ATLANTA – M&F Worldwide, the holding company controlled by corporate raider Ron Perelman, first contacted John H. Harland about a combination of the number two and three check printers as early as last March, beginning a courtship that would culminate in a merger of the two companies, documents filed Friday with the Securities and Exchange Commission show. But preliminary offers by M&F, which had acquired check printer Clarke American the year before, were rebuffed as inadequate, the filings show. On October 25, the Harland board rejected a $50-a-share offer from M&F but told the company it would only enter into serious negotiations if a deal could be assured of being highly likely to pass regulatory and antitrust review. On Nov. 17 M&F raised its bid to $52.50 a share and agreed to pay a ‘reverse break-up fee’ of $40 million if the combination is not approved by antitrust regulators. M&F sweetened the offer on Nov. 22 to $52.75 a share and to raise the break-up fee to $52.5 million, while also agreeing to take on $12 million in retention bonuses to top Harland executives. The terms were enough to satisfy the Harland board, which unanimously approved the deal on Dec. 19.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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