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VOL. 6 | NO. 19 | Saturday, May 4, 2013

Daily Digest

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Argent Trust Co. Acquires South Carolina Firm

Argent Trust Co., which has its executive headquarters in Nashville, has acquired South Carolina-based East Broad Trust Co.

That move adds to existing Argent offices in Nashville, Memphis and Louisville, Ky. It also significantly extends Argent’s geographical reach and is part of a growth market strategy of Argent’s parent company, Argent Financial Group.

Argent also recently announced a merger with Memphis-based Highland Capital Management and an acquisition of The Trust Co. of San Antonio.

Medtronic to Cut 60 Memphis Jobs

Medtronic Spine, the Memphis-based division of Medtronic Inc., will cut about 60 local jobs as part of a strategy to reduce overall costs by 5 percent, a company spokesman confirmed.

The Spine division employs about 1,300 in Memphis. Victor Rocha, a Medtronic spokesman, said the workers learned of the cuts Wednesday, May 1.

Medtronic Spine also will trim 230 positions globally, including the Memphis job cuts, from its worldwide workforce of 5,600. Minneapolis-based Medtronic Inc. employs about 45,000.

Eric Epperson, senior director of public relations and communications, told The Daily News in an April 26 story that Medtronic Spine faces increased pricing pressure, more complex customer device purchasing processes, expanded medical device governmental review times and requirements, and the medical device excise tax.While the plan to trim costs by 5 percent was communicated to employees on April 4, the specific details weren’t available until last week.

Methodist Germantown Names Neel Chief of Staff

Michael Neel has been named chief of staff for Methodist Le Bonheur Germantown Hospital.

He will oversee medical staff and focus on providing high quality, cost-effective care in a manner that is both patient and family centered, the hospital group said in a prepared statement.

Neel is fellowship trained in orthopedic oncology and is a total joint surgeon with OrthoMemphis, a division of MSK Group PC.

He is also a clinical assistant professor of orthopedics at the University of Tennessee Health Science Center.

15-Year Mortgage Rate at Record 2.56 Percent

The average U.S. rate on the 15-year fixed mortgage fell to a new record low last week, and the rate on the 30-year fixed loan declined. Cheaper mortgages have encouraged more home buying and refinancing.

Mortgage buyer Freddie Mac said Thursday that the average rate for the 15-year fixed mortgage slipped to 2.56 percent. That’s the lowest on records dating to 1991. It fell from 2.61 percent last week, the previous record.

The rate on the 30-year loan declined to 3.35 percent from 3.40 percent last week. That’s near the average rate of 3.31 percent reached in November, the lowest on records dating back to 1971.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year mortgages edged down to 0.7 point from 0.8 point last week. The fee for 15-year loans was unchanged at 0.7 point. The average rate on a one-year adjustable-rate mortgage fell to 2.56 percent from 2.62 percent last week. The fee for one-year adjustable-rate loans held steady at 0.3 point. The average rate on a five-year adjustable-rate mortgage declined to 2.56 percent from 2.58 percent. The fee was stable at 0.5 point.

Memphis on List of Top Cities for Home Flipping

A new report says metro Orlando leads the nation in the profitability of flipping homes.

The report released by RealtryTrac on Thursday says Orlando last year was top in the nation in terms of the rate of return for purchasing a house and then selling it within six months.

Other metro areas that ranked at the top of the list were Las Vegas; Phoenix; Tampa; Memphis; Miami; Lakeland, Fla.; Nashville; Sarasota, Fla.; and Tuscon, Ariz.

The report says the average purchase price for a flipped home in Orlando was $103,000, and the average price it sold for was more than $168,000.

US Jobless Claims Fall to 5-Year Low of 324,000

The number of Americans seeking unemployment aid fell last week to seasonally adjusted 324,000, the lowest since January 2008. The drop points to fewer layoffs and possibly more hiring.

The Labor Department said Thursday that weekly applications fell 18,000, the second straight sharp drop. The four-week average, a less volatile measure, plummeted 16,000 to 342,250, close to a five-year low.

Applications are a proxy for layoffs. When they fall below 350,000, it is generally consistent with moderate hiring.

But layoffs are only half the equation: Companies also need to be confident enough to add workers for job growth to pick up and lower the unemployment rate. Many have held off adding new workers in recent months, possibly because of concerns about the impact of federal spending cuts and tax increases.

Economists forecast that the economy added 160,000 jobs last month. That’s much better than the 88,000 added in March, but below last year’s pace of nearly 185,000 per month. The unemployment rate is expected to remain unchanged at 7.6 percent.

But many have lowered their estimates this week, some as low as 120,000, after several reports suggested that slower growth is dragging down hiring. The government will release the April employment report Friday.

School Board Begins Schools Closing Process

The countywide school board should begin public hearings in August as a first step toward considering the closings of a dozen schools in the 2014-2015 school year.

The board voted Tuesday, April 30, to begin the process.

Gordon Elementary School was added to the list of 11 announced by interim schools superintendent Dorsey Hopson last week that included three high schools – Northside, Carver and Westwood. Gordon had been considered for closing last year by the school board but was taken off the list by then-Memphis City Schools superintendent Kriner Cash because of the co-location of an Achievement School District school for Humes Middle School students at Gordon.

The state-run ASD school for the Humes students will move into Humes with the 2013-2014 school year.

In other action Tuesday, the board approved a $21.9 million contract with GCA of Knoxville to outsource school custodial services in the consolidated school system.

And school board members also gave the green light to a hybrid that outsources some transportation services while keeping a fleet of in-house buses. It amounts to a $9.5 million contract with Durham School Services, which would operate buses in the northwest and southwest parts of Memphis. The school district’s bus fleet would operate at schools in the rest of Shelby County but with a route system that has been pared down in the coming schools merger.

Hopson told board members Tuesday that the hybrid model will also involve three start times for schools across the merged system – 7 a.m., 8 a.m. and 9 a.m. The board is to get details of what schools get what start times later this week.

Legislature Leaves Open Question About Judges

When the legislature failed to extend the life of the Judicial Nominating Commission, it effectively ended merit-based selection of judges in Tennessee. It also left open the question about whether there is any mechanism to replace a Tennessee judge who steps down, retires or dies.

Voters will get to decide in November 2014 whether they want to amend the state Constitution to change the way judges are selected in Tennessee. The amendment would give the governor the right to appoint appellate court judges followed by confirmation of the legislature.

Some lawyers warn the legislature has left Tennessee without a mechanism to pick judges before voters go to the polls next year because the commission that is set to expire June 31 currently helps the governor select judges.

Rhodes Honors Buckman With Honorary Degree

Robert Buckman, the chairman and CEO of Buckman Laboratories’ holding company from 1978 to 2000, will receive an honorary Doctor of Humanities degree from Rhodes College at the university’s commencement May 11.

Buckman earned a bachelor’s degree in chemical engineering from Purdue University in 1959 and a master’s in business from the University of Chicago in 1961. He’s been a member of the Rhodes College board of trustees and is a longtime Rhodes benefactor.

Buckman Laboratories was founded in 1945 in Memphis by Buckman’s father, Dr. Stanley Buckman, and it has evolved into a global specialty chemical company. Robert Buckman assumed leadership of the company in 1978 and under his guidance, the company invested in expanding facilities worldwide and laid the groundwork for a computerized communications network to link all Buckman associate companies.

US Construction Spending Down 1.7 Percent in March

Spending on U.S. construction projects fell in March as the biggest drop in government projects in more than a decade overwhelmed strength in home building.

Construction spending fell 1.7 percent in March, compared with February, the Commerce Department reported Wednesday. It marked the second decline in the past three months. January activity plunged a record 4 percent, which represented a downward revision from a previous estimate of a 2.1 percent decline.

Even with the recent weakness, construction activity was 4.8 percent higher in March than a year ago at a seasonally adjusted $856.7 billion.

For March, private residential construction rose 0.4 percent, the only major sector showing a gain. Government construction activity fell 4.1 percent, the biggest drop since March 2002, while private nonresidential building was down 1.5 percent.

The weakness in government activity occurred at all levels. Spending by state and local governments was down 4.2 percent while spending by the federal government on construction projects was down 1.7 percent. Economists are expecting federal activity to be reduced in coming months as different agencies cope with across-the-board spending cuts that went into effect on March 1.

The weakness in nonresidential activity reflected declines in spending on commercial projects such as shopping centers.

For all of 2012, construction spending increased 9.8 percent. That marked the first annual gain after five straight years of declines. Construction spending is still well below healthy levels although housing is helping to support building activity in the face of weakness in government projects.

Survey: Private Employers Add Just 119,000 Jobs in April

A private survey shows U.S. companies added just 119,000 jobs in April, the fewest in seven months.

The report Wednesday from payroll processor ADP suggests that government spending cuts and higher taxes could be starting to weigh on the job market. And new requirements under President Barack Obama’s health care law may be prompting some small and mid-size companies to hold back on hiring.

ADP also said that hiring in March was slower than first thought: the survey shows just 131,000 added, down from an initial estimate of 158,000.

The slowdown in April was broad-based. Manufacturers cut 10,000 jobs, while firms in the service sector added the fewest in seven months. Construction firms added 15,000 jobs.

The ADP report is derived from payroll data and tracks private employment each month. It has diverged at times from the government’s more comprehensive monthly jobs report, which will be released Friday. In March, the government said employers added 88,000 jobs, much lower than ADP’s figure.

Thai Executives Visit Memphis This Week

The Mid-South Quality Productivity Center is playing host this week to one of its international partners, the Federal Thailand Productivity Institute.

The Federal Thailand Productivity Institute is visiting Memphis to help the center celebrate its 25th anniversary and to include Memphis as part of a “Global Best Practices” tour in the U.S.

The Federal Thailand Productivity Institute group includes 10 C-level Thai executives who will interact with 50 Memphis business executives on their tour at several Memphis companies and organizations.

The group will tour Memphis organizations including FedEx Corp., St. Jude Children’s Research Hospital and Elvis Presley Enterprises, among others.

Bank of Fayette County Repays TARP Funds

The Bank of Fayette County has finished paying back the slightly more than $6 million it got from the federal government as part of the Troubled Asset Relief Program, or TARP, initiative.

The Bank of Fayette County is the dominant bank in the county, with almost 40 percent of Fayette’s customer deposit share.

It, like financial institutions around the state and the rest of the country, was encouraged to participate a few years ago in TARP, a widespread bank industry rescue by the federal government that injected capital into banks that needed it as well as banks that didn’t.

Other large area financial institutions that also got TARP investments, such as Memphis-based First Horizon National Corp. and Magna Bank, also have paid back their TARP funds and likewise exited the program.

RedRover Adds New Faces, Workshops

RedRover Sales & Marketing has some new faces on staff – and something new to offer the business community and civic groups.

The company’s sales trainer, Ty Skinner, has been promoted to director of client service on the sales side of the house, and she’s also taking RedRover’s portfolio to a new level by offering a series of sales training workshops for businesses and community organizations.

The workshops are a first for RedRover, which for now will have one in May and one in June.

Skinner moved to Memphis from Denver last year to join RedRover.

Meanwhile, RedRover also recently added account executive Catherine “Kitty” Keller to its team. Keller came to RedRover from the U.S. Chamber of Commerce, where she worked as communications director for one of the chamber’s divisions.

Keller is RedRover’s lead PR strategist and also serves clients’ executive communications and marketing needs.

Obama: Health Care Law Mostly in Place

President Barack Obama argues that his signature health care law is already benefiting most Americans even if they don’t know it.

The president says despite what he calls “sky is falling” predictions, the Affordable Care Act’s provisions are already in place for those with health insurance.

He says what’s left is to help those Americans who don’t have health care coverage to obtain it. He acknowledged that is “a big undertaking” and predicted there could still be some glitches as the details are worked out.

Obama was speaking at a news conference Tuesday at the White House.

The Daily News Takes Two TAPME Awards

The Daily News and The Memphis News took two awards at the annual Tennessee Associated Press Managing Editors competition.

The publications placed first in the competition for best editorial among Division 3 publications, which includes a daily circulation of up to 15,000, for an editorial in the July 27 Memphis News edition on the state of local green initiatives that also ran on the daily website.

Reporter Andy Meek placed third in the same division for business news coverage for his Jan. 13 Memphis News cover story “Trading Hands.” The story, which also appeared in The Daily News, chronicled the sale of Morgan Keegan and Co. Inc. to Raymond James Financial Inc. The story was the latest in a series of stories by Meek on Morgan Keegan over several years that began with coverage of the partnership between Morgan Keegan and Regions Financial Corp.

Whalum Election Lawsuit Gets May 21 Trial Date

A challenge of the August election results by countywide school board member Kenneth Whalum Jr. is scheduled to go to trial May 21 in Shelby County Chancery Court. Chancellor Kenny Armstrong set the trial date Monday, April 29, during a status conference at the Shelby County Courthouse.

Whalum is challenging his 108-vote loss to Kevin Woods, also on the countywide school board, for the District 4 seat. The seat is one of seven that will become the school board effective Sept. 1. That is when the old Memphis City Schools board and Shelby County Schools board positions are phased out on what is now a 23-member school board.

The Shelby County Election Commission has identified 837 disputed votes in the District 4 race. The voters who cast those ballots include citizens who lived outside the district but had the race on their ballots and those who lived within the district but had another district school board race on their ballots.

Armstrong has several options once he hears all of the proof in the case. He could affirm the results with Woods as the winner or overturn the results and declare Whalum the winner. Or he could order a new special election.

Pending US Home Sales Reach 3-Year High in March

The number of Americans who signed contracts to buy homes rose in March to the highest level in three years, pointing to higher sales this spring.

The National Association of Realtors said Monday that its seasonally adjusted index for pending home sales rose 1.5 percent to 105.7. That’s the highest since April 2010, when a homebuyer’s tax credit boosted sales. It’s also above February’s reading of 104.1.

There is generally a one- to two-month lag between a signed contract and a completed sale. Contract signings rose in the South, West and Midwest, and were unchanged in the Northeast.

Steady job gains and near-record low mortgage rates have helped drive home sales up over the past year. Signed contracts are 7 percent higher than the same month a year earlier.

But completed sales have slowed in recent months – and dipped in March – because of a limited supply of available homes on the market. The number of homes for sale has fallen nearly 17 percent in the past year to 1.93 million, the Realtors’ group said last week.

Germantown Fire House Gets LEED Gold Award

The new Germantown Fire House 4 at 30301 Forest Hill-Irene Road, designed by Renaissance Group architects, has earned the status of being the first LEED Gold building for the city of Germantown and the first LEED Gold municipal facility in West Tennessee.

LEED stands for Leadership in Energy and Environmental Design.

Of the material used in the fire house construction, 45.8 percent was extracted and manufactured within 500 miles of the project site, and 23 percent consisted of recycled material. A highly reflective heat-reducing roof was installed, resulting in a 23.6 percent energy savings, and a 30.9 percent reduction in potable water usage was achieved over a typical baseline building.

The new fire house totals about 14,500 square feet, includes eight individual sleeping rooms with space for two more, a 50-seat training center, kitchen and dining area, exercise area, three-lane drive-thru apparatus bay with a five-vehicle capacity, radiant slab heating system and an automatic release carbon monoxide vehicle exhaust system. The facility also houses an emergency backup generator and Emergency 911 backup dispatch center.

Haslam to Keynote Lincoln Day Dinner

Tennessee Gov. Bill Haslam will be the keynote speaker for the Shelby County Republican Party’s annual Lincoln Day Gala. The fundraiser will be May 17 at the Holiday Inn University of Memphis at 7 p.m. The gala, which is in its 38th year, is the party’s largest annual fundraiser with each county party across the state and in other states holding some version of a Lincoln Day event starting in February.

Haslam has attended past Lincoln Day events in Shelby County including the 2010 event that featured him and other contenders in the crowded GOP primary for governor that year.

Tennessee GOP: Infighting Typical of Supermajority

Republicans, positioned to make major changes to state law with the governorship and a supermajority in the General Assembly, ended the session with some high-profile measures derailed by infighting. Leaders say it was to be expected, and they had been warning of it since winning more than two-thirds of the legislative seats in November.

“Does it mean we’ll get everything we want, I don’t necessarily assume that,” Republican Gov. Bill Haslam said at the time.

Proposals that failed this session ranged from Haslam’s initiative to create a school voucher program in Tennessee to Republican Senate Speaker Ron Ramsey’s plan to redraw Tennessee’s judicial districts for the first time since 1984.

The latter probably caused the most tension on the final day of the 108th Tennessee General Assembly last Friday when House members defeated it 66-28.

Most of those opposing the plan – which would have affected 22 counties in eight districts and reduced the number of judicial districts from 31 to 29 – said they felt they were being dictated to by the Senate, particularly Ramsey.

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