Finance and Economic

Bank of America pledged Monday to increase its lending to small and medium sized businesses by $5 billion next year. The announcement immediately followed a White House meeting at which President Obama pressured the nation’s biggest bailed-out banks to start reinvesting in the rest of the economy.

"Bank of America is determined to do our part to help the economy grow next year and reduce unemployment by making every good loan we can make," CEO Ken Lewis said in a statement.

Lewis acknowledged the key role that small businesses play in creating jobs, calling them the "lifeblood" of the U.S. economy. "Our improved financial condition and our optimism about the economy will allow us to step up lending to support these clients," he said.

Bank of America (BAC, Fortune 500), based in Charlotte, N.C., is currently the second largest small business lender in the U.S., behind only Wells Fargo (WFC, Fortune 500), according to reports filed to the Treasury Department. Bank of America ended September with $41.9 billion in small business loans outstanding. That tally includes credit lines, credit cards, traditional loans and other financing.

But like most other big banks, Bank of America has pared back its lending through the recession. Since April, when top banks began submitting monthly reports on their small business lending, Bank of America has shaved its outstanding loan balance by 5%, or $2.2 billion.

Bank of America also cut back drastically this year on its lending through the Small Business Administration’s flagship loan program. SBA lending represents a small sliver of all small business lending, but it’s an important indicator of trends in the broader credit market.

Bank of America made 308 SBA-backed loans, totaling $17.6 million, in the SBA’s 2009 fiscal year, which ended in September. That’s a 90% drop from the bank’s year-earlier lending, when Bank of America made 3,354 loans, totaling $121.4 million.

Bank of America has struggled this year with big losses in its small business loan portfolio.

Last fall, as the Wall Street crisis turned critical in the wake of Lehman Brothers’ collapse, CEO Ken Lewis famously referred to the bank’s small business portfolio as a "damn disaster." In the first nine months of this year, Bank of America wrote off $2 guaranteed payday loans.2 billion in small business lending as bad debt, a default rate of almost 16%. By comparison, the bank’s charge-off rate on commercial loans to larger companies was just 1%.

But the bank’s executives have recently taken a more optimistic tone. "We think we are close to the peak in small businesses losses," CFO Joe Price told analysts in October.

Obama turns up the heat: The next set of Treasury reports are due later this week, with updates on October lending from the 22 biggest recipients of government bailout funds. In previous six months, those banks cut their small business lending by a cumulative total of $10.5 billion.

In his Monday meeting with the chief executives of 12 of the nation’s largest banks, President Obama emphasized the "extraordinary assistance" the financial industry received from taxpayers.

"We expect some results," Obama told the bankers. "I’m getting too many letters from small businesses who explain that they are credit worthy, and banks that they’ve had a long-term relationship with are still having problems giving them loans."

Banking industry representatives point to rising default rates, and say they’re having trouble finding creditworthy small business borrowers. Obama is unimpressed by that excuse.

"I urged these institutions here today to go back and take a third and fourth look about how they are operating when it comes to small business and medium-sized business lending," Obama said after his meeting.

All of the participating banks said they would be willing to institute a policy of "second looks" at loans that had thus far been rejected, White House Press Secretary Robert Gibbs said in a press briefing after Obama’s meeting.

So far, despite multiple attempts by Washington policymakers to revive the small business lending market, bank vaults have stayed slammed shut. The White House is trying yet again to change that.

"I think that the bully pulpit can be a powerful thing," Gibbs said. 

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Employers are ramping up bonus payments this year to help retain the best workers as the economy slowly improves, according to a consulting firm survey released Thursday.

Challenger, Gray & Christmas, Inc., an outplacement consultancy, said 64% of employers are planning to hand out holiday bonus checks this year, up from 54% last year.

The poll of 100 human resources executives also found that more companies are planning to give bigger bonus checks this year.

A full 8% of the employers surveyed plan to increase the amount they award this year, compared with none last year.

While employers remain reluctant to expand payrolls, there is growing concern that job market improvements in 2010 could bring an exodus of workers, according to John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

"Companies are not quite ready to ramp up hiring, but they are beginning to see the light at the end of the tunnel," Challenger said in a statement.

Last week, the U.S. Labor Department said employers cut 11,000 jobs in October, which was far below any of the job losses posted over the last 23 months. The nation’s jobless rate improved to 10% from a 26-year high of 10 Internet Payday loans.2% the month before.

Still, employers have cut 7.2 million jobs since the beginning of 2008. And most economists expect unemployment to remain high well into next year.

The dismal job market and the looming threat of layoffs has weighed on worker morale, Challenger said, and employers are hoping a bigger bonus will help keep their employees happy.

"Companies are also sending a message that we appreciate that this has been a tough year for everyone, and that the workers’ part in ensuring continued survival is recognized," he said.

The poll also found that most companies are tying the size of bonus checks to the performance of the company or individual. According to the survey, 63% of those awarding holiday bonuses are basing them on performance.

Despite the overall increase in the number of companies awarding bonuses, 16% of respondents said that, while they awarded bonuses in 2008, they did not plan to do so this year. That’s up from 13% last year.  

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One in six companies on the Standard & Poor’s 500 index may raise its next dividend payment as a rebound in the global economy boosts cash earnings.

AT&T Inc., Wal-Mart Stores Inc. and Raleigh, N.C.-based Progress Energy Inc. are among 79 companies in the index that may boost dividends, according to data compiled by Bloomberg. An 80th company, Ecolab Inc., the world’s largest maker of cleaning chemicals for hotels and restaurants, increased its payout Thursday. About 2 percent of the members may reduce their next payment.

“The economic recovery is in place,” said John Crawford, chief investment officer of Crawford Investment Counsel Inc. in Atlanta. “With that you will see some improvement in dividends in an overall sense, but they, too, will be coming along at a slower pace.”

Companies that have large market share, strong finances and pay above-average dividends are attractive for investors looking for safe returns as 10-year U.S. Treasuries yield less than 3.5 percent, said Crawford, who manages $2.5 billion in securities.

AT&T, based in Dallas, has a projected 12-month dividend yield of 6.1 percent, and Progress, the owner of utilities in three Southeast states, is expected to pay 6.2 percent.

Dividends tend to reflect the prior year’s profits and so won’t rebound for many U.S. companies until 2011, said Kevin Shacknofsky, who manages about $2 billion for Alpine Mutual Funds in Purchase, N.Y.

Some of the increases in dividends next year will be from companies that had cut payments or eliminated them this year or in 2008 because of “near-death experiences,” Shacknofsky said.

Thirty-three companies on the S&P 500 had lower dividend payments this year compared with 2008, Bloomberg data show.

Banks including Bank of America and Citigroup slashed dividends amid the deepest recession since the 1930s. Citigroup, which paid 32 cents a share, discontinued its dividend this year. Bank of America reduced its quarterly payment to 1 cent a share from as much as 64 cents last year.

“The biggest payers out there were the financials,” Shacknofsky said. “So in dollar terms, dividends are still weak.”

Companies are also beginning to use cash from rebounding profits to buy back stock. Chubb Corp., the insurer of commercial property and high-end homes, approved a repurchase program this week of 25 million shares.

General Dynamics Corp., the producer of Abrams battle tanks and Gulfstream business jets, this week announced plans to buy back as many as 10 million shares. The company is forecast by Bloomberg to raise its dividend in March by 2 cents to 40 cents a share.

Shacknofsky said companies should be raising dividends instead of buying back shares. “They should leave playing the market to investors, and they should rather give cash back as dividends,” he said.

Select companies such as Coca-Cola Co. and Wal-Mart have held up well during the recession and maintained dividend increases, Crawford said. Those companies are a safe haven during this period of low interest rates and slow recovery.

“That’s why AT&T and Progress and some of these names are attractive,” Crawford said. “You are just as safe, and you’re better off because you have higher yield.”

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In an aggressive effort to highlight their growth and health at a time of challenge for all publishers, The Business Journal Serving Greater Milwaukee and the 39 other papers in the American City Business Journals group this week took a novel approach to tell their story: All 40 business journals printed a four-page “wrap” around their papers filled with statistics and testimonials from readers in their local markets, detailing the niche their papers fill in each of their communities.

To see the wrapper, click here.

The testimonials highlighted ways that their papers have connected them to new sales, new jobs, and new ways to grow their businesses, and most recently, ways to tap government stimulus dollars. The national campaign cites statistics that include recent numbers for paid circulation, time spent reading business journals, and event attendance.

Collectively, the papers gained in paid circulation by 3.85 percent between 2005 and 2009, while daily newspapers in those same markets lost 18.81 percent in the same years, according to Audit Bureau of Circulations publisher statements. From 2007 to 2009 alone, the ACBJ circulation growth totaled 2.7 percent, according to ABC figures.

Nationally, ACBJ readers spend an average of 50 minutes reading their local business journal each week, according to media audits.

And through 2009, about 175,000 business leaders have attended business journal events across the country.

The campaign has linked the papers together under a single message that asks, “Who Do You Want To Meet Today?” That message centers on the way each paper connects business leaders with each other, via print, in person, at events, or online through the bizjournals pay day loans.com network of local business journal sites.

ACBJ newspapers reach 4 million readers each week with in-depth coverage of their business communities. ACBJ cites recent research as evidence of the sweet spot it occupies in the media: 83% of all business news is local. Further, the company attributes it commitment to exclusive, top-quality journalism as vital to its success.

“No one in the local business community is more connected, more aware, more in touch than business journals are,” says ACBJ CEO Whitney Shaw, in a Q&A offered in each paper’s four-page wrap. “We're giving vital, up to the minute information to corporate executives, small business owners, community leaders, to virtually anybody who has a stake in the economy. And we're giving that information with a depth they can't get anywhere else.”

ACBJ is a unit of Advance Publications Inc., which also operates Conde Nast Magazines, Parade magazine, Fairchild Publications, the Golf Digest companies, Newhouse Newspapers and cable television interests.

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The Treasury Department is expected to meet with lenders on Monday to press them to do more to rework troubled home mortgage loans, a source familiar with the Treasury’s thinking said.

Herbert Allison, the Treasury Department’s assistant secretary for financial stability, is expected to meet with the mortgage servicers, said the source who requested anonymity because the meeting has not been publicly announced.

The New York Times in its Sunday edition quoted Michael Barr, the Treasury Department’s assistant secretary for financial institutions, as expressing dissatisfaction with lenders over the slow pace at which they are amending loan agreements to help borrowers make their monthly payments.

A Treasury spokeswoman said on Saturday the department was taking additional steps to enhance mortgage servicer transparency and accountability as part of a broader focus on maximizing conversion rates to permanent modifications.

The Treasury spokeswoman said that that could include new resources for borrowers and said the department will announce new measures on Monday.

(Reporting by Rachelle Younglai, editing by Matthew Lewis)

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The Toronto stock market closed slightly higher Friday as some investors speculated Thursday’s global sell-off in equities triggered by Dubai’s attempt to delay debt repayments was overdone.

The S&P/TSX composite index advanced 27.61 points to 11,464.41 after tumbling 200 points Thursday in the wake of an announcement that Dubai World, a government investment company, had asked creditors to postpone its forthcoming payments on $60 billion (U.S.) in debt until May.

Thursday’s loss was responsible for a TSX loss of 114.92 points, or 1 per cent, for the week.

New York markets tumbled Friday, catching up with the losses racked up by other global markets after being closed Thursday for the U.S. Thanksgiving holiday.

The Dow Jones industrial average fell 154.48 points to 10,309.92 at the end of a shortened session. The blue-chip index was flat for the week, up a slight eight points.

The Nasdaq composite index lost 37.61 points to 2,138.44. The S&P 500 fell 23.36 points to 1,087.27.

The Dubai announcement Wednesday stoked fears of a potential default and contagion around the global financial system, particularly in emerging markets. But a day later, investors were taking a harder look at what the Dubai debt crisis means.

Finance Minister Jim Flaherty said there wasn’t any reason for “significant concern” about spillover effects from Dubai’s attempt to delay debt repayments and “any effects would be quite mild on the Canadian financial system.”

Blair Falconer, portfolio manager at HSBC Securities Canada, observed that investors felt better Friday knowing that Canadian financials have limited or no exposure to the Dubai debt.

The Canadian dollar fell 0.09 of a cent to 94.21 cents after a flight to the greenback had sent the loonie down 1.35 cents on Thursday.

The financial sector led gainers, up 0.8 per cent. The industrials sector ran ahead 0.91 per cent.

Commodities were also weaker, but well off early lows, with the January crude contract on the New York Mercantile Exchange falling $1.91 to $76.05 a barrel. The energy sector was off 0.12 per cent.

The gold sector was off 1.83 per cent as bullion prices also gave up ground with the December gold contract on the Nymex down $12.80 to $1,174.20 an ounce.

The Canadian Press

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The St. Louis chapter of the Public Relations Society of America is celebrating its 60th anniversary. It was founded in 1949 by 14 local public relations professionals as the organization’s seventh chapter.

The society now has 110 professional chapters in 10 districts nationwide advance payday loans.

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New orders for long-lasting U.S. manufactured goods fell unexpectedly in October, according to government data on Wednesday that reinforced views of a gradual economic recovery from recession.

The Commerce Department said durable goods orders dropped 0.6 percent after rising by an upwardly revised 2.0 percent in September. New orders in September were previously reported to have increased 1.4 percent.

Analysts polled by Reuters forecast orders rising 0 cash advance loan no fax.5 percent in October. Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

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Home prices in 20 U.S. cities probably fell in September at the slowest pace in almost two years, underscoring improvement in real estate that’s helping the economy emerge from recession, economists said ahead of a private report today.

The S&P/Case-Shiller home-price index declined 9.1 percent from September 2008 after an 11.3 percent year-over-year decrease a month earlier, according to the median forecast in a Bloomberg News survey. Separate reports may show consumer confidence slipped this month on weaker employment prospects, while third-quarter economic growth was slower than first estimated.

Rising home sales, aided by government programs and a decline in mortgage rates this year, have helped stem the slump in property values that precipitated the worst recession since the 1930s. Home buying and consumer spending may still be hindered by higher unemployment.

“It looks like some kind of corner has been turned in the housing market,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio. “It will take time for more people to line up. That said, I do think housing has turned.”

The home-price report is scheduled to be released at 9 a.m. in New York. Estimates ranged from declines of 8.3 percent to 10.3 percent.

The Conference Board in New York will report on consumer confidence at 10 a.m. The figures may show the index fell to 47.5 in November from 47.7, according to the median estimate in a Bloomberg News survey.

GDP Revision

The Commerce Department will release its first revision to third-quarter gross domestic product at 8:30 a.m. in Washington. The report may show growth of 2.8 percent at an annual rate, slower than the 3.5 percent pace reported Oct. 29, as the trade deficit widened and inventories were leaner.

On a monthly basis, home prices have risen in the past three months, according to S&P/Case-Shiller, signaling some stability in the housing market.

Existing home sales in October rose to a 6.1 million annual rate, the highest level since February 2007, the National Association of Realtors said yesterday. The sales increase is helping reduce housing inventory. At the current sales pace, it would take 7 months to sell the 3.57 million homes on the market. The months’ supply is the lowest since February 2007.

The Standard & Poor’s Supercomposite Homebuilding Index has risen almost 18 percent since the beginning of July as the outlook on housing brightened. It rose 0.8 percent yesterday.

Tax Credit

Housing has been among the industries helping stabilize the U.S. economy. To ensure the recovery in housing continues, President Barack Obama and Congress this month extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Concern over the looming expiration of the credit earlier this month weighed on builder sentiment and may have been the reason the Mortgage Bankers Association’s purchase applications index fell to a 12-year low in the week ended Nov. 13. The bankers group is scheduled to release last week’s applications report tomorrow.

While the erosion of house prices is starting to end, it will take “a considerable amount of time” for the market to recover fully, Federal Reserve Bank of Cleveland President Sandra Pianalto said in a speech Nov. 17.

“Though we have seen some signs that the worst may be over, the housing industry is not out of the woods yet,” Pianalto said at a housing conference sponsored by the Ohio Housing Finance Agency and Ohio Capital Corporation for Housing. “Nor is the broader economy.”

Unemployment, Foreclosures

Rising unemployment and foreclosures remain risks for the housing market and the economy. Foreclosures on prime mortgages and home loans insured by the Federal Housing Administration rose to 30-year highs in the third quarter, the Mortgage Bankers Association said Nov. 19.

The unemployment rate increased to a 26-year high of 10.2 percent in October, which may lead to more mortgage defaults and an increase in foreclosed properties that would push prices lower.

D.R. Horton Inc., the second-largest U.S. homebuilder, on Nov. 20 reported a fourth-quarter loss that exceeded analysts’ forecasts and said the housing outlook remains difficult.

“The thing that drives our business the most is job creation,” Chief Executive Officer Donald Tomnitz said on an earnings call for analysts. “If we look at the macro economic environment, it’s not good for us.”

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New Zealand’s annual immigration growth accelerated to the highest in more than five years in October, adding to signs consumer spending and demand for housing may speed the economy’s recovery from a recession.

The number of permanent migrant arrivals exceeded departures by 18,560 in the year ended Oct. 31, Statistics New Zealand said in a report released today in Wellington. That’s up from 17,043 in the 12 months through September and is the most since the period ended August 2004.

Reserve Bank Governor Alan Bollard last month said rising house prices and a gradual pick-up in household spending were buoying the economy, which grew for the first time in six quarters in the three months to June. Retail spending rose in the third quarter as consumer confidence increased to a 22-month high.

Bollard said on Oct. 29 that he is unlikely to raise the official cash rate from a record-low 2.5 percent until the second half of 2010 because the recovery requires more stimulus. Economists say the pace of the recovery may prompt him to raise interest rates as early as the first quarter.

The increase in net immigration has been boosted by fewer New Zealanders heading overseas. About 15,600 fewer citizens left in the year ended Oct. 31 compared with the year earlier, the statistics agency said.

Departures Drop

Permanent departures fell 18 percent in the year ended Oct fast payday loans. 31, today’s report showed. Arrivals fell 0.7 percent.

Analysts monitor a monthly, seasonally adjusted series to determine the pace of immigration. In October, a net 2,120 migrants arrived compared with 1,860 in September.

Tourist arrivals declined in October, which may slow spending in an industry that makes up about 10 percent of the New Zealand economy.

Short-term visitor arrivals fell 0.7 percent, seasonally adjusted, from September, the agency said.

From a year earlier, unadjusted arrivals increased 7.7 percent, buoyed by visitors from Australia.

The global recession has cut international air travel, reducing tourist arrivals from Asia and Europe. The outbreak of swine flu also made people reluctant to travel earlier in 2009.

Arrivals in the 12 months ended Oct. 31 fell 1 percent from a year earlier, led by a 38 percent plunge in tourists from South Korea and large declines in visitors from Japan, China, the U.K. and the U.S.

Annual arrivals from Australia rose 9.7 percent after the government targeted that nation with extra marketing. Excluding Australia, visitors slumped 7.9 percent.

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