Money Talk: Yellen Tells Congress That Feds Are Watching, Waiting

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YELLEN TELLS CONGRESS NO INTEREST RATE HIKES YET, ECONOMY STILL HAS WEAKNESS
For those investors and housing market advocates anxious about an interest rate hike this summer, Federal Reserve Chairwoman Janet Yellen testified before Congress last week that it was still too soon to raise interest rates because some cyclical weakness in the U.S. economy still persists.

Yellen, who chairs the Federal Open Market Committee (FOMC), noted that the labor force participation rate is lower than most estimates and wage growth remains sluggish. She also mentioned the oft-forgotten downside to lower oil and gasoline prices – inflation.

“U.S. inflation continues to run below the Committee’s two percent objective. In large part, the recent softness in the all-items measure of inflation for personal consumption expenditures (PCE) reflects the drop in oil prices,” Yellen said in her testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs on Feb. 25.

Yellen said the Federal Reserve will remain “patient” in normalizing the nation’s monetary policy beyond the current “zero interest rate” stance toward the committee’s 2% objective.

“If economic conditions continue to improve, as the Committee anticipates, (we) will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.”

The last time the Fed raised its federal-funds short-term interest-rate target was in 2006, a year before the financial crisis in 2007 that pushed the U.S. into the Great Recession. Following the last GDP report at the end of 2014, many economic experts were predicting that Yellen and the FOMC would raise interest rates at its next policy meeting in June.

Read more here.

ARKANSAS BANK RIVALS SIMMONS, HOME BANCSHARES CONTINUE OUT-OF-STATE GROWTH
Arkansas financial rivals Simmons First National Corp. and Home Bancshares Inc. ended the month of February with a flourish, as both regional banking groups continue their out-of-state shopping sprees.

After the close of market Friday, both Arkansas banks made announcements concerning two deals that were at different stages of the acquisition process. For Conway-based Home Bancshares, its Centennial Bank subsidiary continued its growth strategy in Florida by taking over the deposits and assets of Doral Bank in that state.

The news came after the Federal Deposit and Insurance Corp. announced prematurely that the Florida bank’s parent company in Puerto Rico has been shut down by regulators. Home Bancshares will take over the bank’s 26 former branches in the Florida Panhandle.

Simmons’ announcement on Friday was a lot less frantic. The Pine Bluff-based banking group announced that it had completed its deal to acquire Liberty Bancshares in Springfield, Mo., and First State Bank, based in Union, Tenn. Both deals were first announced last May.

Both Liberty and First State Bank will temporarily remain separate banks and continue their operations as subsidiaries of Simmons until they are merged into the larger bank.

YEAR-AGO INVESTMENTS PAYING DIVIDENDS FOR SAM’S CLUB
Off and on through the years, analysts have said they believe Sam’s Club might perform better if Wal-Mart cut it loose. However, few believe it will happen given that the retail founder’s namesake appears to do fine in Wal-Mart’s shadow.

Sam’s Club, if it stood alone outside of Wal-Mart Stores, would be the eighth largest retailer with annual revenue of $58.02 billion last year. That compares to $11.86 billon at J.C.Penney and $27.69 billion at Macy’s.

Under the direction of CEO Rosalind Brewer, Sam’s Club continues to adapt to the ever-changing demands of its members. She has said the Sam’s Club brand must evolve to drive needed member growth.

BEAR STATE EARNINGS BOOSTED BY INCOME TAX BENEFIT
Bear State Financial, Inc. reported fourth quarter earnings of $4.8 million, or 14 cents per share, rallying from flat earnings a year ago of nearly $200,000. For the full year of 2014, net income was $24.3 million, or 84 cents per share, compared to earnings of $729,000, or three cents, in fiscal 2013.

The Harrison-based banking group said the improved earnings resulted from an income tax benefit that reversed its valuation allowance against its deferred tax assets. Those gains profited the bank in the fourth quarter and full year 2014 to the tune of $1.6 million and $21.9 million, respectively.