M&T Bank Corp. (NYSE: MTB) recently announced that it has declared a quarterly cash dividend of 75 cents per share on its common stock. 

The dividend will be payable on Dec. 29 to shareholders of record at the close of business on Dec. 1.

The dividend amount is the same that the Buffalo–based banking company has paid in each quarter of 2017, after it boosted the dividend by 5 cents a share, or 7 percent, from the previous 70 cents a share that M&T had paid quarterly since September 2007.

M&T Bank in mid-October reported that its net income in this year’s third quarter totaled 

$356 million, up 2 percent from the $350 million it generated in the third quarter of 2016.

The banking company operates branches in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia, and the District of Columbia. 

M&T Bank ranks number one in deposit market share in the 16-county Central New York area.

SYRACUSE — U.S. Senate Minority Leader Charles Schumer (D–N.Y.) on Nov. 22 told members of Teamsters Local 317 that he’s working to get a bill approved that would restore cuts made to their pension plans. 

Syracuse–area Teamsters, who have already suffered pension-benefits cuts, are at “significant risk” of losing even more of what they earned and saved over a lifetime of work, according to Schumer’s office.

The Democrat spoke to Teamsters members at the local headquarters at 566 Spencer St. in Syracuse. 

“This issue does not just affect Central New York. It affects all of New York state, Downstate, Upstate, all the Teamsters in all parts of the state,” said Schumer.

In response, he and his Democratic colleagues in the U.S. Senate, are pushing new legislation that would ensure local Syracuse–area Teamsters (and thousands of other Upstate Teamsters) can avoid cuts in the future — and perhaps reverse past cuts. 

Schumer contended that this “must-pass legislation is necessary” to put Syracuse workers’ hard-earned pension plans back “on solid footing.”

Background

After the 2008 financial crisis, the Great Recession, and “tectonic” shifts in the economy, many pension plans, including the New York State Teamster Conference Pension and Retirement Fund, absorbed “major” financial losses and now they’re “in danger of not meeting their full obligations to retirees,” Schumer’s office said. 

That pension and retirement fund has more than 34,000 participants, according to Schumer’s office.

Trustees and members of the Teamster Fund earlier this year faced a “tough choice” as the plan was 46 percent funded with $1.46 billion in assets and $3.14 billion in liabilities. Ultimately, the Teamsters went through a process to keep the plan solvent in the short term that included a 30 percent cut to benefits. 

Schumer said the New York State Teamster Conference Pension and Retirement Fund is “vital” to more than 34,000 members, including 16,000 retirees and some 18,000 active members. Thousands of Syracuse–area Teamsters from Local 317 are part of this fund, including 7,000 retirees and 5,000 active members. 

If pension plans are allowed to fail, not only will employers no longer be able to pay promised benefits, but taxpayers would be at risk of having to pay billions when the Pension Benefit Guarantee Corporation (PBGC), the government-sponsored insurance company for multiemployer pensions, cannot afford to cover losses and becomes insolvent.

“The PBGC is supposed to be on the hook … that’s a federal-government agency that promised to back up the pensions should they run into trouble, but the PBGC doesn’t have all the funding it needs and that’s why people here have suffered a cut in their pensions, unfairly and through no fault of their own,” Schumer said to those gathered at the Teamsters Local 317 headquarters on Spencer Street.

Butch Lewis Act

Schumer wants Congress to “immediately” pass the Butch Lewis Act. The bill, introduced by Sen. Sherrod Brown (D–Ohio), would work to “ensure that no American loses the pension benefits that they deserve.” 

“Butch Lewis was a Teamster activist and he died fighting to … rectify this injustice,” Schumer said in his remarks.

For the members of the New York State Teamster Conference Pension and Retirement Fund, this bill would help the plan avoid cuts in the future and even help reverse past cuts. 

Without this bill’s protections, further future cuts “are still possible,” Schumer contends. 

“If this bill passes, then there will be no more cuts and there’s a very good chance some of the previous cuts can be restored, depending on the individual pension plan,” Schumer told the gathering. 

Creating the PRA

The “Butch Lewis Act” would create a new office within the U.S. Treasury Department, which would be called the Pension Rehabilitation Administration (PRA), Schumer explained. 

The PRA would allow pension plans to borrow the money they need to “remain solvent and continue providing retirement security for retirees and workers for decades to come.” 

The money for the loans and the cost of running the PRA would come from the sale of Treasury-issued bonds to financial institutions. The PRA would sell Treasury-issued bonds in the open market to large investors such as banks. The PRA would then lend the money from the sale of the bonds to the financially troubled pension plans, according to Schumer.

To ensure that the pension plans can afford to repay the loans, the PRA would lend them money for 30 years at low-interest rates — about 3 percent. “The 30-year loans would buy time for the pension plans, so they can focus on investing for the long-term health of the plan, while the loans pay benefits owed to current retirees,” according to Schumer’s office.

 In addition to prohibiting the borrowed funds from being used to make “risky investments,” the bill also requires plans that borrow money to submit reports to the PRA every three years to demonstrate that the plans are on track to getting back on “solid footing.” 

Pension plans may borrow as much money as they need, as long as they can demonstrate the ability to repay the loan, the legislation stipulates.

The interest will be comparable to that of a 30-year Treasury bond. The rate may be slightly higher in order to cover operating costs for the PRA. During the first 29 years of the 30-year loans, the pension plans will pay only fixed interest rates on the money they’ve borrowed. 

In the last year, the pension plans will pay interest on the loans and repay all the money they borrowed — since the money comes from the sale of Treasury-issued bonds to financial institutions, according to Schumer’s office. 

These PRA bonds will be fully backed by the Treasury. Schumer contends the PRA “will not have trouble raising the money because investors want long-term bonds that carry little risk.”           

AAA is predicting drivers won’t find “significant” holiday savings at the gas pump this December.

Even though AAA expects gas prices to decline between now and the end of the year, it also expects drivers will pay the highest November and December gas prices since 2014.

That’s according to a report the organization released Nov. 27.

The national gas-price average was $2.51 as of Nov. 27, or 38 cents more than this time in 2016, AAA said.

“Despite a forecasted 5 to 20 cents decrease in coming weeks, motorists will see higher than expected December gas prices — especially compared to year-end prices from 2015 and 2016,” Elizabeth Carey, director of public relations, AAA of Western and Central New York, said in the release. “Driving factors for cheaper gas prices this winter include colder temperatures, the threat of inclement weather and online shopping.”

Gas prices in 2017 have “strayed from typical trends,” AAA said. 

Historically, year-end gas prices “tend to be relatively cheap” due to a drop-off in fall gasoline demand around Labor Day and the move to “cheaper to produce” winter-blend gasoline in mid-September. This year, the typical factors that drive gas prices down in winter were “outweighed” by the adverse impact of two major hurricanes, “steady” consumer demand, and “continued growth” in gasoline exports.

Describing itself as upstate New York’s “largest” member-services organization, AAA provides nearly 860,000 members with travel, insurance, financial, and automotive related services, according to its news release.

2018 look ahead

Drivers can expect gas prices to continue to trend lower in the first few months of 2018, with potential to see the national gas-price average in the $2.25 to $2.35 range by February, AAA said. 

OPEC’s meeting that was scheduled for Nov. 30, and any decisions to further cut or keep production rates stable, will “influence” longer-term forecasts for 2018. OPEC is short for the Vienna, Austria–based Organization of Petroleum Exporting Countries.

DeWITT — Business owners should establish an effective business-planning process, prepare a detailed sales and marketing plan, and improve their supply-chain management.

These three recommendations were part of a presentation titled “Ten suggestions for improving profitability and increasing business value” during the recent Dannible & McKee, LLP 40th annual tax & financial planning conference.

The Syracuse–based accounting firm Dannible & McKee on Nov. 9 held the event at the DoubleTree by Hilton Syracuse, near Carrier Circle in DeWitt.

Victor Vaccaro, Jr., a certified public accountant and audit partner with Dannible & McKee, conducted the hour-long session.

“The objectives of this presentation … We’re really going to emphasize that it’s important to establish goals in your business. We’re going to talk about tools that could help you achieve those goals and hopefully in the end, stimulate some action plan,” said Vaccaro.

He started his presentation asking what are the “most important” goals of every company? His answer to the question was: providing an annual return on the capital investment in the business and providing growth in the value of the capital investment.

But firms, Vaccaro noted, often “do not focus” on the goals, citing reasons that include companies may establish other goals “with no clear link” to increased business value. In addition, many small businesses focus solely on profitability with no consideration for long-term increases in business value.

Vaccaro used his presentation to discuss 10 techniques to increase profitability.

“Everyone of ‘em on the screen starts with some action word,” Vaccaro noted.

1. Establish an effective business-planning process

Vaccaro recommends establishing a business plan with goals, budgeting, a “commitment” to achieve the goals, and an eventual plan evaluation.

“You need to determine who you are. This doesn’t need to be some overly complex strategic plan. This doesn’t mean you need to hire a consultant to do this,” he said.

Essentially, if a budgeted expenditure cannot be linked to a business strategy, “the funds should not be spent,” he stressed.

Vaccaro also advised business owners to remember that effective budgeting is part of a continuous planning process, not a once-a-year exercise.

2. Determine your business value and succession plan

For most closely held businesses, the value of the business is by far the largest investment of the business owner, according to Vaccaro.

Still most owners have never had a valuation performed for their business and don’t have a true sense of its value. 

“Often times we find that the owner doesn’t really know what the value of the business is,” said Vaccaro.

Valuations of closely held businesses fall into any one of three general approaches, including an asset approach, an income approach, and a market approach.

Under the asset approach, the value of the business is based solely on the value of the entity’s assets net of liabilities, including both tangible and intangible assets. The income approach is the “most widely used” method of valuing a closely held business where value is the sum of the present values of the expected future economic benefits attributable to the ownership interest. Under the market approach, the value of a closely held business is determined by reference to the market values of comparable companies who are either publicly traded or were recently sold in the private marketplace.

Succession plans can either be internal, involving existing employees or family members, or external, involving someone currently outside the business.

3. Prepare a detailed sales and marketing plan

The quantity and quality of your sales drives all else within your business, Vaccaro said. 

Do you have a written sales and marketing plan defining what you will sell and how you will sell it? he asked.

A sales and marketing plan should provide details for all aspects of your sales process. The plan should be updated on a regular basis.

“We need to consider … are we really marketing the business right now to take advantage of all opportunities to help us currently and to set us up for best sales in the future,” said Vaccaro.

He recommended business owners consider best practices that should be included in a sales and marketing plan.

4. Consider activity-based costing/management (ABC/M)

ABC/M is not just for manufacturers, Vaccaro noted, indicating that concepts are being applied to all types of businesses. 

ABC/M is a concept. It is not necessarily a system that must be implemented and often can work offline from your accounting system, according to Vaccaro’s presentation.

ABC/M is a process that assigns overhead costs based on consumption. Key factors for ABC/M include more accurate cost-management methodology, a focus on indirect costs (overhead), tracing rather than allocating each expense category to the particular cost object, and making “indirect” expenses “direct.” 

Numerous specialized software packages are available for use in applying ABC/M, Vaccaro told attendees.

5. Perform a customer-profitability analysis

The suggestions also included performing a customer-profitability analysis. “Why do you actually need to perform some analysis in this area? Because those customers that are really your best customers … you want to price their products or services effectively. You want to give them the right amount of attention … For some customers, there’s hidden costs in there that you’re not seeing that makes it more costly to service them … More advertising to obtain those customers,” said Vaccaro. 

The presentation included the question, “Are overhead and administrative costs significantly different for different customers or customer segments?” 

Do costs differ for advertising, sales, distribution, returns, and allowances? Are there higher collection costs for people who don’t want to pay it? 

“All of those things are real costs to your business and should go into looking at which customers are more profitable than others,” said Vaccaro. 

Such an analysis “goes hand in hand” with the activity-based cost concept that Vaccaro discussed. “It really results in you knowing more about your customers, potentially helping you to make them better customers for you. As you’re able to quantify some of these things that are driving costs, you can look at it and say maybe it’s not making sense,” he said. 

As an example, Vaccaro said maybe a business is spending so much in a sales effort for a category of customers, it might decide to charge them more or abandon that customer segment altogether.

6. Analyze pricing of products and services

The price of a product or service is often market driven, according to Vaccaro’s presentation. 

Drawbacks of determining sales price using a cost approach include potential for lost sales when the cost is too high, lost profits when cost is too low, and potential for lost sales and profits when a business doesn’t know the cost.

The benefit of determining sales price using a market approach includes stimulating analysis of internal procedures to reduce costs, allowing for additional sales opportunities when cost structure can be modified to achieve the target cost, and providing the opportunity to focus on products or services that will produce more profits.

The major factors for determining a market price are competitors and customer value. A business should know what competitors are doing, document information about competitors’ pricing, and maintain a history of that information. A business should also keep documentation on customer reactions to pricing changes. 

7. Improve your supply chain management

Implementing a plan for supply-chain management can “significantly” improve profitability, according to Vaccaro.

If a large portion of your product or service is purchased from suppliers, the supply base can “significantly” impact the cost, quality, innovation, and speed to market. 

Businesses should determine how well they know their suppliers and examine “strategic sourcing, including development of a written plan for the purchasing of the most important materials, supplies, and services.

A business could also focus on supplier development, such as communicating to them when they’re not performing as a company would like.

8. Evaluate business acquisitions and sales

Successful companies continuously evaluate possible business acquisitions and sales. This can be part of an overall determination of the return on investment (ROI) for assets deployed within the business and other investment alternatives.

Acquisitions could involve buying direct competitors or may provide for entry into new markets.

Selling or closing unprofitable areas of your business should also be regularly evaluated. If the price is right, you might also sell profitable parts of your business or even the whole company, Vaccaro said.

9. Enhance financial-statement analysis

A company “must go beyond” the basic statements. The balance sheet and income statement are only the starting point for successful financial management. Applying other financial-statement analysis methods is a necessary step in analyzing the success, failure, and progress of your business.

Other types of financial-statement analysis include fluctuation analysis, common size financial statements, budgets and forecasts, ratio analysis, industry comparison, and use of detailed financial reports, per Vaccaro.

Improved financial-statement analysis can help companies to locate and correct accounting errors, identify areas for business improvement, identify more problem areas and react to problems more quickly, better understand the interrelationship of accounts — which in turn will help you to devise better solutions to the problems identified; monitor success or failure of business initiatives, and help to identify business opportunities.

10. Upgrade personnel management and compensation policies 

Performance is created by the quality of the people working for you, according to Vaccaro. 

He advised attendees to take a “hard look” at their employees, and they should “continuously” evaluate whether changes are needed. Companies should also reward the top performers, “even in down times.” They should also get rid of the non-performers and those with bad attitudes. He also advises business owners to bring a “positive culture” to their companies.