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Southeastern Wisconsin financial service industry news
Tuesday, April 23, 2013
Small businesses give mixed economic scorecard
April 23, 2013 10:00 AM
Small business owners are split on the state of the economy, according to the 2013 U.S. Bank Small Business Annual Survey.

The survey polled 3,210 small businesses in U.S. Bank’s 25-state small business banking footprint that had $10 million or less in annual revenue in the first quarter of 2013.

About 45 percent of respondents felt the economy was in recovery, while 43 percent thought it was in a recession. Only 1 percent believed it to be expanding, while 10 percent were unsure what the economy is doing.

In Wisconsin, 47 percent of respondents thought the national economy was expanding and 43 percent believed it to be contracting.

Overall, small business owners cited the federal budget deficit as the top national issue affecting them this year. Unemployment, healthcare and taxes were also among top concerns. Wisconsin had the same result.

"These results are very consistent with what we're hearing in the field," said John Elmore, vice chairman of community banking and branch delivery at U.S. Bank. "Last year, 70 percent of our respondents said they believed the economy was in recession, so even though we asked the question a little differently this year, it's clear that small business owners feel a little better about current economic conditions than they did in 2012. However, uncertainty about the federal budget, unemployment and taxes are clearly a concern. If those variables improve, I believe we have a small business sector that is ready to soar."

About 23 percent of Wisconsin respondents expect to increase their staff in the next 12 months, higher than the national average of 16 percent.

And 32 percent of Wisconsin small business owners reported higher revenue this year than last year. About 47 percent expect higher revenue next year.

Wisconsin small business owners cited economic uncertainty as the most important business challenge they face. Poor sales and government regulations were also concerns.

But 64 percent say their financial health is at least “good” and 29 percent were likely to make capital expenditures in the next year.


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Schlifske tours with Forbes
April 23, 2013 10:00 AM
Northwestern Mutual Chairman and CEO John Schlifske has partnered with Steve Forbes, chairman and editor-in-chief of Forbes Media, on a speaking tour of two cities this week called “The Power of a Game Plan.”

The pair are speaking on the economy, financial markets and financial planning in St. Louis and Omaha. They have partnered since 2010 to speak in more than 30 cities.

Their key insights include: Getting to retirement is no longer the end goal, but a starting point; Investing alone will not lead to prosperity; Put a plan in place now to assure long-term security.

“It’s clear that achieving financial security today requires thoughtful planning to preserve wealth, reduce risks, and provide a predictable stream of income for life,” Schlifske said. “These events provide a great opportunity to share perspective on how people can tap into the power of a solid game plan. We offer these insights to help families, business owners and students plan for financial security in the midst of a still uncertain economy.”

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Experts to provide stock market analysis for investors
April 23, 2013 10:00 AM
“The Stock Market of 2013” will be the subject of a Milwaukee Press Club Newsmaker Luncheon to take place on Wednesday, May 1, from 11:45 a.m. to 1:30 p.m.

The stock market has soared to record highs this year, despite a flat job market, the sequestration of the federal government, the uncertainty of Obamacare and looming crises abroad, including Cyprus, Iran, the West Bank and Korea.

The Newsmaker Luncheon will feature investment experts Robert Chernow and William Delwiche.

Chernow is a vice president and investment officer with RBC Wealth Management in Milwaukee. He and his business partner, Linda Cowan, have $450 million under management. Chernow also is vice chair of the 11,000-member World Future Society and a noted futurist who predicted the S&L collapse and the sub-prime crisis (in 2006).

Delwiche is first vice president and investment strategist at Robert W. Baird & Co. Inc.’s Investment Policy Committee. Before joining Baird in 1999, he worked as a researcher at the Committee for Economic Development, a Washington, D.C., pro-business think tank.

The investment experts will answer question posed by a panel of journalists, including BizTimes reporter Molly Newman. The discussion will be moderated by BizTimes executive editor Steve Jagler.

The public is invited to attend the Newsmaker Luncheon, which will take place at the Newsroom Pub in downtown Milwaukee at 137 E. Wells St.

The Milwaukee Press Club presents the Newsmaker Luncheons to shed light on issues of the day. The cost to attend is $15 for MPC members, $20 for non-members, $10 for students. Lunch is included. Seating will be limited.  Advanced registration and payment are required and may be done by clicking on the registration tab above.  Checks may be mailed to the MPC at PO Box 176, North Prairie, WI  53153-0176. Cancellations will be accepted up to 48 hours in advance for a full refund. Please contact Joette Richards at the Milwaukee Press Club at joette@milwaukeepressclub.org with any questions or call (262) 894-2224.

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Jacsten Holdings acquires stake in Triton Corp.
April 23, 2013 10:00 AM
Jacsten Holdings LLC, a Milwaukee-based family investment firm, has announced an investment in Hartford-based Triton Corp., the latest addition to Jacsten’s portfolio.  

Triton has been a family-owned and operated business since its founding in 1975. The family legacy will continue as Jacsten has partnered with the second generation to continue to build on a demonstrated track record of success. Triton’s prior owners, Rochelle and Tony Priesgen, will continue with the business in their current roles and are committed to the ongoing success of the business over the long term.
 
Rochelle said, “As we considered bringing in a new partner we knew our focus had to be on making sure all of our employees would be taken care of for the long-term as well as providing a platform of continued growth for our customers. Jacsten’s investment approach, as well as its track record, demonstrated to us their commitment to the long-term success of both our employees and our business. We look forward to our partnership with Jacsten and our ability to collectively build upon a legacy my father started over 37 years ago.”
 
Triton Trailers is one of the oldest aluminum trailer manufacturers for recreational vehicles and utility uses in North America. Triton offers a comprehensive product line of trailers for the snowmobile, ATV, utility, cargo, motorcycle, car hauler, personal watercraft and pontoon markets. Built over the past 37 years, Triton enjoys unrivaled brand name recognition given its commitment to providing quality products to the market and its unwavering commitment to stand behind those products.
 
In addition to providing growth equity and strategic assistance, Jacsten brings the expertise of its operating partner and co-investor, Dan Rabay, who brings a wealth of manufacturing experience and will be the company’s new chief executive officer.  
 
“Our interest in Triton is based on the company’s strong brand name and reputation for quality in the market. We also feel as though Triton’s well-established North American distribution network is unique in the industry and positions the company nicely for additional growth” said Mike Hansen, Jacsten’s founder.
 
Given its proprietary capital base, Jacsten is able to pursue a buy-and-hold strategy across its portfolio, allowing for true long-term partnerships with the companies it invests in and their respective management teams.  
 
Hansen will be one of the featured panelists at the BizTimes M&A Forum on Friday, May 3, at the Pfister Hotel in downtown Milwaukee. BizTimes invites company owners interested in buying or selling companies to attend the conference. For more, visit www.biztimes.com/maforum.

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Bank Mutual earnings jump 120%
April 23, 2013 10:00 AM
Brown Deer-based Bank Mutual Corp. reported first quarter net income was $2.5 million, up 120 percent from $1.2 million the same quarter a year ago.

The company attributed the earnings increase to higher net interest income, higher net loan servicing fee revenue and lower net losses and expenses on foreclosed real estate.

Net interest income was $1.3 million for the quarter, up 8.6 percent from the first quarter of 2012. The increase came mostly from a 32 basis point net interest margin improvement, from 2.65 percent a year ago to 2.97 percent in the most recent quarter. Bank Mutual achieved the improvement through changes to its earning asset and deposit funding mixes.

Bank Mutual saw a 19 basis point decline in the average cost of certificates of deposit. The company also repaid $100 million in high cost borrowings from the Federal Home Loan Bank of Chicago in the second quarter of 2012. Both contributed to the improved net interest margin.

"Our net interest margin improved for the third quarter in a row on the strength of improved earning asset and funding mixes, as well as lower absolute funding costs," said chairman and chief executive officer Michael Crowley Jr.

Bank Mutual did, however, report lower gains on loan sales and a higher provision for loan losses. Average earning assets declined to $67.1 million, down 3 percent from a year ago. Its provision for loan losses was $891,000, up from $51,000 in the same quarter last year.

The bank said its loan portfolio has seen continued effects of slow economic growth, relatively high unemployment and low real estate values.

"Strengthening our net interest margin is a high priority for us, which will offset expected declines in revenue from our mortgage banking operations as the year progresses," said president David Baumgarten.

Baumgarten will officially take the helm as CEO on July 1. Crowley will retire into the role of chairman of the board of directors.

Looking forward, Baumgarten plans to focus on making acquisitions.

Read more in a recent Q&A with BizTimes.

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Mortgage banking fuels revenues for Associated Bank
April 23, 2013 10:00 AM
Associated Banc-Corp reported first quarter net income of $46 million, or 27 cents per share, up from $41 million, or 24 cents per share, in the same quarter a year ago.

The Green Bay-based parent company of Associated Bank attributed the growth to a record quarter for mortgage banking and a continued focus on expense management.

Average loan balances grew by $317 million, an 8 percent increase year-over-year. The growth was mostly in the commercial and commercial real estate businesses.

"We are pleased with our solid results this quarter and remain optimistic about our long term prospects," said Associated Bank president and chief executive officer Philip Flynn. "Our mortgage banking business had a very strong quarter and we remain focused on expense management. We continue to execute on our long-term growth strategies with a focus on relationship banking for consumers and businesses, and remain disciplined in our approach to capital deployment through share buybacks and dividend payments."

Average deposits were $17.1 billion, up 14 percent from a year ago. Capital ratios were strong, with a tier 1 common equity ratio of 11.64 percent.

Associated repurchased $30 million in common stock during the first quarter, at an average cost of $14.31.

Associated expects earning asset yields to continue to compress and lowering deposit costs to become more challenging over the remainder of 2013, Flynn said.

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PNC Bank reports strong quarter
April 23, 2013 10:00 AM
The PNC Financial Services Group Inc., the Pittsburgh-based parent company of PNC Bank, reported first quarter net income of $1.0 billion, or $1.76 per share, compared with $811 million, or $1.44 per share, in the same period a year ago.

"PNC's diversified businesses delivered solid revenue despite weaker lending in the first quarter and combined with significantly reduced expenses drove improved returns for our shareholders," said James Rohr, chairman and chief executive officer of PNC. "We are making important progress on all of our strategic priorities as we continue to focus on growing deposits, loans and revenue. Our strong capital position should enable us to continue to invest to meet our clients' needs even as we remain committed to disciplined expense management over the course of the year."

The company, which has a presence in the Milwaukee market, said its quarterly earnings growth resulted from continued customer growth and a significant increase in pretax pre-provision earnings driven by solid revenue and a substantial reduction in expenses from fourth quarter.

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U.S. Bank quarterly profits rise 6.7%
April 23, 2013 10:00 AM
Minneapolis-based U.S. Bancorp reported that its first quarter earnings rose 6.7 percent. Net earnings rose to $1.43 billion, or 73 cents per share, for the first quarter ended March 31, from $1.34 billion, or 67 cents per share, a year earlier.

However, revenue for the quarter fell 1.1 percent to $4.87 billion.

Other highlights for U.S. Bank's first quarter included: a return on average assets of 1.65 percent, new lending activity of $57.3 billion during the first quarter including $27.1 billion of new and renewed commercial and commercial real estate commitments, 5.8 percent growth in average total loans and 7.3 percent growth in average deposits.

"Our first quarter earnings…reflected our company's continuing ability to perform against the backdrop of a slow-growth, uncertain economic environment," said U.S. Bancorp chairman, president and chief executive officer Richard K. Davis. "As we begin celebrating the 150th anniversary of our company, we reflect on the many institutions, customers, communities and employees that were important to our past and have helped create our future. Our company has expanded from small beginnings to where we are today – a company recognized for our industry-leading financial performance, prudent risk management, capital generation, and a diversified business model, and a company that serves and supports its customers, communities and employees. I look forward to our strong future, knowing that we have built U.S. Bancorp to produce consistent, predictable and repeatable results for the benefit of all of our constituents and, most importantly, our shareholders."

U.S. Bank has a significant presence in the Wisconsin market.

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Badger Meter acquires California technology company
April 23, 2013 10:00 AM
Milwaukee-based Badger Meter Inc. has acquired Los Gatos, Calif.-based software technology company Aquacue Inc. for $14 million.

The addition will help advance Badger Meter's water usage management technology.

"Although this is an early-stage company without significant sales, we believe Aquacue's intellectual property can move us further down the road in adding new technology enhancements to our Advanced Metering Analytics automatic meter reading system," said Richard Meeusen, chairman, president and chief executive officer of Badger Meter.

Badger Meter expects to introduce new products using Aquacue technologies in the early part of next year, he said. While the acquisition won't be immediately accretive, it will help the company long term, he said.

"As we integrate the new products that use Aquacue technology, we should be able to gain marketshare for our business, and that's where we'll see accretion from the acquisition," Meeusen said.

The acquisition was announced in Badger Meter's first quarter earnings release. The report showed a weak first quarter performance.

Badger Meter's net earnings were $2.9 million in the first quarter, down 53.5 percent from $6.2 million in the first quarter of 2012.

Diluted earnings per share were 20 cents, down 52.4 percent from 42 cents in the first quarter of 2012.

Meeusen attributed the decline to weather, municipal budget constraints and Hurricane Sandy.

"The utility business is seasonal, with fewer meter installations typically completed during the winter months. Our experience has been that more snow cover correlates to lower sales. According to the Rutgers Global Snow Lab, the 48 contiguous U.S. states had 47 percent more snow cover this year than in last year's first quarter. In addition to the snow cover, other factors contributing to our lower first quarter sales include a 30 percent decrease in sales to utilities in communities in the Northeast affected by Hurricane Sandy and lingering concerns related to municipal budgets. We believe these factors are temporary events that have delayed some meter orders into future quarters and our market share has not changed."

The snow cover in the first quarter was similar to that seen in the first quarter of 2011, said Richard Johnson, senior vice president of finance and chief financial officer.

"Often these weather events cause delays in meter orders, with a weaker first quarter followed by a stronger second quarter as seen in 2011," Johnson said. "We don't believe that this is anything more than our normal lumpiness."

Badger Meter also announced an exclusive agreement it recently signed with Ocala, Fla.-based Elster AMCO Water LLC. Elster previously announced its decision to exit the mechanical water meter business in North America as of June 30.

In the aftermath of the announcement, Badger Meter formed an agreement with Elster to become the recommended supplier for its mechanical customers. Badger will have the advantage of an Elster representative on its sales calls as it works to gain those customers in a scramble with competitors for marketshare.

"We view this as a significant opportunity for Badger Meter," Meeusen said. "We believe that this agreement will have a positive impact on the second half of this year."

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Late spring clips Briggs & Stratton
April 23, 2013 10:00 AM
Briggs & Stratton Corp. reported fiscal third quarter net income of $38.5 million, or 78 cents per share, down from $39.9 million, or 80 cents per share, in the same period a year ago.

The company's quarterly net sales dipped to $637.3 million from $720.1 million a year earlier.

"We continue to see soft demand across international markets for engines and products due to macroeconomic concerns weighing on the minds of consumers and unfavorable weather conditions particularly in Australasia. Brazil continues to be a bright spot for growing our international products business as our Branco acquisition is performing as anticipated," said Todd Teske, chairman, president and chief executive officer of Briggs & Stratton. "Here in the U.S., the spring lawn and garden season has been delayed by at least a few weeks due to a prolonged cold and wet spring in many parts of the country. This is significantly different from last year when we had an unusually early start to spring with very warm weather across the country. The drought that impacted our industry so significantly last season appears to be improving east of the Mississippi River which is encouraging for the upcoming season. Despite a later start to spring compared to last year, we are optimistic that the U.S. market will be in line with our anticipated growth projections of 4 to 6 percent."

Due to continued weakness in consumer spending for outdoor power equipment in international markets and a significantly reduced market for snow thrower products in the United States and Europe, the company is revising its fiscal 2013 net income projections to be in a range of $56 million to $65 million, or $1.16 to $1.33 per diluted share. These net income projections include the results of the Branco acquisition closed on Dec. 7, 2012 and are prior to the impact of any additional share repurchases and costs related to our announced restructuring programs.

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Molly Newman This exclusive news bulletin is compiled by BizTimes Milwaukee reporter Molly Newman. This bulletin is published every Monday morning. Send manufacturing industry news and tips to molly.newman@biztimes.com or call her at (414) 336-7144.

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