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Basch Report
Jax Daily Record Thursday, Oct. 4, 201805:20 AM EST

The Basch Report: Jacksonville stocks underperform market

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Landstar, CSX showed biggest third-quarter gains, while Ameris had the largest decline.
by: Mark Basch Contributing Writer

During a strong third quarter for the overall market, stocks of Jacksonville-based companies generally underperformed.

The S&P 500 index rose 7.2 percent in the three-month period, its best quarterly gain since the fourth quarter of 2013, and the Nasdaq Composite index rose 7.1 percent, its best performance since the first quarter of 2017, according to CNBC.

The Dow Jones industrial average beat both of those indexes, rising 9.3 percent.

However, only 10 stocks of Jacksonville area companies finished with gains in the third quarter while 11 declined.

The only Jacksonville-based companies (among stocks trading above $1) to better the Dow were the two major transportation companies, CSX Corp. and Landstar System Inc.

Both companies had strong second-quarter earnings reports in July, which sent their stocks to record highs. CSX ended the third quarter up 16.1 percent and Landstar rose 11.7 percent.

At the other end of the spectrum was Ameris Bancorp, which dropped 14.3 percent after reporting lower than expected earnings. Ameris officially is based in Moultrie, Georgia, but its executive offices are in Jacksonville.

Timber outlook hurts Rayonier

Rayonier Inc. had the second biggest decline behind Ameris, down 12.6 percent in the third quarter.

Most of the recent local attention for Rayonier focuses on its real estate development business and its Wildlight community in Nassau County, where the company moved its headquarters last year.

However, Rayonier’s biggest business is timber, and timber company stocks have been down recently.

“The more muted outlook for housing, coupled with the acknowledgment that southern log prices will be lower for longer, and the inevitable relapse in lumber and panel prices has put the timber related equities under pressure for the past six months,” D.A. Davidson analyst Steven Chercover said in a research note Monday after meeting with Rayonier and several other timber companies.

“There could be more weakness to come, but absent a meltdown in housing – which we don’t foresee – this is exactly what commodity investors wanting to get involved in the space need. A pause that refreshes,” he said.

Kleffner retiring as Stein Mart CFO

Stein Mart Inc. said Monday that Chief Financial Officer Gregory Kleffner will retire from the company next spring.

Kleffner, 63, has served as CFO of the Jacksonville-based fashion retailer since August 2009.

Stein Mart has retained an executive search firm to help with an external search for a successor. Kleffner will continue to serve as CFO until a successor is brought in and then will serve the company in an advisory capacity during the transition.

Kleffner announced his retirement two weeks after Stein Mart reached new credit agreements with two lenders. It also followed an encouraging second-quarter earnings report that included the company’s first increase in comparable-store sales (sales at stores open for more than one year) since the spring of 2015.

Kleffner said in a news release that he had promised Stein Mart’s top executives he “would not retire before our financial condition stabilized and we had a new credit agreement in place. With these accomplished, and the right team and strategies in place to continue improving our results, the timing is right.”

JP Morgan Chase & Co. plans to open 35 more branches in Florida in the next three years, including Downtown in the Barnett Building.

JP Morgan Chase adding Florida branches

A week after Wells Fargo & Co. and Ameris Bancorp announced plans to downsize their branch networks, JP Morgan Chase & Co. said it plans to add more branches in Florida.

The company, which operates its branches under the Chase brand, has more than 400 branches in Florida, including 22 in the Jacksonville market, and plans to open 35 more over the next three years.

Chase will open one more Jacksonville branch in Durbin Park by the end of this year and does plan to open more in the market over the next three years, spokesman Michael Fusco said.

However, it’s too soon to say how many more offices Chase will open in Northeast Florida, Fusco said.

Many banks are closing brick and mortar branches because customers are finding other ways to handle their transactions remotely. However, Chase is taking a different approach.

“We are continuing to fill in gaps across the state so we can provide even more convenience for our customers,” George Acevedo, south divisional director for Chase consumer banking and wealth management, said in a news release.

JP Morgan Chase entered the Florida banking market when it acquired the failed Washington Mutual Inc. in 2008.

Washington Mutual had a large mortgage banking operation in Jacksonville that employed about 2,000 but had just one banking office in the city, located at its mortgage office mainly to serve its employees.

Five years later, Chase decided to expand its presence in the Jacksonville banking market and opened its first three branches (besides the former Washington Mutual office) in October 2013.

Deutsche Bank denies merger rumors

Merger rumors have been swirling around another global financial institution that has been growing its Jacksonville presence, Deutsche Bank.

However, Deutsche Bank officials are dismissing those reports as fake news.

News reports in Germany last week suggested Deutsche Bank could merge with either Switzerland-based UBS or Germany-based Commerzbank.

However, Reuters news service reported Deutsche Bank Chief Financial Officer James von Moltke called those reports “fictions of the press.”

Deutsche Bank employs about 2,000 people in Jacksonville. CEO Christian Sewing announced plans in April to cut back the Germany-based bank’s U.S. activities, but the company has not said if that will affect its Jacksonville operations.

FIS ends Brazil joint venture

Fidelity National Information Services Inc., or FIS, said Monday it is unwinding a joint venture with a Brazilian bank that provides financial services technology to clients in Brazil.

Jacksonville-based FIS owns 51 percent of the joint venture, with Banco Bradesco owning 49 percent.

FIS, which had $9.1 billion in revenue last year, said dissolution of the joint venture will reduce revenue by about $200 million. The company does not expect it to impact adjusted earnings per share.

FIS said the move gives the company more flexibility to grow its business in Brazil, as it will be able to compete independently in the market.

As it dissolves the joint venture, FIS signed a long-term agreement to continue providing services to Banco Bradesco.

Ocwen, PHH complete merger

Two struggling mortgage banking companies that had big operations in Jacksonville a few years ago are scheduled to complete their merger Thursday.

Ocwen Financial Corp. is acquiring PHH Corp. for $360 million in cash in a deal announced in February.

Ocwen entered Jacksonville in 2012 by acquiring Homeward Residential Inc. but closed Homeward’s Jacksonville office the next year, putting 370 people out of work.

PHH employed more than 1,000 people in Jacksonville five years ago but began downsizing as losses piled up. It sold most of its remaining Jacksonville operations to LenderLive Network LLC last year.

LenderLive in August agreed to a deal that will sell its Jacksonville operations, with 220 employees, to Computershare Loan Services.

The Ocwen-PHH merger needed approval from several regulatory agencies and according to a Securities and Exchange Commission filing, the New York Department of Financial Services put several restrictions on management of PHH following the merger. PHH will operate as a subsidiary of Ocwen.

“Ocwen must ensure that PHH has competent executive management in place and sufficient staff and resources with appropriate skills and expertise,” the New York regulator said, according to the filing.

Also, “with limited exceptions, Ocwen may not appoint anyone to serve on the board of directors of PHH or to a senior management position at PHH without the prior written approval of the NY DFS for three years from the date of closing.”

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