Coffee Talk

Coffee Talk

Chico's picks headquarters builder

One of the Gulf Coast's construction prizes - Chico FAS Inc.'s new corporate campus in Fort Myers – was quietly awarded last month to Owen-Ames-Kimball Company, a Lee County builder.

Although a price hasn't been set, the women's clothing retailer says in a securities filing that the project will cost "well in excess of 15% of the consolidated fixed assets of Chico's FAS."

Chico's recently reported $420 million in property and equipment on its balance sheet, which means the project could cost $63 million or more. However, Chico's says it won't know the exact cost until it completes the design plans.

Still, Chico's says cash from operations will be "more than adequate" to cover the cost of construction.

"It's an exciting project for us," says OAK President Steven Shimp. "We have built their expansions locally ever since they moved into the first corporate headquarters."

Shimp will be working closely with architects Thompson, Vaivoda and Associates, a Portland firm famous for designing Nike Inc.'s Oregon headquarters.

The first phase of the Chico's project, on 105 acres at Three Oaks Parkway and Alico Road, will measure between 500,000 and 750,000 square feet. That's about the size of 13 football fields.

Persistent growth at Persystent

Ray Weadock, founder and chief executive officer of Tampa's Persystent Technology Corp., is bullish on 2006 when it comes to the technology sector.

"Budgets are returning and companies are spending on technology again," he says. "We look to have a very exciting 2006."

Persystent, which develops patented software that automatically fixes computers as they boot up, plans to hire more than 25 new employees. The company recently tripled its office space to 15,000 square feet.

CEOs take on another role

Dean Akers, CEO of Tampa-based laser hair removal chain Ideal Image Inc., recently became chairman of the CEO Council of Tampa Bay Inc.

Other board members are first vice chair, Kevin Hourigan, president and CEO of Bayshore Solutions; secretary/treasurer, Mark Anderson, CEO of eLogic Learning; vice chair of relationships, Dick Lange, president and CEO of Hillsboro Printing; vice chair of member recruitment, Penny Hulbert, area president of RBC Centura Bank; vice chair of member retention, Oscar Horton, CEO of Sun State International Trucks LLC; vice chair of branding and communication, Michael Gilbert, general manager of Marketing Associates USA Inc.; vice chair of sponsorships, Andrew Cohen, CEO of Vertical IT Solutions; vice chair of roundtables, Alan Bridges, CEO of Allpoints Equipment Co.; vice chair of strategic and succession planning, Guy King, president of M.E. Wilson Insurance Co.; and chairman emeritus, Chris Pfeifer of Tice Financial Services.

A fork in the curve

Pinellas Park-based bank analyst Richard X. Bove celebrated the arrival of 2006 by questioning conventional wisdom.

Citing a trove of charts and statistics, Bove argues that an inverted yield curve is nothing for a banker to worry about.

The yield curve refers to the distance on a graph between the interest rates that the U.S. Treasury pays government securities holders. When the benchmark 10-year note pays no better than a less risky one-year note, the yield curve is said to invert. Some economists see the current inversion as a sign that a recession isn't far off.

Bankers supposedly dread a closing of the interest rate gap. After all, their livelihood depends on paying less for short-term money than they can make lending it out longer term.

But Bove says commercial banks always seem to adjust profitably to a changing yield curve.

The yields on the one- and 10-year notes were inverted 21% of the time between 1962 and 2004. Going back to 1935, Bove says net interest income – the gross profit that banks make on the rate spread between deposits and loans – never declined when the curve was inverted.

Not only that, but net income went down just once. That was in 2000, when loan losses were up. "An increase in the loan loss provision at banks is the most compelling determinant of declines in bank profits," he concludes.

Profitability should be fine in 2006, the Punk Ziegel & Co. analyst says.

Bank earnings rise whenever demand for commercial and industrial loans is strong. Bove says middle-market companies – usually defined as having annual revenue of $50 million to $500 million – are borrowing heavily for equipment and plant expansion because they lack the cash piling up on the balance sheets of their larger competitors.

Amending the amendment?

Physicians and insurance companies pushed an amendment to the Florida Constitution limiting contingency fees for attorneys in medical malpractice cases as a way to reduce new cases and drive down legal costs.

Instead, after the amendment passed in November 2004, attorneys responded by having their malpractice clients waive their rights as a condition of taking the case. Now the Florida Bar is stepping in to codify the amendment bypass.

At the urging of the Florida Supreme Court, a special committee is drafting rules that would establish a procedure attorneys must follow in having their clients waive those contingency caps. The draft rules would also require attorneys to notify potential clients of their rights under the amendment, but would likely create a standard waiver document and some form of judicial review.

The special committee is accepting comments via e-mail to Tony Boggs of the Florida Bar staff at [email protected], or by fax to (850) 561-5665 up until Jan. 17.

The proposed bar rules are expected to be submitted to the Supreme Court in February.

What's up with the economy?

George Bernstein, a senior portfolio manager with Bernstein Research and Management, will discuss Florida's economy, with an emphasis on the Tampa Bay area, at a Jan. 18 event at the Hyatt Regency Tampa.

The 5:30 p.m. event, "Key Trends in Today's Capital Markets," is co-sponsored by the Florida Venture Forum, the Association for Corporate Growth, Tampa Bay Chapter, and the CEO Council of Tampa Bay. For more information, call (813) 335-8116.