Financial thoughts

NEW YORK

Lending cash to individuals looking for cash advance or payday loans.

Ontario is taking aim at

Learn what faxless payday loans are and how online payday loans can be used as a quick fix to pay off your bills.

When Don Davis first heard about the 25,000 cases of organic Italian wheat vodka sitting in a Lincoln County warehouse, he wasn’t planning to launch a liquor company.

“I like vodka, so I was interested,” said the banker and businessman. “But I was just going to flip it. Make a few bucks.”

Less than a year and a half later, Davis is selling Purus Vodka in eight states, rolling out a new pomegranate-based drink this month, and developing a pipeline of boutique spirits, all from a few offices in Clayton.

The quick rise of Davis’ new spirits company, Pure Holdings LLC, reflects the hot market for high-end vodka these days, and the opportunities that can exist in the corporate spillage of an industry giant. Purus – the contents of those 25,000 cases – was actually created by a much bigger St. Louis-based alcoholic beverage company.

Anheuser-Busch, through its now-shuttered high-end subsidiary Long Tail Libations, developed Purus in a bid to tap soaring demand for top-shelf liquor. It even sold the stuff in a few Northeastern markets in 2007 and 2008.

But when InBev bought the brewery in late 2008, it closed Long Tail down and sold off its products. Purus was bought by Fire Tail Brands, a small spirits company in Lake Saint Louis, where it sat for nearly two years.

Fire Tail owner Jon Herbik liked Purus – this week he called it “probably the best vodka ever made” – but saw the brand more as a short-term investment. He put it up for sale. Davis, whose holdings range from a homebuilder to a car dealership to a craft brewery, caught wind and checked it out. At first, he was thinking short-term, too. But when Davis started looking a little closer, he saw a business ready to pull out of the box.

“It had been up and running. It had a proven product,” he said. “It was just sitting there gathering dust.”

But Davis needed someone to run it. Then he met John Giarrante and Mark Braeckel, who’d been executives in the innovations division at A-B. In other words, they’d already spent two years creating Purus – Giarrante in brand development, Braeckel in packaging and procurement – only to see it scrapped.

Davis hired them away and revived the brand.

Purus has been back on shelves now for a bit less than a year, mostly in Missouri, but also in Arizona, Florida and Ohio. Sales, about 3,000 cases in Missouri last year, have been well ahead of projections, Giarrante said. Event sponsorships and a few industry awards have helped to build buzz.

Now Pure is expanding into four more states - Illinois, Texas, North Carolina and New Mexico. And it’s launching a second Long Tail-developed spirit: PomAcai, a vodka flavored with pomegranate and acai berries. They’ve ordered 50,000 cases.

Pure had good timing. U.S. sales of so-called “super premium” vodkas - which typically retail around $30 a bottle - have climbed 32 percent in the last two years, to $1.2 billion, according to data from industry trade group the Distilled Spirits Council. Flavored vodkas like PomAcai have grown even faster.

Pure has been riding that wave. But it also had a built-in advantage: A-B spent two years – and millions of dollars – developing Purus. It found a distillery in northern Italy, won organic certification in three countries, ran consumer tests and made a boatload of vodka.

“We developed the brand. We built the strategy. We had the resources of A-B to go out and find the best products in the world,” said Giarrante.

To keep growing beyond that seed, Pure will have to launch new brands. They plan to both grow their own and partner with existing products that are trying to find a market. They’ve started selling a third drink, Aguila Tequila, and a have desk full of prospects in the office that they’re not ready to talk about just yet.

When it comes to what’s next, Pure is being choosy. But it definitely plans to keep growing. A broader portfolio will build Pure’s name and give it more to offer wholesalers and liquor stores.

But even for now, at two brands, eight states and nine employees, Pure Holdings has come a long way from a pile of boxes, gathering dust.

Source

The city of St. Louis is giving a $4.7 million property tax break to the owner of one of downtown’s tallest office towers, One AT&T Center.

The local holding company, affiliated with one of the nation’s largest real estate trusts, convinced the city assessor that the building is worth far less than its purchase price in 2006 because AT&T, its lone tenant, now fills only half its office space.

MB St. Louis LLC is the owner of record for the property, which was acquired for $204.9 million by Minto Holdings Inc., of Florida and Inland American Real Estate Trust, of Oak Brook, Ill.

Inland American, according to its most recent annual report, posted annual revenues last year of $1.3 billion and holds interests in nearly 1,000 properties, including hotels, office towers and retail complexes across the country. Inland reported last month that a subsidiary paid $22.6 million for the Hilton hotel at 400 Olive Street in downtown St. Louis as part of a $393.1 million deal for five hotels in Atlanta, San Francisco, Austin, and Lexington, Ky.

Inland’s affiliate, MB St. Louis, convinced St. Louis assessor Ed Bushmeyer that the AT&T tower is now worth just $135 million – about $70 million less than what it sold for in 2006.

Jerome Wallach, an attorney for MB St. Louis, argues that the building’s value plummeted because AT&T has slashed the size of its workforce there, and low occupancy cuts the building’s market value. The owner would have difficulty selling the half-full building for an attractive price when AT&T’s lease expires in 2017, he added.

But the building is not for sale now, Wallach acknowledged, nor has MB St. Louis given AT&T any rent breaks on the property because of its diminished presence. Wallach argues the rent shouldn’t factor into assessed value, which should be based on what it might sell for now in its half-full state.

Bushmeyer initially contended that occupancy levels have no effect on the structure’s value — because AT&T leases the entire 1.2 million-square-foot building, regardless of the space filled. But Bushmeyer ultimately bought the landlord’s argument that the relatively short period left on the lease, along with potential renovations needed to accommodate multiple tenants, justified the lower assessment.

The matter was resolved in a settlement approved by the State Tax Commission on March 27. The owner first appealed the assessor’s valuation to the city’s Board of Equalization, which lowered the building’s 2010 assessment to match its December 2006 purchase price, $204.9 million. MB St. Louis then appealed that ruling to the State Tax Commission on line pay day loans.

Before the state commission could issue a decision, the owner and the city assessor reached an agreement that dropped the building’s 2010 value to $155 million. The agreement also lowers the 2011 and 2012 values to $135 million from the city’s original assessment of $191.5 million.

The result is three years of tax cuts, totaling $4.7 million.

Since 2007, the annual property tax bill has been about $5.5 million, city records show. The portion of taxes MB St. Louis paid under protest in previous years will be refunded from an escrow account, Bushmeyer said.

Completed in 1986, the 44-story tower is downtown’s third-tallest structure, trailing only the 630-foot Arch and — by five feet — the 593-foot Metropolitan Square building on Broadway.

An AT&T spokesman said employment at the company’s three-building downtown complex, including the tower, is slightly less than 4,500. As recently as 2009, the complex had nearly 5,700 workers.

Another factor in the building’s lowered value is its design as a single-tenant headquarters, the owner argued. Most downtown office towers were built for multiple tenants. A new owner of the AT&T tower would likely face an expensive and time-consuming renovation to accommodate multiple tenants.

“The assessor’s office relied on sales and rental transactions involving multi-tenant buildings downtown, such as Met Square,” in its initial property assessment, Wallach said. “AT&T is used as a single-tenant building. It was, in my opinion, an apples and oranges comparison.”

The tower’s lowered assessment will mean that city public schools and other tax-supported entities will take a slight hit, Bushmeyer acknowledged. But he noted that while citywide reassessments in 2009 and 2011 produced generally lower property values — and lower tax bills — state law allows some taxing districts to raise rates to make up lost revenue.

The AT&T case illustrates the nationwide decline of real estate values during the recession, Bushmeyer said.

“I expect that, as the economy improves, we will see valuations increase,” he said.

Jim Mosby, senior managing director in St. Louis of Cassidy Turley, said Thursday that challenges to assessed valuations have been widespread over the past four years because of general declines in the value of commercial real estate.

“At some time, the market takes over, no matter what you have in your building,” he said.

Source

The older they get, the deeper in debt — that’s the story for today’s 20-somethings, according to a new survey by PNC bank.

The bank found that two thirds of 20 and 21-year-olds carry debt.  The burden averages $12,000 and it’s mainly mortgage debt.  By their late 20s, 87 percent are in debt, averaging $78,500.  But mortgage debt makes up the bulk.

Student debt actually goes up through the 20s, from $9,500 for 20 and 21-year-olds, to $20,300 for 28 and 29-year-olds installment payday loans.

The survey of 2,000 young people found that 60 percent feel stressed by debt, a figure that holds even through the 20s.

Source

Dallas Federal Reserve Bank President Richard Fisher said on Thursday U.S. economic conditions were improving and repeated his view that further easing from the U.S. central bank was not needed.

“The tone is a lot better. It’s not brilliant; we don’t have enough new hiring taking place, (but we’re) definitely moving in the right direction,” Fisher told CNBC television.

“Given the improvement in the data that we’ve seen, things are getting better, not worse. I don’t see any need personally for QE3 here,” he said, referring to the possibility of a third round of central bond buying, or quantitative easing.

The Fed has held overnight interest rates near zero since December 2008 and has bought $2.3 trillion in government and mortgage-related bonds.

After the central bank’s last policy meeting on January 24-25, Chairman Ben Bernanke said policymakers were still debating whether further bond purchases might be warranted.

At that meeting the Fed also said it expected to keep rates “exceptionally low” at least through late 2014, a statement that Fisher cautioned against viewing as an iron-clad promise.

“The intention, as I view it, of the committee is to make sure that we adjust to the real economy, and as new data comes in, more anecdotal evidence on top of that is confirming what the data says, then we will adjust. The question is when,” he said,

“I happen to be a little more optimistic about economic movement here” than some others on the Fed’s policy-setting panel, said Fisher, who is not currently a voter on the committee.

The Dallas Fed chief said he had told his colleagues at the January meeting that the central bank’s post-meeting statement might be unduly dour, given what he was hearing from corporate executives around the nation.

“At the last meeting … I warned that I thought the statement was talking down the economy,” he said.

Read more

In his first 100 days as European Central Bank President, Mario Draghi has taken unprecedented action to tackle the sovereign debt crisis. Greece may push him even further into unknown territory.

Draghi will today face questions on the ECB

Fewer Americans applied for unemployment benefits last week, indicating the U.S. labor market continues to gradually improve.

Jobless claims dropped by 12,000 to a seasonally adjusted 367,000 in the week ended Jan. 28, the Labor Department said Thursday. That’s near a four-year low.

Economists surveyed by MarketWatch had estimated claims would drop to 370,000. Claims from two weeks ago were revised up by 2,000 to 379,000.

The four-week average of claims fell by a smaller 2,000, to 375,750. The monthly average smooths out seasonal quirks and provides a more accurate assessment of labor market trends, economists say.

The monthly average has shown little change in the past six weeks, but it also remains near a four-year low and stands at a level that usually suggests a healing labor market. Since claims reflect how many people lose their jobs, the recent decline likely indicates a slowdown in layoffs.

“The decline in the claims numbers does point to an improving labor market that will ultimately show up in more jobs,” said Joel Naroff of Naroff Economic Advisors.

Even if most companies aren’t laying off workers, however, that doesn’t mean they are eager to boost payrolls. The current pace of job creation — about 150,000 jobs a month — is far too slow to put millions of unemployed Americans back to work free credit score.

The past week’s claims data are likely to draw more than the usual scrutiny, coming on the eve of U.S. data on nonfarm payrolls and joblessness for January. The economy likely added 125,000 jobs in January and the unemployment rate probably stayed even with December’s 8.5 percent, according to a MarketWatch survey.

Economists say the U.S. would have to add about 250,000 jobs a month for several years to bring unemployment back under 6 percent. The jobless rate ranged between 3.8 percent and 6.2 percent in the seven years before the 2007-2009 recession.

Most economists expect the level of jobless claims to settle in the 375,000 range in the next several months.

Also Thursday, the Labor Department said continuing claims decreased by 130,000 to a seasonally adjusted 3.44 million in the week ended Jan. 21. Continuing claims are reported with a one-week lag.

About 7.67 million people received some kind of state or federal benefit in the week ended Jan. 14, virtually unchanged from the prior week.

Source

At long last, the Holy Grail of Internet IPOs is here. Facebook filed Wednesday to raise $5 billion in an initial public offering.

In 2011, Facebook earned $1 billion on sales of $3.7 billion. As of December 31, Facebook had 845 million monthly active users.

The company crossed the line into profitability in 2009, five years after it launched in founder Mark Zuckerberg’s Harvard dorm room. Facebook earned $229 million that year on sales of $777 million, and has remained profitable ever since.

It’s not yet known on which stock exchange Facebook will trade, though it said it plans to use the ticker symbol "FB."

Facebook will likely re-file its paperwork several times over the coming months. Those updates will add more details and could even restate some of the financial information detailed in Wednesday’s filing.

In this initial paperwork, companies don’t declare how many shares they’re going to sell, or how much those shares will cost. Those details will be added in an updated filing shortly before trading begins.

Without that share price information, Facebook’s valuation is still speculative.

Facebook has its own guesses, though. The company said it conducted its own valuation of its stock at the end of each quarter, and as of December 31 determined it to be worth $29.73 a share.

Zuckerberg’s letter to investors: ‘Hacker Way’

Revenue breakdown: Advertising accounted for 85% of Facebook’s 2011 revenue, or almost $3.2 billion.

Facebook’s other revenue stream is its payment system for purchases within apps and games: Facebook Credits. Facebook keeps 30% of the revenue from those payments, and passes the remaining 70% on to the app developer.

Those fees brought in $557 million for Facebook last year.

Revenue from Zynga, which makes FarmVille and other games played on Facebook, represented 12% of Facebook’s total revenue in 2011.

About 44% of Facebook’s revenue came from overseas last year, compared with 38% in 2010 and 33% in 2009.

As of December 31, Facebook had $3.9 billion in cash and liquid assets.

Exec compensation: Another choice tidbit: In 2011, Facebook CEO Zuckerberg raked in a $500,000 base salary. But he requested — and will receive — only $1 per year in salary starting January 1, 2013.

Don’t feel too bad for Zuck, who remains the largest shareholder in the company he created. His total compensation in 2011 came to $1.48 million, according to Facebook’s calculations.

He was one of the lowest-paid among Facebook’s executive ranks. Facebook COO Sheryl Sandberg topped the list with a total package Facebook estimated at $30.9 million, almost all of it in stock.

Engineering VP Mike Schroepfer made an estimated $24.7 million — again, mostly in stock — while CFO David Ebersman collected an $18.7 million pay package. (For more on Ebersman, see Fortune’s profile: "The man behind the Facebook IPO.")

As far as the regular rank-and-file at Facebook, the company had 3,200 full-time employees as of December 31. That was a 50% increase from the previous year, and Facebook said it "expect[s] this growth to continue for the foreseeable future."

Facebook also noted that it has bought out some small companies mainly to acquire employees, and said that it intends to continue that strategy.

How much Facebook is worth: Trading won’t begin for several months, as Facebook now has to field questions from regulators and court investors for its stock sale.

Most analysts estimate Facebook’s valuation will fall somewhere between $85 billion to $100 billion. But the value of Web companies can be extremely volatile.

A recent example: Zynga (). The FarmVille maker’s IPO filing reported that it valued its shares in August 2011 at $17.20 each, which gave the company a valuation of $14 billion. But when Zynga went public in December, shares sold for just $10 — valuing the company at $7 billion.

Several other Internet companies made their public debuts in 2011, but the end of the year proved to be a turbulent time for the sector. Shares of Groupon (), Pandora (), Zillow (), LinkedIn () and Angie’s List () all suffered steep double-digit losses for November, though most clawed back at least a bit in December or January. 

Source

Nigerian oil union Pengassan said it will only shut down oil output as