Monthly Archives: February 2017

During a meeting with big investors and analysts in New York City earlier this month, TCF Financial CEO Craig Dahl and his chief financial officer were peppered with questions about a national auto-lending portfolio that underperformed in the fourth quarter and that amounts to less than a sixth of TCF's revenue mix.

At one point, CFO Brian Maas asked if they wanted to discuss the 85 percent of business that performed well.

"The auto business is an issue," said Christopher McGratty of Keefe, Bruyette & Woods in New York last week. "It has been a growing source of their business. TCF also has the [January] lawsuit brought by the Consumer Financial Protection Bureau. [Investors] are uncertain about their future. And that's why the stock hasn't worked.

"Their old business model got upended. And Craig was instrumental in growing new businesses the last few years. What's challenging is that some of these markets can move quickly against them."

Dahl, 62, a veteran commercial lender and executive at TCF since 1998, acknowledges there is work to do.

TCF's stock price has traded mostly between $12 and $18 per share since the Great Recession of 2007-08. That's far short of the $20 to $28 range of the several years before when TCF was considered acquisition bait by larger banks as it raked in profits from fees and overdraft charges that were limited by regulators after the recession.

Former CEO Bill Cooper, who died of cancer earlier this month at 73, was the leader at TCF since arriving in 1985. He pulled off a widely admired turnaround of the failing S&L, turning it into Minnesota's third largest commercial bank. Dahl succeeded Cooper as CEO on Jan. 1, 2016 as TCF's performance improved.

Last year, TCF posted a 6.6 percent rise in earnings to $212 million on a nearly 5 percent increase in revenue to $1.4 billion. As revenue grew in recent years, Dahl restrained costs by closing about 100 of what was once 440 branches since 2012. He invested in technology to bring TCF's lagging consumer-online services to the level of competitors such as Wells Fargo, his previous employer. And Dahl grew consumer and commercial lending.

Since 2014, TCF was able to increase low-cost deposits by $5 billion, the consumer checking and other accounts it uses to finance higher-yielding loans, mortgages and credit cards.

That long-term progress has led some analysts, such as Jared Shaw of Wells Fargo Securities in New York to project the bank will "outperform" its midsize peer group and achieve a stock price of $19 to $20 this year. It closed at $17.51 Friday.

Dahl is a collaborative leader who samples opinion among a larger group before making decisions. He also has a track record of starting or running commercial lending and leasing business that have grown profitably. As CEO, he also has learned to take a longer view.

"Running the bank for today is what I was doing driving for performance in all these businesses," Dahl said. "As I moved into this [CEO] chair, it's become What are we going to do tomorrow? What are the things we are not doing today? If I'm not thinking about tomorrow who is? That's been my biggest change."

Dahl, an International Falls, Minn., native who played hockey while earning a bachelor's degree at Princeton, was nicknamed "Coach."

While finishing his degree at Princeton after his hockey eligibility expired, Dahl was asked to coach the first women's hockey team at the school. That mention caused him to smile and recall how much fun it was to coach a group of bright young athletes, something he later did as a youth coach for 20 years in the Twin Cities.

Dahl has surrounded himself with complementary players. Half of his six-person senior management team came up with Dahl through the leasing businesses. He's balanced the team with three outsiders, including new managers who joined TCF from Target, Wells Fargo and PNC Financial.

Dahl still wrestles with issues from the Cooper era, who could have sold the bank at a premium before the recession, and leaned heavily on consumer overdrafts and electronic fees.

They were curtailed by the Federal Reserve and Congress after the near-failure of the banking industry and the resultant taxpayer bailout of 2008-10.

Mairs & Power, the St. Paul investment firm that was one of TCF's largest shareholders for years, sold out its position a few years ago amid uncertainty as TCF struggled to replace lost fee revenue with the national auto-leasing business and commercial lending.

TCF's performance and stock price has improved since 2015. Dahl has proved that TCF could build revenue using a deposit-funding base that's cheaper than those of most his midmarket peer group while gaining economies by closing branches and replacing them with ATMs.

Dahl's latest challenge is a lawsuit brought in January by the federal Consumer Finance Protection Bureau (CFPB), alleging TCF since 2010 has misled customers into a service that costs a $35 fee to cover each overdraft on their accounts.

"We have to conclude that lawsuit," said Dahl, who knows it concerns investors. "We feel we're on the right side of the law."

TCF last week filed its response in federal court as part of a motion asking a federal judge to dismiss the case.

And TCF is not for sale, Dahl said.

"I wouldn't be investing if I had been told [by the board], to sell the bank," he said. "We have a clear strategy. Our performance has moved up the continuum among our 50-bank peer group."

Cooper moved TCF's longtime headquarters 20 years ago from Minneapolis. The former Republican Party chairman disliked Minneapolis DFL politicians.

After TCF's lease expired downtown in the former TCF building in 2015, he moved 1,100 employees to a new campus in Plymouth.

Dahl said last week after the Wayzata lease expires, he probably will move a couple hundred headquarters employees to Plymouth or the commercial lending offices in Minnetonka.

Dahl, unlike Cooper, avoids public politics. The one-time young DFLer from International Falls, who played on a state championship hockey team in 1972, said he's a political independent.

"I like to stick to business," Dahl said.

Originally posted here:

TCF Financial touts progress, but investors remain cautious - Minneapolis Star Tribune

A few days ago, the management team at Civeo Corp. (NYSE:CVEO) announced that it had finalized its most recent credit facility redetermination. Seeing as how I own shares in Civeo, I like to keep up-to-date with the firm's progress and I know that you, my readers, like to as well (at least those of you who follow and/or own it). As such, I determined that it would be a wise idea for me to provide an update on the company and give my thoughts on what it all means for the business moving forward.

A touch on their earnings

Seeing as how Civeo's earnings just came out the other day, you may be asking why the focus on this article is not on that news as opposed to (or in addition to) what I'm writing about. Simply put, management provided preliminary guidance on financial results for the fourth fiscal quarter of last year, as well as provided guidance regarding the company's 2017 sales and other financial data at an earlier time.

I wrote about it in this article but the gist of it is that management's forecast for 2016's fourth quarter revenue was in the range of $89 million to $92 million (actual result was $90.92 million) and for EBITDA it came out to $16 million to $18 million (actual result was $17.7 million). For 2017, sales guidance is still as it was at between $337 million and $353 million, while EBITDA guidance is still calling for a range of between $60 million and $65 million. In essence, nothing really changed too much from what was forecast.

A look at management's newest move

One problem with Civeo is that it has a meaningful amount of credit facility debt that can be cut below their borrowings if lenders elect to force such a situation. So long as this does not happen, the firm is fine, but if lenders ever become scared and this number gets pulled down too low, the end result could make shareholders quite unhappy since it could result in the business going under in a worst-case scenario or could force additional share offerings and/or require it to take on debt at materially-higher interest rates in order to account for the difference.

*Taken from Civeo

Fortunately, according to management, the firm just went through its most recent redetermination and struck a deal with lenders wherein it had seen its lender commitment drop by $75 million from $350 million to $275 million. In the image above, you can see what the picture looked like before the deal was struck (no similar table has been provided for the post-agreement). This is particularly interesting because, according to their existing facilities agreement, Civeo has to pay a small amount of interest on any proceeds not currently being used (this is standard for credit facilities and I don't think I have ever seen one that didn't have this kind of stipulation).

*Taken from Civeo

I will get to the other aspect of the deal in a moment but the reason why this is important is that, based on the company's current leverage ratio, which I estimate, using its projected 2017 EBITDA of $60 million to $65 million, is between 4.23 and 4.58. As you can see in the image above, this means that on any undrawn amount, Civeo must pay between 0.90% per year and 1.01% per year. By reducing this number by $75 million, management is reducing interest expense, keeping all else the same, by between $0.68 million and $0.76 million per year.

*Taken from Civeo

Every little bit helps but if this were all I was writing on, I wouldn't say it's enough to warrant your attention. What does warrant it, however, is that, in exchange for management striking this deal, they also were able to change their allowable leverage ratios for the better. In the image above, you can see what their leverage ratios were prior to their agreement and in the image below, you can see their current allowable leverage ratios post-deal. At first glance, this may not seem like much but it could make all the difference in Civeo's long-term survival.

*Taken from Civeo

Let's take, for example, the end of 2017. Under their prior deal, the firm would be allowed, assuming its EBITDA estimates are correct, to hold debt of between $300 million and $325 million. Now that number has increased to between $351 million and $380.25 million. For the third quarter of 2018 (the last number shown on the original table), the disparity is even larger, with management only allowed to have debt of between $210 million and $227.5 million compared to the same $351 million to $380.25 million range cited above.

In its press release on this development, management said that one benefit to this change in their agreement is that the company has greater financial flexibility. In detailing this, they noted specifically that it could allow them to engage in acquisitions, a move that I would applaud if management can find a suitable prospect. One downside, though, is that if their leverage ratio is at 5.50 or higher, they will be forced to pay an interest rate that is 0.5% higher than what they are paying today, but if the firm does decide to buy up something, then it's unlikely to be an asset or business where such a small increase in the interest rate would have a material impact on the firm (otherwise, they shouldn't be buying anything).

Takeaway

Based on the data provided, it looks as though management continues to make some nice progress given Civeo's circumstances. Even though I did not like their public share offering earlier this year, I do like to see improved financial flexibility, especially if it can lead to an acquisition, and I also enjoy seeing interest expense falling, even if the move is immaterial in and of itself.

Disclosure: I am/we are long CVEO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Civeo's Making Nice Progress - Seeking Alpha

MILAN, Italy Given the massive challenge of taking up the reins of a designer as unique and adored as Consuelo Castiglioni, Francesco Risso was always going to draw down a forensic level of scrutiny with his womenswear debut at Marni.

The staging seemed to acknowledge that. It hedged its bets. Marnis showspace on Viale Umbria was reconfigured as a shadowy building site, with looming scaffolding and bubble-wrapped plywood benches for seating. A neon sign flashing WORK IN PROGRESS would scarcely have looked out of place. And it would certainly have been an appropriate cue for the collection Rossi presented.

It was heavy on concept, which was to be expected after Rissos seven years working with Miuccia Prada. She is a genius at using abstract ideas to add substance to collections when they most need it. Rissos shtick was, however, obtuse to a fault. He called his collection Be1ngs, with an emphasis on the singular in the plural. Got that? No, me neither. An individual being in the act of creating its own reality? Still no clearer.

But what was easier to wrap ones head around was the influence of the women in Rissos life. He was talking personal, I was thinking professional. Castiglioni, liberated from stereotypes, Prada, free of conventional notions of beauty and ugliness. Rissos collection was provocative in the way it dispensed with prettiness and proportion.

There was an element of perverse discomfort in high collars and ill-fitting bustiers. Or maybe it was a deliberate naivet. Risso talked about a special wool that had been scratched till it pilled. Ghastly! Or a silk that mimicked the plastic bubblewrap on our benches. One of my obsessions is waxed cotton, he said. Padded and layered, so the pieces are three-dimensional, sculptural but still very light.

There was something fiercely utilitarian about that stuff. Some of it was tied at the waist with string. The shaggy, matted coats could have been rescued from a recycling depot. And those hats! Oy! They looked like sou-westers clumped with sheepskin.

And yet, and yet you could step back from the oddness (match the hats to the clunky nailhead-heeled boots) and take it all as a deliberate statement of dissociation. On the soundtrack, Brit avant-gardist Robert Wyatt crooned At Last I am Free. That song was originally written and recorded by Chic, which gave it a certain untouchability in the grand scheme of artists covering other artists. But Wyatt audaciously overlooked any reservations to make his own gorgeous version. Is that what we take away for Rissos debut at Marni? Minus the gorgeousness, this time.

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A Work in Progress at Marni - The Business of Fashion

Paul Fain, USA TODAY NETWORK - Tennessee 8:02 a.m. ET Feb. 26, 2017

Paul Fain(Photo: Submitted)

Do you have a pending file? How long have some of those actions been pending? How many relate to your personal financial plan?

Consider the synonyms for pending":unresolved, unsettled, up in the air, on ice, unfinished, on the back burner. I dont know about you, but unresolved financial matters in my life are a leak for my energy and feelings of well-being.

Why do we have pending financial actions? Sometimes we struggle with paralyzing indecision based on lack of knowledge, uncertainty, or negative past experiences. Often, we are distracted by other seemingly pressing matters. I recall a Wall Street Journal article titledMultitasking makes you stupid. We often need to focus on a task, especially if it appears difficult.

To move from pending to progress, we need to be intentional, create measurable steps, and even add accountability. Since we often dont pay attention to things that we dont see, we need to write down our action plan, strategize with our family or an adviser, and set timelines and deadlines.

The first intention should be to reduce our financial pending list to two or three top priorities. Then, we can identify two or three specific actions we can do this month. Then we can pick one thing to do this coming week to create momentum, no matter how big or small. As examples, here are a few financial planning action items that may be circulating through your life right now:

Tax planning:Once youve got all of your tax reporting forms, get them organized and file your return.

Estate planning:It seems that every few years, state or federal estate regulations are in flux. With each change, you need to review and possibly update your estate documents.

Life is a series of transitions:Marriage, birth, retirement, death. Subsequently, it is important to update your insurance coverages types, amounts, beneficiaries, etc.

Investments: With an extended run-up in U.S. stock market values, it is vital to review and rebalance your portfolio.Consider diversification opportunities, often applying some contrarian logic. Do you have exposure to global markets? Are you updating the risk/return profile of your bond strategy to reflect the likelihood of rising interest rates? Do you need to create some cash for an upcoming expense?

Often, we get stuck in a pending mode as a result of our own unrealistic expectations. A perfect solution is a myth. Or, we might be buried under a mentality of woulda, shoulda, coulda.I absolutely cannot change the decisions that I made yesterday.But, I can definitely strive to make better decisions today and tomorrow.

What we need is progress. Think simple and essential. A trip of a 1,000 miles begins with the first step.

When I check-off a pending item from my financial to-do list, I almost always experience two things: a tremendous sense of relief and/or achievement; andrecognition that the action wasnt as complicated or difficult as I previously imagined.

It seems appropriate to summarize with the wacky wisdom of comedian Larry the Cable Guy:Git-r-done.

Paul Fain is a Certified Financial Plannerand president of Asset Planning Corp., a financial planning and investment management firm based in Knoxville. He welcomes comments and column ideas, but cannot offer specific personal financial advice. Write to him at pkf@assetplanningcorp.com.

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Fain: How to move pending to progress - Knoxville News Sentinel

White Sox: Happy with progress, Brett Lawrie tries to clear final hurdles

GLENDALE, Ariz. -- Brett Lawrie isn't sore, he's just not yet correctly aligned.

Until that happens, the White Sox second baseman doesn't want to risk playing at full speed, which for him is nearly the equivalent of hyperdrive on the Millennium Falcon.

Lawrie said Sunday he has been pleased with the progress made in returning from a series of leg injuries that wiped out the final 2 1/2 months of last season. But he also isn't quite ready and doesn't want to risk re-injuring himself until he feels total confidence.

"I've been very happy and I haven't really gone backwards and that's been key for me," Lawrie said. "I guess the biggest thing is being able to trust myself when I get out on the field and not have to worry about my body and just worry about the game. If I can't do that then I'm not going to go out there and do that. S once I can clear that stuff up, and it's in the near future.

"I just need to keep being positive and keep putting the work in every single day and I'll be OK."

Lawrie and Rick Renteria said the veteran has been his normal hyper since he reported to camp eight days ago. He'd been a full participant leading up to Saturday when he told Renteria he still didn't feel completely right. But Lawrie said he's just working out the "end kinks" to a trying period. Even though he's had a few tough days of late, Lawrie is trying to stay upbeat and power through.

"It's nothing that's grabbing at me or anything like that," Lawrie said. "I think it's just how everything is sitting and needs to be aligned, that's all.

"Not completely where I want to be and I want to be right where I want to be in order to get out on the field. This last part has just been tough but I'm just continuing to push through and I want to be out on the field and be 100 percent and just have to worry about baseball and not have to worry about this. Before I get out there I just want to make sure that everything is cleared up."

GLENDALE, Ariz. -- Jose Quintana and Miguel Gonzalez looked like a pair of pitchers who began their offseasons earlier to prep for the World Baseball Classic.

Both White Sox starting pitchers looked sharp as they made their spring debuts in a 7-3 victory over the Colorado Rockies at Camelback Ranch on Sunday afternoon. Team USA relievers David Robertson and Nate Jones also pitched a scoreless inning each in the win. Prospect Zack Burdi also pitched a scoreless ninth inning.

Gonzalez, who is on the Team Mexico roster, only allowed a single on a dropped pop up on the infield in two scoreless innings.

Im a little ahead of the game right now, Gonzalez said. I started a little earlier this year in the offseason to work out, thinking I wanted to go to the WBC and get ready for that. But I think the most important thing right now is getting ready for April 1 with the White Sox. Thats my goal, and you dont get these opportunities every year. To represent Mexico, its going to be fun. Its going to be great.

Quintana, who will start for Colombia in their March 10 opener against the United States, allowed a run and a hit in two innings. He struck out one and hit a batter.

I feel good, Quintana said. I think for the first day I feel comfortable. I hit the glove. I feel good. A couple of pitches spinning were good and I feel really good.

[RELATED: Jim Thome on being a finalist for National Baseball Hall of Fame]

Robertson is throwing much earlier than normal in anticipation of his March 6 departure for Miami, where Team USA begins its tournament. The clubs closer normally wouldnt appear in a game until the calendar turns to March. Robertson said he usually only needs 5-6 spring outings to get in shape for the regular season. Though he felt a little rusty, the right-hander was pleased with several changeups and fastballs he threw.

I wouldnt say it was smooth but I got through it, Robertson said. I had a few bad pitches that were just not competitive. All in all I got through what seemed like a tough inning for a first outing.

Im excited. I think its going to be a lot of fun. Im going to go down there and put the USA across my chest and have a chance to win something for our country. I think its going to be a lot of fun and Im excited to play with a group of guys Ive been playing against my whole life.

Eddie Alvarez had a three-run double for the White Sox while Tyler Saladino collected two hits in three trips. Catcher Roberto Pena went 2-for-2 with an RBI.

GLENDALE, Ariz. -- Normally upbeat and positive, Jim Thome cant help but beam with pride when asked about his Hall of Fame candidacy.

Thome, who blasted 612 career home runs, including 134 with the White Sox, is eligible for induction for the first time in 2018. Even though hes expected by many to one day be voted into Cooperstown, perhaps even in his first year, Thome said hes merely honored to be on the ballot. Thome is joined on the ballot by Chipper Jones and former teammate Omar Vizquel, among others. Voting begins in December and the results will be announced next January.

To even be on the ballot and thought of, it would be the greatest honor I think you could get, Thome said. Or if you get an opportunity to go into the greatest fraternity baseball has or created, it would be indescribable. How do you ever think as a kid or a high school player or even going through the minor leagues, that youd play at the big leagues that long? And then to get an opportunity at the end of your career to be put on the ballot is so great.

That would be the coolest moment ever.

Thome who is in White Sox camp as a special assistant to the general manager provided plenty of big moments in a career that spanned 22 seasons. He hit 30 home runs in 12 of 13 seasons between 1996-2008, leading the league with 47 in 2003. The slugger was a five-time All-Star and produced 72.9 b-Wins Above Replacement.

[RELATED: Brett Lawrie trying to clear final hurdles]

Thome isnt as superstitious about his candidacy as others previously have been. He wont be the guy to bring up the topic, but the Peoria, Ill.-native doesnt shy away from discussing it, either.

Its not something you talk a lot about, Thome said. Were not going to bring it up. But when people do bring it up, theres a sense of pride, a sense of Wow, baseball has thought that highly to put you on the ballot. And the fact that theres just this wonderful fraternity of incredible players that you could be a part of, if youre chosen.

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White Sox: Happy with progress, Brett Lawrie tries to clear final hurdles - Comcast SportsNet Chicago