Finance Blog number 1

First Citizens BancShares is asking the federal government for permission to merge its banking subsidiaries.

First Citizens (NASDAQ:FCNCA), based in Raleigh, is the parent of both First Citizens Bank and IronStone Bank. The company says it wants IronStone to become part of First Citizens Bank.

IronStone is a federally chartered thrift with branches in Georgia, Florida, Texas, New Mexico, Arizona, California, Oregon, Washington, Colorado, Oklahoma, Missouri and Kansas. First Citizens is chartered as a commercial bank under North Carolina law and has branches in North Carolina, Maryland, Virginia, Tennessee and West Virginia.

“The merger of our two banking subsidiaries, known for experienced associates and exceptional customer service and products, strengthens our national presence under a single identity in many of the nation’s top growth markets,” Lewis Holding, chairman of the board, says in a statement creditreport. “The combined bank will provide better growth opportunities to build our company for the future.”

The bank expects approval of the merger in the first quarter.

Overall, First Citizens BancShares has $16.7 billion in assets and 401 branches around the country.

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The number of e-mails containing attack attachments jumped eight-fold in the third quarter over the same period last year, according to a report released Monday by IT security firm Sophos Inc.

The research by Burlington, Mass.-based Sophos found one in every 416 e-mail messages contained an attachment that could harm one’s computer, up from one in every 3,333 messages last year.

Sophos officials say PCs running the Windows operating system are most at risk for infection.

“For Apple Mac and Unix lovers, these major spam attacks just mean a clogged-up inbox, not an infected operating system. But organized criminals are causing havoc for Windows users in the hunt for cold hard cash,” Graham Cluley, senior technology consultant at Sophos, says in a statement one hour loan. “Too many people are clicking without thinking, exposing themselves to hackers who are hell-bent on gaining access to confidential information and raiding bank accounts. The advice is simple: you should never open unsolicited attachments, however tempting they may appear.”

The United States remains the country that produces the most spam with some 18.9 percent of all unwarranted messages, followed by Russia and Turkey each producing 8 percent.

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The Bank of Korea slashed interest rates by a record at an emergency board meeting in an attempt to bolster markets as the nation faces its biggest crisis since requiring an International Monetary Fund bailout 10 years ago.

Governor Lee Seong Tae cut the seven-day repurchase rate 75 basis points to 4.25 percent, the central bank said in a statement in Seoul today. The bank also broadened the type of bonds it will accept as collateral in money-market operations, giving lenders access to more funds.

The Kospi stock index slumped on concern the rate cut won't prevent the economy from slowing and could add more pressure on the weakening won. President Lee Myung Bak, who met Finance Minister Kang Man Soo and the central bank's Lee yesterday, said today the country is far from experiencing a repeat of the 1997 financial crisis when it needed a $57 billion loan from the IMF.

“The Korean authorities felt compelled to take dramatic action in the face of global turmoil,'' said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “The rate cut might provide a brief boost to the financial market but the general panic environment prevails.''

The central bank also cut rates on special loans for small- and medium-sized companies to 2.5 percent from 3.25 percent.

South Korea's Kospi stock index fell 1.4 percent to 925.41 at 1:35 p.m. in Seoul, after earlier rising as much as 3 percent. The index plummeted 20 percent last week in its worst week since 1997. The won sank to 1,440 against the dollar from 1,424, extending this year's drop to 36 percent.

Japan's Measures

“What we urgently need is stabilization of the currency and a drop in risk premiums paid to investors when local companies raise funds overseas,'' said Song Seong Yeob, a fund manager at KB Asset Management Co. in Seoul. “The interest rate cut doesn't directly cover such issues. Rather, it will trigger a further decline of the won's value against the dollar.''

The Bank of Korea said the “large cut was called for in order to guard securely against the possibility of a sharp contraction of real economic activity,''

Governor Lee hinted at further rate cuts, saying the bank will “maintain a stance to pay more attention'' to the risk of slower economic growth internet payday loans. Inflation is likely to ease on weak domestic demand and falling oil prices, he said.

“The Bank of Korea will likely cut rates again at their monthly rate-setting meeting next week,'' Chun Chong Woo, an economist at SC First Bank Korea Ltd. in Seoul. “The Bank of Korea seems determined to stop the market panic from the U.S. financial crisis spreading.''

Currency Rules

The bank said today it would also ease rules to make it easier for exporters to borrow dollars. Also, small businesses that borrowed mostly in Japanese yen can extend their foreign- currency loans for another year, it said. The won has fallen 47 percent against the yen this year.

The bank last week raised the limit on so-called total loans to 9 trillion won ($6.2 billion) from 6.5 trillion won. Total loans are offered to commercial banks at a rate lower than the benchmark rate, with the funds earmarked for small and medium- sized businesses.

President Lee held the emergency meeting on returning from a Beijing gathering of Asian and European leaders at which they called for an overhaul of World War II-era banking rules. It was the first meeting of Asian and European Union chiefs since calls for coordinated action mounted amid bank failures and plunging stock prices that began in September.

South Korea last week pledged $130 billion to support lenders struggling to obtain foreign funds and said it will spend as much as 8 trillion won to rescue builders struggling with unsold homes. The central bank said Oct. 24 it will inject 2 trillion won into the financial system through repurchase- agreement operations.

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NorCal Community Bancorp, the parent of Bank of Alameda, saw third-quarter earnings fall 88 percent on higher loan-loss provisions.

The bank’s net income slipped to $102,000 from $885,000 in the third quarter of 2007. Earnings per diluted share were down to 3 cents from 26 cents a year earlier.

Net interest income was down 16 percent to $3.3 million from $3.9 million last year. Noninterest income rose 7 percent to $202,000, from $188,000.

NorCal (OTCBB: NCLC) increased its allowance for loan losses, or its reserves against which loans deemed uncollectible can be charged off, to $3.95 million, from $3 million a year earlier.

“It is unclear when this economic downturn will bottom out,” Troy Williams, the company’s chief credit officer, said in its earnings release absolutely free credit report. “Management believes it critical to build its reserves to manage through this period. We believe that we have exercised sound judgment in our approach to analyzing the potential risk in our current loan portfolio.”

At the quarter’s end, NorCal’s total assets stood at $ 279.2 million, up from $264.7 million a year earlier.

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LinkedIn Corp. has raised $22.7 million in funding from Goldman Sachs, The McGraw-Hill Cos., and SAP Ventures, along with a reinvestment by Bessemer Venture Partners, the company said Thursday.

The new investment is a follow-on from a Series D round of funding in June that raised $53 million, led by Bain Capital Ventures.

LinkedIn says its valuation for the round was just over $1 billion.

The Mountain View-based business social networking service says more than 30 million professionals have joined guaranteed cash advance. LinkedIn backers include Sequoia Capital, Greylock Partners, the European Founders Fund, Bessemer Venture Partners, Bain Capital Ventures and now Goldman Sachs, The McGraw-Hill Co. and SAP Ventures.

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Constellation Energy Group unveiled Tuesday changes in its top management, a month after the Baltimore energy giant agreed to acquired in a $4.7 billion deal.

Jonathan Thayer will become the chief financial officer, replacing John R. Collins, who stepped down from the post, Constellation said. Charles A. Berardesco, 50, will become the new general counsel for Constellation and replace Irving Yoskowitz.

Iowa-based MidAmerican Energy Holdings Co., a subsidiary of billionaire Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A., BRK.B), said Sept. 18 it would acquire Constellation (NYSE: CEG).

Thayer, 37, had served as the vice president and managing director for corporate strategy and development for Constellation. He was appointed treasurer in August.

Collins, 51, will take an advisory role on the Constellation and MidAmerican merger and will also remain as chairman of the board of directors for Constellation Energy Partners LLC, an affiliate of Constellation Energy Group that’s developing and acquiring oil and natural gas properties savings account payday advance.

Collins was appointed chief financial officer of Constellation in May 2007.

Berardesco had served as vice president, deputy general counsel, chief compliance officer and corporate secretary for Constellation. Yoskowitz, who joined Constellation as general counsel in 2005, will retire.

The proposed union between Constellation and MidAmerican could take nearly a year to close and would need the approval of federal and state regulators and shareholders.

Constellation filed its application for the merger with the Federal Energy Regulatory Commission Oct. 15 and filed its application with the Maryland Public Service Commission Oct. 17. The PSC plans to hold a pre-hearing conference on the merger filing Nov. 3.

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South Korea's won and stocks rose after the government announced Asia's biggest financial rescue package to open access to overseas credit markets and allay concern of a recession.

The won climbed 2.7 percent to 1,299 per dollar at 1:41 p.m. in Seoul. The currency has risen 6 percent since Oct. 16, when it suffered its biggest one-day decline since South Korea required a bailout from the International Monetary Fund in 1997. The benchmark Kospi stock index gained 1.3 percent.

South Korea, struggling with Asia's worst-performing currency and a stock market that has lost 37 percent this year, guaranteed $100 billion of lenders' foreign-currency debt and said it will provide $30 billion in dollars to banks. The plan, equal to about 14 percent of gross domestic product, was mapped out in an emergency meeting after Standard & Poor's said the nation's banks may have difficulty securing overseas funds.

“We can expect to see a significant stabilization of the financial markets,'' said Kim Young Il, who oversees the equivalent of $6.5 billion as head of equities at Korea Investment Trust Management Co. in Seoul. “But it will take time for the real economy to improve, and that means investor sentiment won't immediately show a turn for the better.''

The currency gained as much as 8 percent before trimming its advance, according to Seoul Money Brokerage Services Ltd. The won plunged 9.7 percent Oct. 16 after S&P said there's a greater than 50 percent chance banks won't be able to find foreign funding, threatening their ability to repay short-term debt.

Kospi Gains

The benchmark Kospi stock index gained 17.52 to 1,197.9, led by exporters Samsung Electronics Co. and Posco, Asia's third-biggest steelmaker. Hana Financial Group Inc., which controls South Korea's fourth-largest bank, rose 9.1 percent.

Some banks and brokerages fell. Mirae Asset Securities Co., the brokerage affiliate of the nation's biggest asset manager, fell the daily 15 percent limit. JPMorgan Chase & Co. said the Government's plan to provide tax benefits to investors who hold shares for more than three years isn't enough to attract money to the market.

Industrial Bank of Korea, the nation's largest lender to small and medium-sized companies, slumped 6.2 percent on concern the government's plan to inject capital into the company may dilute the value of its stock.

Bank of Korea Governor Lee Seong Tae today told lawmakers the worsening economic outlook and market turmoil had made setting interest-rate policy difficult and economic growth this year will be “low.'' Lee this month cut the benchmark interest rate for the first time in four years, to 5 percent.

`Solid' Fundamentals

South Korea, hampered by a record current-account deficit and shrinking currency reserves, joins Europe, Australia and Hong Kong in providing banks with state backing to ease a global lending drought. Korean banks get as much as 12 percent of their funding from international markets, according to Moody's Investors Service cash advance loans.

The government will guarantee local banks' new foreign debt taken out between today and June 30, 2009. The protection is valid for three years. To boost dollar liquidity, the government will provide the banking industry with $30 billion from its foreign-exchange reserves.

The support package should boost confidence in the banking system and return attention to “Korea's solid macroeconomic fundamentals,'' the IMF said in a statement.

Hana Financial climbed 9.1 percent. Shinhan Financial Group Co., which operates the nation's third-largest bank, rose 2.1 percent.

Fundamentals 'Sound'

“They did the best they can do to contain the spread of the crisis on their home turf,'' said Oh Suk Tae, an economist at Citigroup Inc. in Seoul. “But the measures could fizzle out if banks can't borrow from abroad because the external environment isn't making much headway.''

The won should rebound as falling oil prices cut the nation's import bill and the government taps its $239 billion of foreign-exchange reserves to boost dollar supplies, said Kwon Goohoon, an economist with Goldman Sachs in Seoul.

“Korea isn't facing an issue of solvency,'' Kwon said. “Its fundamentals are sound and reserves are not a problem.''

The won was Asia's best-performing currency in the four years ended Oct. 31, 2007, soaring 31 percent to a decade high of 899.60 per dollar. That encouraged companies including Ulsan- based Hyundai Heavy and Daewoo Shipbuilding & Marine Engineering Co. of Seoul, the world's biggest and third-largest shipyards, to buy contracts that lock in an exchange rate or profit from a drop in the dollar.

Hedges Gone Awry

South Korea's banks were the main sellers of the hedging contracts. They borrowed dollars and converted them to won because they also wanted to fix a price for the U.S. currency to limit their exposure to its declines. That contributed to an almost tripling of the nation's external debt due in a year to $176 billion between the end of 2005 and June 30 this year.

Short-term debt is equal to 76 percent of Korea's currency reserves, which is “the most vulnerable in Asia,'' Brown Brothers Harriman & Co.'s strategist Win Thin wrote in a note to clients. The ratio topped 250 percent during the 1997-98 crisis.

Government bonds rose with the yield on the 5.75 percent bond maturing in October 2008 falling 9 basis points to 5.50 percent.

Investors bid for only 80 percent of the 800 billion won of debt offered in a 10-year bond auction. South Korea sold 543 billion won ($414 million) of the bonds at an average yield of 5.50 percent, the finance ministry said today, compared with a Sept. 16 auction that attracted bids for 1.7 times the amount on offer.

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A second round of mediated talks between The Boeing Co. and the International Association of Machinists and Aerospace Workers ended Monday with no settlement and no new talks scheduled.

Boeing negotiator Doug Kight expressed disappointment with the failure of the negotiations to resolve the strike by the Boeing workers, which has halted aircraft production and kept 27,000 employees off the production lines in Washington, Oregon and Kansas since Sept. 6.

“We want to resolve this strike so employees can return to work, but we cannot sacrifice our ability to continuously improve productivity and our long-term competitiveness for an agreement,” Kight said, in a statement. “Given current economic conditions, it is now more important than ever that we retain the ability to respond to a dynamic, uncertain environment.”

Boeing CEO Frank McNerney, in an Oct. 6 internal memo, expressed Boeing’s sense that the company is surrounded by rising competition and can’t surrender its competitive edge to resolve the strike. The memo was available on the Leeham Co. LLC website.

In the memo, McNerney cited the competition from China’s new 90-seat ARJ21, along with China’s aspiration to build larger aircraft bad credit payday advance.

He also pointed out that Airbus has just opened a Chinese factory to assemble its A320 model, which competes directly against Boeing’s 737. Airbus also is expected to assemble commercial aircraft at its proposed Alabama plant if the company succeeds in building jet tankers there, NcNerney’s memo said.

“The ongoing turmoil in the financial markets provides a timely reminder of why it would be gravely unwise for Boeing to agree to terms in any contract that would fundamentally restrict our ability to manage our business,” he said.

He went on to draw parallels between Boeing’s situation and that of U.S. auto makers.

“U.S. auto companies, for one, all but fatally wounded themselves years ago by promising unsustainable wage and benefit levels, and by agreeing to contract conditions (including job guarantees) that limited their flexibility to run their businesses in the face of intense global competition,” he said.

Machinists have cited Boeing’s record profits as a reason why they should be able to win salary increases without losing benefits.

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German Finance Minister Peer Steinbrueck said Europe's biggest economy will struggle to grow next year amid the fallout from the financial crisis.

“We'll be entering an extremely difficult year in 2009,'' Steinbrueck told reporters in Washington today after a meeting of Group of Seven finance ministers and central bank governors. “The crisis is already spilling over into the real economy.''

Chancellor Angela Merkel's government will accept tax revenue shortfalls and higher spending for unemployment benefits to cushion the slowdown, and will resist cutting spending, Steinbrueck said. After posting a small budget surplus in 2008, the slowdown will squeeze public coffers next year, he said.

The comments suggest Steinbrueck may have to abandon his goal of eliminating by 2011 the federal budget deficit, the only component of Germany's overall budget that's still in the red. Putting public finances in order has been the hallmark of Merkel's ruling coalition, which faces a federal election in 2009.

Still, unlike other economies, Germany is facing only a worsening of financing conditions and not a credit crunch, Steinbrueck said. There's been no property-market bubble that might aggravate the economic downturn and the labor market remains solid, he said.

German unemployment fell more than economists forecast in September as machine makers hired people to work off an order backlog, the Federal Labor Agency said Sept. 30. Consumer confidence unexpectedly rose for the first time in five months after falling fuel prices left people with more to spend on food and clothing, GfK AG said Sept. 25.

The Sueddeutsche Zeitung newspaper today reported the government will cut its 2009 economic growth forecast to zero or slightly above zero next week. Economy Minister Michael Glos will present new forecasts for 2008 and 2009 on Oct. 16.

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Wells Fargo has emerged victorious in its weeklong tug-of-war with Citigroup over Wachovia and will proceed with its $15 billion purchase of the troubled bank.

The Wells-Wachovia combination creates the nation’s third banking powerhouse, with about 10,700 branches and 12,200 ATMs stretching from coast-to-coast. Wells Fargo and its ubiquitous stagecoach will now roll from New York City to Miami in the East, through Texas and into the West with branches from San Diego to Seattle.

The combined company, to be called Wells Fargo and based in San Francisco, will have $1.42 trillion in assets, $787 billion in deposits and 280,000 employees.

Wells Chairman Dick Kovacevich, CEO John Stumpf and their team will have their hands full in the days and weeks ahead, handling triage among Wachovia employees who became increasingly nervous about their futures as Wells and Citigroup fought over the Charlotte bank.

Wells (NYSE: WFC) is expected to avoid layoffs, if possible, in the largest acquisition in the company’s 156-year history. Even in making last year’s in-market, Bay Area acquisition of Greater Bay Bancorp, Wells kept the vast majority of the acquired bank’s employees (faxless payday loan).

“We know this has been a time of great uncertainty for Wachovia (NYSE: WB) team members and many of its customers as their company has gone through a very painful and challenging time of unprecedented change in our industry,” Wells Fargo’s Stumpf said. “We want to assure them we’ll do everything we can to make the integration of our operations as smooth as possible. An important measure of success for this integration will be our ability to retain as many of the talented Wachovia team members as possible.”

Although Wells is acquiring Wachovia, the San Francisco bank is likely to find a few gems at the Charlotte bank to extend into Wells Fargo territory beyond Wachovia’s huge presence in the East. Wells Chairman Dick Kovacevich told analysts about a year ago that Wells Fargo’s customer service in retail banking had room for improvement. Wachovia has consistently won high marks in that department. Wachovia’s Way2Save program is also a candidate for going national under the Wells Fargo banner.

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