Tuesday, September 30, 2014
Inquirer Daily News

POSTED: Wednesday, September 24, 2014, 10:24 AM
Bruce Van Saun is Chairman and Chief Executive Officer of RBS Citizens Financial Group, Inc. and head of RBS Americas. He is a member of the Royal Bank of Scotland Group executive committee. RBS is the parent company of Citizens Bank. (photo courtesy of Citizens Bank)

CEO interview at UPDATE below. Royal Bank of Scotland, owner of Citizens Financial Group and its Citizens Bank of Pennsylvania network, says it has raised $3 billion, or $21.50 a share, from the sale of 25% of its stock to public investors.  Royal had hoped to sell at up to $24 a share -- still a discount to other large banks. But shares jumped as much as 6% in early trading, enriching the brokerages who are retailing shares to outside investors. The proceeds will go to RBS, still reeling from the long British and European recession.

Citizens chief executive Bruce Van Saun tapped the ceremonial bell at the New York Stock Exchange to mark the start of trading (symbol: CFG) this morning. The Citizens share sale marks the "largest-ever U.S. bank IPO," according to SNL Financial LC, Charlottesville, Va., but that says more about the way banks raise money than it does about current demand.  Citizens competes with PNC, Wells Fargo, TD and other multistate and local lenders for business, consumer and real estate customers in Pennsylvania and other Northeast and Midwest states. The company is based in Providence, R.I. 

UPDATE: Van Saun, from the NYSE: "It's a big day for us. We'll be back working hard tomorrow on our plans." He was at the stock exchange in 2007 when his then-employer Bank of New York merged with Mellon Bank and got re-listed. "But this time, I got to put my thumb on the bell. It's great. People have worked really really hard to get us into this position."

POSTED: Tuesday, September 23, 2014, 12:39 PM

The Third Federal Reserve District's board chairman James Nevels, founder of the well-connected Swarthmore Group, and vice chairman Michael Angelakis, CEO of Comcast Corp., are leading the effort to find a replacement for Charles I. Plosser, the engineer-turned-economist and prominent inflation "hawk" who served as president and CEO of the Philly Fed since 2006, consistently urging a harder line on inflation and more systematic policies on interest rates and bank shutdowns. 

Plosser enjoyed national prominence as a skeptic that the Fed can do much, in the long run, beyond stabilizing the price of money. He defended the Fed to libertarians and critics -- we need a central bank, he said, and the gold standadr is not realistic -- but otherwise urged a conservative, systematic, long-term approach over "ad hoc" efforts to jump-start or inflate the economy (example here, read Plosser speeches at the Philly Fed Web site here.) 

Did that make Plosser a good representative of the Fed to Philadelphia, or a good spokesman for Philadelphia in his on-and-off service to the Open Markets Committee that sets interest rate targets?

POSTED: Tuesday, September 23, 2014, 10:10 AM

Philadelphia's slow-grow economy depends more than most places on colleges, hospitals and other nonprofits, and the donors who give them millions. Institutions love to publicize these gifts when they are promised. But how often are they funded? Sometimes the millions never arrive, and nobody wants to talk about it. Second of two examples from my Sunday Philadelphia Inquirer column:

In 2005, University of Pennsylvania president Amy Gutmann announced that law school dean Michael A. Fitts would be honored by a $1 million gift to start the Nevels-Fitts Scholarship program, funded by James E. Nevels, a double-degree Penn grad who is chairman of Swarthmore Group, a stock-picking firm that counted Pennsylvania state and local government agencies as clients. Nevels also headed the state-controlled School Reform Commission, charged with turning around Philadelphia public schools.

"As the first person in my family to attend college, I feel I owe a great debt to Penn Law School, which paved the way for my subsequent success," Nevels said in a statement at the time. "The least I can do is help others gain the same advantage that a Penn education afforded me."

POSTED: Tuesday, September 23, 2014, 9:56 AM
Earle I. Mack , a real estate mogul, agreed to have his name taken off the law school at Drexel. (Photo by Scott Wintrow (Getty Images)

Philadelphia's slow-grow economy depends more than most places on colleges, hospitals and other nonprofits, and the donors who give them millions. Institutions love to publicize these gifts. But how often are they funded as promised? Sometimes the millions never arrive, and nobody wants to talk about it. From my Sunday Philadelphia Inquirer column:

Drexel University's plan to name its law school for plaintiff's lawyer Thomas R. Kline, for his pledge of $50 million in cash and real estate, is the second time that school has sold naming rights. Maybe it'll last longer this time: 

In 2008, Drexel said the law school would be named for 1959 grad Earle I. Mack, the real estate mogul who ran Mack-Cali Realty Corp., in exchange for Mack's pledge of a $15 million matching grant, once Drexel found a second $15 million. 

The recession hammered charities and law school enrollments. Still, Mack went ahead and gave Drexel $4 million in 2010, according to his foundation's tax returns. Mack also made smaller gifts to Drexel totaling at least $180,000 in 2009-12.  But last December, Drexel and Mack agreed to take his name off the school. In a polite statement citing "the unprecedented economic pressures facing law schools today," they agreed "a change is warranted in order for Drexel University to attract other major benefactors to the Law School."

POSTED: Tuesday, September 23, 2014, 9:39 AM

Larsen MacColl Partners LP,  the Wayne investment firm headed by Princeton grads Jeff Larsen (ex of Chartwell Investment Partners) and Tim McColl (Chatterton Partners), says it has bought S. Walter, a Northeast Philadelphia company that says it designs and distributes customized shopping bags, boxes, wrapping paper and bows for more than 10,000 U.S. and Canada customers. The buyer won't tell the price, but notes it typically buys "established and profitable companies" with at least $5 million in yearly sales. 

The buyer named Kurt Koloseike, former chief executive of FlagZone, as S. Walter's new chief executive, Larsen MacColl partner Satya Ponnuru said in a statement, adding that the firm plans to use S. Walter's "strong market position, first-rate management team and unique design and global sourcing" to "aggressively grow the Company both organically and through acquisition.”

Koloseike, in a statement, called the sale "an exciting new era for S. Walter," founded by Simon Walter in 1904 and based at 2900 Grant Ave. by Northeast Philadelphia Airport. Koloseike said the company has the cash, people and expertise "to hire additional talent and pursue strategic acquisitions for long term growth." NewSpring Mezzanine, a Radnor investment fund, and Wells Fargo Bank financed the deal. Larsen MacColl was represented by law firm Miller & Martin PLLC.

POSTED: Monday, September 22, 2014, 1:31 PM
Irvin E. Richter, Chairman and CEO, Hill International, at his desk in Marlton. DAVID M WARREN / Staff Photographer

Hill International, the Marlton-based, multinational construction-management and consulting company, says it has settled on Brandywine Realty Trust's One Commerce, Square, 2005 Market Street, as the new location for its corporate headquarters. "We expect to move 120 jobs from Marlton immediately when our (Philly) lease begins next May, and to add up to 100 more" by 2018, David Richter, Hill's president and chief operating officer, told me. He expects the later group of 100 will be "new hires," Richter added.

"Hill will be paying higher rent" in Philadelphia, Richter said. But he's been talking to Philadelphia and Pennsylvania officials about taxpayer incentives to move to a 60,000 sq. ft. downtown space since I wrote about Hill's search fall. Result:  "We received financial incentives from the Commonwealth and the City totalling $4.4 million," mostly in grants, Richter says. The state and city have offered sweeteners that will more than cancel higher costs of a few dollars a square foot for years to come:

That includes state money:
- $1 million from a Pennsylvania First program grant
- Up to $666,000 in Pa. Job Creation Tax Credits
- Up to $34,000 in Pa. Workforce and Economic Development Network training funds

POSTED: Friday, September 19, 2014, 10:28 AM
Bok High School at 9th and Mifflin streets in Philadelphia on June 4, 2013. (David Maialetti / Staff Photographer)

Lindsey Scannapieco's Scout Ltd. LLC says this morning that Philadelphia's state-controlled School Reform Commission and its cash-strapped school district have picked Scout over other applicants "to transform the historic, vacant Edward W. Bok School in South Philadelphia into a creative anchor for the burgeoning East Passyunk neighborhood featuring studios and live-work space for the maker community."

Update - Confirmed: the building is to be apartments, mostly. They're not saying how many.

The eight-story Bok, with its Art Deco trimmings, was designed by architect Irwin Catherine and opened in 1938. Scannapieco, daughter of Center City condo and apartment builder Tom Scannapieco, plans underground parking and ground-floor "temporary, artistic uses" that may be followed by retail or office uses.  More at www.scout-ltd.com/.

POSTED: Friday, September 19, 2014, 10:07 AM

Citizens Bank owner Citizens Financial Group Inc., of Providence, R.I., in its Form S-1 initial public share offering (IPO) documents as amended Sept. 8 (read it and more recent updates here), hopes to sell the public at least 140 million shares at around $24 a share, a little above the company's tangible book value, and a discount to the typical U.S. large regional bank (which trades at about 40% over book), writes Terry McEvoy, an analyst at the brokerage Stern Agee, in a report to clients today.

The cash will go, not to Citizens, but to its recent owner, Royal Bank of Scotland, which is trying to raise cash and cut expenses, McEvoy notes. Once it goes public, the company will trade under the ticker CFG. Citizens owns the former PSFS, Girard and Mellon Bank branches in the Philadelphia area, where it rivals PNC, TD and market-leader Wells Fargo for consumer and business accounts..

As part of RBS, "Citizens’ sub-par operating performance went either unnoticed or was acceptable," and the company "poorly executed" its Midwest expansion since buying Charter One Bank in 2004, McEvoy writes. Under new boss Bruce Van Saun (who I profiled here last year), McEvoy adds, "the company’s commercial banking business is producing solid results, whereas additional resources and management focus will be needed to improve the consumer platform, in our view."  

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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