Financial thoughts

The average Washington-area home was worth more in July according to the latest unadjusted data from the latest S&P/Case Shiller Home Price Index. Prices in the D.C. area rose 1.1 percent from June 2010, and 6.5 percent from July 2009. That was much better than the national advance of 0.6 percent for the month and a 3.2 percent gain for the past 12 months.

The Washington market improved its position among the best real estate markets around the country in July, notching the fourth best year-over-year price advance after being ranked fifth in June. Washington’s month-over-month gain jumped to third from fifth.

San Francisco kept its hold on the title of best-performing market year-over-year with price gains of 11 online payday loans.1 percent from July 2009. Las Vegas again performed the worst with prices falling 4.9 percent from a year ago.

Detroit posted the best monthly advance with prices up 1.6 percent from June. Las Vegas had the worst monthly drop with prices falling 0.8 percent.

The S&P/Case-Shiller survey of 20 major U.S. cities uses the “repeat sales pricing technique” to measure housing markets. This method collects data on individual single-family home resales and uses those prices to calculate price declines or gains.

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The presidents of Arizona’s three state universities have unveiled a plan to create a $350 million financial aid program funded by the state as part of a new enterprise model.

In turn, they have agreed to operate their universities more efficiently, holding themselves accountable for a higher level of performance.

The Arizona Board of Regents voted unanimously to support the three presidents in their effort to create a more productive work force to boost the state’s economy.

The recommendations, unveiled Friday at the board’s annual retreat, include aggressive new performance metrics; enable gains in efficiency and effectiveness; provide new, low-cost options for students; and offer privatization plans and partnerships. Ultimately, the realignment is meant to streamline operations and better position the university system to serve students and address the state’s need for a skilled, innovative work force and sustainable economic growth.

This new educational system will restructure its funding model built on performance indicators, while privatizing some colleges.

For example, the $13 million in annual state funding for the law school at Arizona State University could be used elsewhere in the system if the law school were able to create partnerships with private industry for funding, said ASU President Michael Crow. He said he also would consider moving the school to the downtown Phoenix campus as part of that realignment.

This new statewide enterprise for higher education would increase the percentage of Arizona adults with bachelor’s degrees to as much as 30 percent, compared with the current 25 percent. Plans call for producing as many as 36,000 bachelor’s degrees each year, compared with 21,000 now.

To become major competitors nationwide, the three state universities plan to more than double their annual research expenditures, from $900 million to $2 billion.

Anne Mariucci, chairman of the Board of Regents, said this can only be done in partnership with the state.

“We can’t manage our way just by being more efficient,” she said.

Now that the board has approved the concept, the next step is to determine exactly how to create the financial aid fund.

She said the $350 million fund could be established through the Arizona Legislature, a property tax or a bond issue. It could be modeled after other states’ programs or created from scratch, she said.

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The Atlanta KFC Advertising Co-op, has named LevLane of Philadelphia as its first agency of record since the co-op formed in 2002.

The Atlanta KFC Advertising Co-op, which will have a $2.5 million budget in 2011, includes 10 members in the metro Atlanta market.

LevLane manages six other KFC regional co-op accounts, in Vt., Mass., N.Y., Penn. and Fla.

The first ads for the new campaign, which will include TV, radio, digital, print, and outdoor, are expected to begin in January.

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Baylor College of Medicine is on a mission to streamline its administrative staff.

The medical institution, which has struggled financially for years, announced to employees Thursday in an internal memorandum that it would cut jobs and review administrative salaries and benefits.

Dr. Paul Klotman, who took over as president on Sept. 1, noted in the memo that the payroll for Baylor’s 1,440 administrative positions totals $118 million a year in salary and benefit expense.

“I believe that when we look at these positions, we will find that there is duplication of efforts within and across departments,” he wrote.

Describing the new initiative as “rightsizing,” rather than downsizing, Klotman said Baylor will embark on an initiative to cut certain positions, combine others and have shared positions across departments.

The goal is to save $15 million to $20 million a year as a result.

“This will be a major step forward towards my goal of restoring the original contribution levels to the college’s retirement plan,” he added payday loans lenders.

Baylor also will implement new discretionary spending policies as part of its process improvement.

Lori Williams, a Baylor spokeswoman, said Klotman would not comment further on the memo and could not provide any more specifics.

St. Luke’s Episcopal Hospital became the primary, private adult-teaching hospital for Baylor in April 2004 after Baylor ended its 50-year affiliation with The Methodist Hospital. In 2005, Baylor and St. Luke’s opened the doors to the Baylor Clinic at 6620 Main

In June 2005, St. Luke’s and Baylor announced plans to merge, only to call off the deal three months later — around the same time Baylor and Methodist announced a renewed, redefined collaboration at the urging of Texas Attorney General Greg Abbott.

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After days of mixed results, Hawaii stocks finally followed the overall stock market as it went higher in Monday trading.

The Dow Jones Industrial Average closed at 10,544.13, up 81.36 for the day, while the Nasdaq was up 43.23 to close at 2,285.71.

An international banking agreement signed over the weekend in Basel, Switzerland, was getting much of the credit for pushing markets higher. In fact, the six largest banking companies in the United States each were up more than 2 percent. Bank of Hawaii and Central Pacific Financial Corp. were among the Hawaii-based companies trading higher.

Gainers were:

Hawaiian Electric Industries Inc. (NYSE: HE), which closed at $23.16, up 7 cents.

Alexander & Baldwin Inc. (NYSE: ALEX), which closed at $35.11, up 32 cents.

Hawaiian Holdings Inc. (Nasdaq: HA), which closed at $5 fast cash.07, up 13 cents.

Bank of Hawaii Corp. (NYSE: BOH), which closed at $47.38, up 63 cents.

Central Pacific Financial Corp. (NYSE: CPF), which closed at $1.59, up 1 cent.

Maui Land & Pineapple Co. (NYSE: MLP), which closed at $4.54, up 44 cents.

ML Macadamia Orchards (Other OTC: NNUT), which closed at $2.57, up 7 cents.

Hoku Corp. (Nasdaq: HOKU), which closed at $2.50, up 10 cents.

The two companies that lost ground on Monday were:

Barnwell Industries, Inc. (AMEX: BRN), which closed at $2.88, down 1 cent.

Cyanotech Corp. (Nasdaq: CYAN), which closed at $2.55, down 9 cents.

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Smurfit-Stone Container Corp. is one of several paper-making companies named in an antitrust suit filed by a Minnesota company that accuses its rivals of fixing the prices on containerboard.

Kleen Products LLC filed the lawsuit Thursday in federal court in Chicago, alleging that Smurfit-Stone and others in 2005 “began a coordinated across-the-board imposition of capacity restraints, leading to a subsequent restriction in the supply of containerboard products on the market. The goal of the conspiracy was to fix, raise, maintain and stabilize the price at which containerboard products were sold.”

Minnetonka, Minn.-based Kleen Products also named Weyerhaeuser Co guaranteed personal loan approval.; Packaging Corporation of America; International Paper; Norampac Industries Inc.; Cascades Inc.; Domtar Corp.; Georgia Pacific LLC; and Temple-Inland Inc.

Download a copy of the suit here.

Smurfit-Stone emerged from bankruptcy in June. It reported adjusted net income of $2 million for the second quarter, compared with a loss of $21 million a year earlier, excluding $1.4 billion in income and tax benefits from its bankruptcy exit.

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Three out of four Denver-area employers plan to keep their staffing level where it is in the fourth quarter, according to the latest regional employment survey released Tuesday by Manpower Inc.

Of the rest, slightly more local employers plan to cut their staff than add to it during October, November and December, the latest Manpower Employment Outlook Survey for the Denver-Aurora metro area shows.

For the fourth quarter, 75 percent of local employers surveyed said they plan to maintain current staffing levels. Another 10 percent said they plan to hire more workers, while 11 percent said they expect to reduce payrolls, and 4 percent aren't sure.

That's a gloomier hiring outlook than in the last survey, covering third-quarter plans, in which 19 percent of Denver-area employers said they planned to hire versus 8 percent who anticipated staffing cuts.

"Employers are significantly less optimistic about hiring plans for the final three months of the year," Manpower spokesperson Sunny Ackerman said.

In 2009's fourth quarter, the ratio was 9 percent who planned to hire versus 11 percent who planned cuts.

The survey indicates that Denver-area hiring prospects for the fourth quarter appear brightest in information, while larger percentages of employers in several sectors — including nondurable-goods manufacturing, financial activities, professional and business services, education and health services, and leisure and hospitality — plan to reduce staffing levels.

Nationwide, the survey found a slightly better hiring outlook than in the Denver area, with 15 percent of U.S. employers surveyed saying they plan to boost staffing in the fourth quarter and 11 percent saying they plan to cut jobs.

Some 18,000 employers were surveyed nationwide.

Milwaukee-based Manpower (NYSE: MAN) is an employment services company with 400,000 clients in 82 countries worldwide.

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Hawaiian Airlines passengers are getting a sneak peek of the new Hawaii Five-0 television series.

Under an exclusive marketing agreement with the show’s producers, Hawaiian Airlines is airing the debut episode of the Honolulu crime drama series remake on its “Hawaiian Skies” inflight video program, according to a statement from the airlines. Passengers can catch the sneak preview on 14 transpacific Hawaiian Airlines flights up until the show’s national debut on Sept. 20 on the CBS network.

The agreement includes a Hawaiian Airlines jet being shown in each episode’s opening credits, and the almost 4,000 Hawaiian Airline’s employees are among the first to receive a Hawaii Five-0 cell phone ringtone, according to the statement.

The flights that will air the debut episode offer service to Los Angeles, Oakland, San Francisco, San Jose, San Diego, Sacramento, Portland, Seattle, Phoenix, and Las Vegas, Manila, Sydney, American Samoa and Tahiti.

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Fewer mortgage borrowers are delinquent on their loan payments, according to the latest data from the Mortgage Bankers Association.

The nation’s overall delinquency rate dropped to 9.85% in the second quarter, down from 10.06% of all loans outstanding three months earlier.

Even better, the percentage of seriously delinquent loans — ones 90+ days late or already repossessed by lenders — dropped to 9.11% from 9.54% in the first quarter.

The drop in loans 90 days or more late was the biggest the MBA has ever recorded, according to the MBA’s chief economist, Jay Brinkmann. "That shows we’re making headway," he said.

He cited three reasons for the improvement:

• Fewer loans are coming into the default process;
• The homebuyers tax credit, which increased demand for homes, generated many pre-foreclosure sales, removing the attached delinquent loans from the statistics;
• The government- and lender-led mortgage modifications "cured" some payment problems.

However, even with those bright spots, there was one troubling finding: First-time delinquencies increased after four quarters of decline. It inched up to 3.51% in the second quarter from 3.45% in the first quarter. According to Brinkmann, the reversal reflects the weakness in both the housing market and the overall economy.

"It’s a question of jobs," he said. "It takes a paycheck to make a mortgage payment."

Underscoring the trend is the foreclosure trend among borrowers with conventional loans, like 30-year, fixed rate mortgages. They accounted for nearly 36% of foreclosure starts during the quarter. And these safe loans rarely get into trouble unless they lose employment or income business card.

The four worst hit states — California, Florida, Arizona and Nevada — still account for nearly 60% of national delinquencies, but California’s numbers dropped dramatically this year. At the end of 2009, California foreclosure starts made up nearly 20% of the nation’s total. That dropped to 14.7% during the second quarter.

Another positive trend is the gradual downturn in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth.

CoreLogic reported today that the rate of borrowers underwater dropped to 23% in the second quarter from 24% in the first.

When borrowers fall underwater, it increases the chance that they’ll lose the homes. Brinkmann calls it one of the two "triggers" that lead to foreclosure.

If homeowners have positive equity, they can use it as a source of cash to pay bills, including mortgages. But if their cash reserves are gone and they can’t afford to make payments because their income has dropped, foreclosure is almost inevitable.

CoreLogic found that negative equity is worst in five states: Nevada (68%), Arizona (50%), Florida (46%), Michigan (38%) and California (33%).

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