with the termination of the company’s pension plan.

The real estate developer’s revenue fell 54 percent in the quarter to $15.7 million.

St. Joe said its fourth-quarter revenue consisted of $4.4 million in real estate sales, $10.1 million from resort, leisure and leasing operations and $1.2 million of timber sales.

FNFV starts ‘Dutch auction’ process

As the company promised the previous week during its quarterly conference call, Fidelity National Financial Inc. last week announced terms to buy back stock of Fidelity National Financial Ventures (FNFV) in a so-called “modified Dutch auction.”

FNFV is a tracking stock created by Fidelity to represent the non-real estate-related investments by the company.

After closing a string of deals, FNFV was sitting on $210 million in cash, company officials said, and they want to use a good chunk of that cash to buy back stock.

That helps shareholders by making the remaining shares outstanding more valuable.

Fidelity last week decided to buy back $185 million worth of stock. However, Fidelity never does a simple deal. Instead of a straightforward buyback at a predetermined price, Fidelity is using the Dutch auction process and offering to buy the FNFV shares at a price range of $14.30 to $15.40.

Stockholders who are interested in selling their shares pick a price within that range where they are willing to sell, and Fidelity will buy the FNFV shares at the lowest price that enables it to spend $185 million.

Analyst rates CSX at ‘overweight’

J.P. Morgan analyst Brian Ossenbeck issued an “overweight” rating on Jacksonville-based CSX Corp. last week as he began coverage of all the major North American railroads. Overall, he is cautious about rail stocks.

“We are launching coverage of the North America railroad sector with the view that consistent growth will be harder to find in 2015 given oil price uncertainty and disruptive foreign exchange volatility,” Ossenbeck said in his report.

“In fact, the last time the U.S. dollar appreciated as strongly as it has since mid-2014 was mid-2011, which preceded the last period of underperformance by the rails,” he said.

Ossenbeck cited lower exposure to metallurgical coal, intermodal potential and “new locomotives driving service and margins” for his overweight rating on CSX.

Genesee & Wyoming buys Freightliner Group

Genesee & Wyoming Inc. last week announced its biggest deal since its $1.4 billion purchase of Jacksonville-based RailAmerica Inc. in 2012, an acquisition that will greatly expand its foreign operations.

Connecticut-based Genesee will pay about $755 million to buy Freightliner Group Ltd., a London-based company with freight rail operations in the United Kingdom, Poland, Germany, the Netherlands and Australia.

The short-line railroad company said the deal is expected to add $785 million in revenue in Genesee’s first year of ownership. The company had total revenue of $1.6 billion in 2014.

Genesee said after the acquisition, the company will be generating about 77 percent of its annual operating income from North America, 12 percent from Australia and 11 percent from Europe.

Analyst downgrades Landstar

Deutsche Bank analyst Robert Salmon last week downgraded his rating on Jacksonville-based Landstar System Inc. from “buy” to “hold.”

Salmon said in his research note that the trucking company was trading at 20.9 times his earnings estimate of $3.43, but he thinks a price-to-earnings ratio of 20 is more appropriate.

“Although we like Landstar’s near-term setup given the recent strength in truck spot pricing and strong load growth quarter-to-date, we have grown incrementally more cautious about the flatbed demand outlook,” he said.

WJXT owner increases TV earnings

Graham Holdings Co. reported fourth-quarter revenue from its five television stations, including WJXT TV-4 in Jacksonville, grew 20 percent to $102.4 million and operating income rose 24 percent to $54.4 million.

The company said the increase was due to a $15.4 million increase in political advertising revenue and $4.6 million in increased retransmission revenue. That represents the fees stations get from cable and satellite television providers.

Graham is going through a major transformation that makes its overall earnings difficult to analyze.

In the past 16 months it has sold off its newspaper division, including The Washington Post, and also sold its Miami television station.

The company has also said it will spin off its cable television business into a separate company.

In addition to its five television stations, Graham still has its Kaplan education division.

However, the company announced a deal last month to sell off its 38 Kaplan Higher Education ground campuses.

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