Finances

London, England based HSBC is one of the largest banking institutions in the world. In 2011, First Niagara bank reached a deal with the global banking giant to acquire HSBC's U.S. network of 195 branches for a reported $1 billion. However, in order to obtain Justice Department approval of the acquisition, First Niagara is required to shed a portion of its market share. To accomplish this goal, First Niagara has agreed to sell 37 branches to KeyCorp, a Cleveland, Ohio-based banking and financial corporation. The deal calls for KeyCorp to pay $110 million, and in return, receive 37 branches with $2.4 billion in deposits and $400 million in active loans. The selling price represents a 4.6% deposit premium for the branches and a 50% increase in KeyCorp's presence in Buffalo and Rochester, New York.

HSBC and First Niagara plan to finalize their transaction in the second quarter of 2012 with the KeyCorp-First Niagara deal following soon thereafter. "We think there is an opportunity to get sharper and stronger within our organization [in the affluent client market]," said Bill Koehler, KeyCorp's President. "We think we can learn something from them."

Shares of HSBC (HBC) closed the week up at $38.60. KeyCorp (KEY) and First Niagara (FNFG) stocks also finished the week up at $8.32 and $9.50 respectively.

For Target, an Apple a Day is the Prescription

On Thursday, Minneapolis, Minnesota-based Target Corporation announced that in keeping with its recent "The Shops at Target" model, it is close to inking a deal to place Apple, Inc.-mini stores within 25 existing Target stores. Target spokeswoman, Dustee Jenkins, described the placement as "a test" saying, "We have 25 stores with unique display and assortments" to try the concept out. Target has not announced which stores will initially be involved or when the partnership may occur. Hosting Apple stores may allow Target to bolster its consumer electronics sales, which lagged behind estimates of its in-store sales in December.

"The Shops at Target" model will see select brick-and-mortar as well as its online stores giving dedicated space to exclusive collections in five distinct categories from candy to women's fashion. The five initial stores are said to include: San Francisco-based, The Candy Store; Aspen, Colorado-based skincare shop, Cos Bar; Boston-based, Polka Dog Bakery; Connecticut-based home wares purveyor, Privet House; and Miami-based women's fashion boutique, The Webster. The first of these "new" Target stores will open on May 6.

Shares of Target, Inc. (TGT) closed the week at $49.82 per share.

Kodak Struggles to Remain Solvent

After warning of a possible Chapter 11 bankruptcy filing should it prove unable to raise sufficient funds from the sale of a number of its patents, Kodak announced reorganization of its business structure.On Tuesday, Kodak announced that it will consolidate and realign its three units down to two. The new units break up the consumer and commercial sides of Kodak's film business. The consumer segment will be comprised of its retail businesses including cameras, paper, home printers, film rolls, online photo-sharing service and the intellectual-property unit. The commercial division will operate Koadk's motion-picture, industrial and professional films as well as high-speed presses, printing plates and software, document scanners and other printing products. The commercial and consumer units will now report to two new Chief Operating Officers Philip Faraci and Laura Quatela. Previously, Kodak's business segments were divided into film and photo paper products, consumer digital imaging and graphic communications.

Kodak has struggled to remain a profitable business with the advent of foreign competition for its film business and the significant change from film-based to digital photography. Previously, Kodak's bread and butter business was consumer film processing. When digital photography overtook film in the early part of 2000, Kodak's market value began to decline. By the end of 2011, its value had receded by more than 95%. With its new business structure and plans to sell a portfolio of its patents, Kodak intends to emerge stronger. "As we complete Kodak's transformation to a digital company, our future markets will be very different from our past and we need to organize ourselves in keeping with that evolution," said Kodak's Chief Executive Officer, Antonio Perez.

Shares of Eastman Kodak (EK) closed the week trading at $0.52 per share.

The Dow started the week at 12,360 and closed at 12,422. The S&P 500 started the week at 1,278 and ended at 1,289. The NASDAQ started the week at 2,674 and finished at 2,711.

Bonds started the week up after several domestic economic reports showed the U.S. economy may be weaker than expected. However, comments from the European Central Bank regarding fiscal policy and the continent's economic future relieved some investors' worries. The result was a rather tepid bond sale. Treasury sold $13 billion in 30-year bonds at a yield of 2.985%, higher than most traders expected, resulting in a relativly weak ending to the government's auction.

Bidders offered to buy more than two and a half times the amount of debt sold which is lower than at the last four comparable auctions where bidders jockeyed for an average 2.91 times the allotment, according to CRT Capital Group. A group which includes foreign central banks bought 31.9% of the sale versus an average 34.6% in recent auctions. Direct bidders, a group which includes domestic money managers, purchased another 7.2%, well below the 22.5% on average recently. Treasury prefers direct bidders who are less likely to resell the notes, thus depressing prices.

The 10-year Treasury note yield finished the week at 1.853% while the 30-year Treasury note yield finished the week at 2.90%.

Freddie Mac released the results of its Primary Mortgage Market Survey (PMMS), showing mortgage rates easing to new all-time record lows for all products covered in the survey. These results help to keep homebuyer affordability high. The average for the 30-year fixed mortgage rate has been below 4.00% for six consecutive weeks.

The survey showed the 30-year fixed rate mortgage (FRM) averaged 3.89% for the week, down from last week when it averaged 3.91%. Last year at this time, the 30-year FRM averaged 4.71%. The 15-year FRM averaged 3.16%, down from last week when it averaged 3.23%.A year ago at this time, the 15-year FRM averaged 4.08%.

"Mortgage rates eased slightly this week to all-time record lows following mixed indicators in the labor market," said Frank Nothaft, Freddie Mac's Vice President and Chief Economist. "Although the economy added 1.6 million jobs in 2011, which was the most since 2006, the unemployment rate remained historically elevated. The 2009 to 2011 period had the highest three-year average unemployment rate since 1939 to 1941. Moreover, the Federal Reserve indicated in its January 11thregional economic review that most industries saw limited permanent hiring at the end of last year."

The money market fund finished this week at 0.50%. The 1-year CD finished at 0.70%.