Cigna Corp. confirmed Thursday that it will keep its pharmacy-benefits management business, after considering a possible sale earlier this year.

Responding to a question from Goldman Sachs Group Inc. analyst Matthew Borsh, Cigna president David M. Cordani said the firm decided its PBM was “important strategically to us as we go forward.”

PBMs administer prescription-drug benefits for health-plan operators and often run mail-order pharmacies.

Many big health insurers began looking at selling their PBM units after WellPoint Inc. struck a deal with Express Scripts Inc. to unload its PBM for $4.68 billion.

Solution Saturday

April 15 is months away, but that’s not keeping the IRS from holding “Solution Saturday” tomorrow to help individuals and small-business owners with tax problems.

People can go to the IRS office at Sixth and Arch Streets, Philadelphia, between 9 a.m. and 2 p.m., and meet face-to-face with tax experts to address their specific issues, said spokesman David D. Stewart.

I can’t imagine someone who hasn’t paid his or her taxes in a few years strolling into the IRS to try to make it right, but that’s what the IRS is hoping will happen.

The goal is to get those who’ve dropped out of the system back in and help those in danger of falling behind because of financial challenges, he said.

Testing, testing

Rosetta Genomics Ltd. , based in Israel with a big lab in West Philadelphia, named a former Johnson & Johnson executive as its new president and chief executive officer this week.

Kenneth A. Berlin, 45, succeeds Amir Avniel, who’d announced in September that he would step down.

Berlin had been general manager of Veridex L.L.C., a J&J unit in Raritan, N.J., that employs about 100 people. Veridex bought the assets of Immunicon Corp., a cancer-diagnostics firm in Huntingdon Valley that went bankrupt in summer 2008.

The Nasdaq-listed Rosetta Genomics is developing medical diagnostic tools based on microRNA technology. Its Philadelphia lab is in the University City Science Center.

The Web site of the Philadelphia Fund shows the city skyline in silhouette.

But this mutual fund has had little to do with its namesake for years. In 10 days, even the name will go away, spelling the end for a fund with roots pre-dating securities regulation.

Shareholders of this mutual fund with $54 million in assets as of Sept. 15 are being asked to approve a reorganization under which Dallas-based Westwood Holdings Group Inc. would absorb the assets into its WHG LargeCap Value Fund.

The reason for the deal? Boca Raton, Fla.-based Baxter Financial Corp. is getting out of the asset management business. Its president, Donald H. Baxter, has been the portfolio manager for the no-load fund since May 1987.

Another reason is that the Philadelphia Fund has been too small in terms of assets to generate “economies of scale,” Baxter writes in a letter to shareholders.

In Westwood, Baxter Financial found a firm with economies of scale. Westwood had assets under management of $8.2 billion as of June 30. Its WHG LargeCap fund had total net assets of $128 million as of Sept. 30.

Philadelphia has earned its place in mutual fund history, but it’s largely been written by the Vanguard Group, in Malvern, which manages about $1 trillion in assets.

The Philadelphia Fund never experienced much of a growth spurt, even though fund-tracker Lipper’s rankings show it has tended to perform pretty well compared to other funds with a large-capitalization value strategy.

Like nearly every stock fund, the Philadelphia Fund’s total return was negative for 2008 - down 24.5 percent. But its peer group was down 36 percent.

Today, there’s nothing Philadelphia-like about the fund’s portfolio, which had 24 big-name stocks, such as McDonald’s, Wal-Mart and Coca-Cola, at the end of August.

All that’s left is its history. A group of businessmen, led by Philadelphia banker W. Wallace Alexander, pooled about $200,000 to start the fund in 1923. According to Bloomberg News, its management was transferred to New York’s Fahnestock & Co. in 1952.

Baxter acquired control of the fund in 1989. Twenty years later, he’ll turn it over to Westwood, and one of the thousands of funds that overpopulate the mutual fund industry will be gone.
 

Far from the debate over “too big to fail” plenty of small-business owners have grumbled that they must be “too small to matter.”

Every politician acknowledges how important the nation’s 29 million small businesses are to the economy. But their actions over the last year have been aimed at the big threats to the financial system.

Yesterday, President Obama announced new lending initiatives to help, he said, “the engine of job growth in America.” But before anyone grumbles over a new big-ticket bailout for Main Street, the first impression is what’s in the works is less than it might appear, and it’s not clear what this will cost.

First, the administration wants to increase the maximum size of Small Business Administration guaranteed loans, but it needs Congress to pass legislation to do so. The most popular loan, called the 7(a) loan, is used to buy machinery, equipment and buildings. Obama would like to see the limit rise from $2 million to $5 million.

Second, the Obama team wants to provide capital to small banks with less than $1 billion in assets, and community financial institutions. To get that capital, participating banks would have to submit quarterly small-business lending plans and pay a 3 percent annual dividend to the federal government.

Lynn Ozer, executive vice president at Susquehanna Bank, said increasing the cap on SBA loans would be “absolutely awesome” because it can cost much more than $2 million to buy a commercial building.

Susquehanna is an active SBA lender, having done 42 loans through the Philadelphia District Office alone valued at a total of $19.9 million in the federal fiscal year ended Sept. 30.

But she said raising the loan limit won’t mean much if the administration doesn’t also increase the guaranteed portion, which has been 75 percent, or a maximum of $1.5 million. If only $1.5 million of a $5 million loan is guaranteed and able to be sold in the secondary market, that won’t be a great incentive to lenders, Ozer said.

Ozer, who serves on the board of the National Association of Government Guaranteed Lenders, said what would help is to maintain the measures contained in the American Recovery & Reinvestment Act, including an increase in the guaranteed portion to 90 percent of a loan and the elimination of borrower fees.

With $375 million in new funding, the SBA said it was able to support more than $11.3 billion in lending through more than 30,000 SBA-backed loans since February.

Still there’s one thing that’s missing in these policy-driven fixes: Desire. There’s a lack of desire by businesses to borrow and a lack of desire by financial institutions to lend because the economy is still a hazy, scary question mark.

The “Beige Book” regional economic conditions released by the Federal Reserve yesterday noted that business lending has declined in the Philadelphia region. The National Federation of Independent Business says its members have postponed building inventories and gutted their capital spending plans. In its most recent survey, only 4 percent of owners reported “finance” as their No. 1 problem.

Tinker as policymakers may with loan programs, what will really help small business is a robust economic recovery.

Does anyone see it out there?

Can NutriSystem Inc. bulk up at Wal-Mart?

The diet-plan purveyor yesterday said it had snagged a deal to sell a two-week, $148 "starter" version of its weight-loss program at 3,200 Wal-Mart stores.

Shares in the Horsham company jumped as much as 22 percent at one point, and volume surged by a factor of 20 over average.

NutriSystem, whose second-quarter profit fell 60 percent on a revenue decline of 32 percent from last year, said it was hitting Wal-Mart shelves "at the brink of the holiday rush and leading into the height of the 2010 New Year's resolution season."

The company has had a deal since January to sell NutriSystem in Costco stores. "We're still there," NutriSystem spokeswoman Susan McGowan said of Costco yesterday tues, but she would not say how Costco sales were going.

Analysts Mitchell B. Pinheiro and Brian Holland, at Janney Montgomery Scott in Philadelphia, put out a note to investors that the Wal-Mart deal was "on a much greater scale" than Costco.

But the duo concluded, "We are not looking for any meaningful lift from Wal-Mart" in the fourth quarter.

Online layaway

Many stores ditched layaway programs in the years of easy credit, but not Kmart. Now, having detected new interest in the old-fashioned payment method, the retailer is taking layaway to the Internet.

Kmart's owner, Sears Holdings Corp.announced yesterday that Kmart and Sears customers could go online to put 10 percent down on a purchase and make biweekly payments on an eight-week layaway plan.

Customers may use a debit card, or store gift card to make the payments. They can also use a credit card, though it's not clearit was unclear whom that might benefit.

Procrastination

People who filed for six-month extensions on their 2008 federal income tax returns need to take note.

Your new filing deadline of Oct. 15 is fast approaching. The IRS says 264,000 Pennsylvanians and 295,000 New Jersey residents filed for extensions.

Lots of analysts have been warning that the U.S. is just getting warmed up when it comes to bank failures.

Sure, the biggest basket cases were probably addressed, rescued or bailed out (take your pick of characterizations) last fall with the $700 billion Troubled Asset Relief Program.

But the Federal Deposit Insurance Corp.’s running total of failed banks for 2009 is up to 98. The FDIC also says 416 institutions were on its “problem list” as of June 30. (No, the FDIC doesn’t name names.)

Few expect the level of failures to reach what was experienced during the savings and loan crisis of the ’80s and ’90s. That doesn’t mean everything’s fine either.

Credit-rating agency A.M. Best Co. ran its own proprietary model on the 7,476 commercial banks regulated by the FDIC and found that 505 of them could be considered “troubled.” That’s 6.8 percent of all U.S. banks.

What makes for a troubled bank in A.M. Best’s view? Besides having weak capital ratios, it tends to be more exposed to commercial real estate loans compared with industry norms.

Of those 505 troubled banks, 272 are at high risk of failure, according to A.M. Best analysts Tam V. Nguyen and Kevin McFadden.

Oldwick, N.J.-based A.M. Best will not say who’s at risk, but it does say where: Georgia, California, Florida, Illinois and Arizona.

Georgia could have 73 troubled banks on its mind. A.M. Best says 20 are at high risk of failing.

Here, Watchdog

In a speech largely about encouraging innovation to spur cancer-care breakthroughs, AstraZeneca P.L.C. CEO David Brennan renewed a call for more funding for the Food and Drug Administration.

“An understaffed and underfunded FDA is an agency in crisis,” Brennan said Monday at the Medical Innovation Summit in Cleveland.

It may seem odd for the regulated to call for “a watchdog with a full set of teeth,” as Brennan said. But the reputations of the drug industry and FDA have been shredded in recent years.

Sure, everyone want to help patients. But the drug industry, which has done well by doing good (and not so good), wants to be seen as open to change even as it braces for reform.

It’s been a year since the collapse of Lehman Bros. touched off a September we’d rather not remember.

A year of houses of cards, trillions of dollars of wealth destruction, and a federal Troubled Asset Relief Program that provided a lot of relief but never touched those troubled assets.

How are you feeling now?

Still angry about the financial crisis and bank bailouts, based on comments sent to me via e-mail or phone.

That’s why it seems odd to read reports that federal efforts to change the financial regulatory system are stalled, because so little has changed in the last 12 months. Outside of new rules for the credit-card industry, the same environment of incentives, risk-taking, and market opacity exists today that did last year.

Consumer anger carries change only so far. That’s why President Obama was in New York yesterday to renew the push for his menu of financial-sector reforms, which include creating the Consumer Financial Protection Agency and expanding the Federal Reserve powers to regulate financial institutions that pose systemic risk.

There was nothing new in his speech. All of his priorities have been addressed in congressional hearings this year. Rather, the president was reminding Wall Street and Congress that doing nothing is not an option.

While you would expect the banking industry to resist major regulatory change, it’s illustrative that federal regulators have shown a distressing lack of resolve as well. Within the Obama administration itself, the heads of the alphabet soup of the CFTC, FDIC, OCC, and SEC have publicly squabbled over whose mission should be changed and how.

With Rome, or at least Wall Street, not burning, President Obama reminded all actors, good and bad, that the taxpayers were not amused: “They shouldered the burden of the bailout, and they are still bearing the burden of the fallout - in lost jobs and lost homes and lost opportunities.”

That’s a good reality check. Here’s another: The biggest U.S. banks are now bigger, not smaller. These behemoths may be needed to support the nascent economic recovery, but even after adding more capital, they still pose as much risk to the system now as they did when Lehman was allowed to fail.

Lots of people complain that there’s not enough disclosure about executive pay.

But if you read a proxy statement, you’ll see a ton of disclosure. Whether it makes sense is the real issue.

Earlier this week, Dollar Financial Corp. said it approved cash bonus awards to its top management after the Berwyn-based operator of 1,206 check-cashing stores achieved its financial performance goals for its fiscal year ended June 30.

Chairman and CEO Jeffrey A. Weiss got a bonus of $911,520, according to a filing with the Securities and Exchange Commission. Four other executives received a total of $960,467 in bonuses.

I thought that was curious because the company had just announced a 97 percent decrease in profit for its recently completed fiscal year. Last Thursday, Dollar Financial reported net income of $1.8 million, or 7 cents per share, compared with $51.2 million, or $2.08 per share.

How had Dollar Financial achieved its management bonus goals with performance like that?

The answer lies not on the bottom line but in the company’s proxy statement where its human resources and compensation committee clearly states that the bonus gets paid if Dollar Financial meets “consolidated targeted EBITDA objectives.”

EBITDA stands for “earnings before interest, taxes, depreciation and amortization.” Listen to enough earnings calls, you will hear more about “ee-bit-dah” than net income because it measures how a company’s operations are doing. Always looking forward, analysts don’t dwell on charges for litigation or discontinued operations.

The primary reasons for Dollar Financial’s paltry net income were a $57.9 million charge for settling long-running Canadian class-action litigation and a $10.3 million charge for store closings.

But it’s a different world when viewed through EBITDA glasses. According to Dollar Financial, its consolidated adjusted EBITDA was a record $158.6 million, up 8.5 percent from the $146.2 million it reported for its previous fiscal year.

So bonus target achieved - despite what Weiss described as “the worst recession we may ever have to face” - but not at a level to warrant the maximum pay-out. If so, he would’ve gotten 150 percent of his $850,000 base salary, or $1,275,000.

The number of "problem" institutions in the banking industry's keeps growing.

The Federal Deposit Insurance Corporation today released a tally of 416 troubled banks as of June 30, up from 305 at the end of March.

That statistic is contained the FDIC's Quarterly Banking Profile, released this morning. Regulators say the number of troubled banks is highest it's been since June 30, 1994, when 434 institutions on the list.

The agency never identifies who's on the list of troubled banks. Generally, we find out who the worst of the worst are Friday nights when the FDIC swoops in and takes over a failed bank.

And for some perspective, the FDIC insures deposits at 8,246 banks and savings associations. So the percentage of "problem" banks is currently 5 percent of all institutions. Still, 81 banks have failed so far this year, and banking analysts project another 200 to 300 banks will failed before the current cycle is over.

(For those keeping score, the FDIC said there were 252 problem institutions at the end of 2008, up from 76 at the end of 2007.)

After months of rumors, Lincoln National Corp., of Radnor, confirmed that it is selling its Center City-based Delaware Management unit for $428 million in cash.

The buyer is Macquarie Group, an Australian conglomerate with holdings in infrastructure, retail and financial services.

An Associated Press report says the Delaware Management business will remain based in Philadelphia. Here's alink to that report.