Telehealth demand is increasing …

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by IIA

OCTOBER 15, 2020

According to FAIR Health’s Monthly Regional Tacker, telehealth claim lines — an individual service or procedure listed on an insurance claim — rose over 3,800% in the U.S. from July 2019 to July 2020.

The data also showed that over this same timeframe, telehealth claims rose in both urban centers and rural areas, though urban centers saw much higher rates of usage. 6.4% of total medical claim lines in urban centers utilized telehealth versus 3.0% in rural areas.Source: FAIR Health

High points from Federal Reserve vice-chair Richard Clarida show how Biden will play economy in 2023 …

News and Analysis

Yesterday, vice-chairman of the Board of Governors of the Federal Reserve, Richard Clarida, reiterated the Federal Reserve’s call for continued stimulus spending to reboot an American economy severely slowed down by a government-ordered commercial lockdown resulting from efforts to stem the virality of Covid-19. In describing combined fiscal and monetary efforts to reboot the economy, Mr Clarida shared the following:

“Although spending on many services continues to lag, the rebound in the GDP data has been broad based across indicators of goods consumption, housing, and investment. These components of aggregate demand have benefited from robust fiscal support—including the Paycheck Protection Program and expanded unemployment benefits—as well as low interest rates and efforts by the Federal Reserve to sustain the flow of credit to households and firms. In the labor market, about half of the 22 million jobs that were lost in the spring have been restored, and the unemployment rate has fallen since April by nearly 7 percentage points to 7.9 percent as of September.”

Mr Clarida challenged naysayers who had argued that interest rate cuts, asset purchases, and loan programs would not facilitate growth in gross domestic product by reminding them that the unemployment rate has fallen almost seven percentage points since April and that the labor market has replaced almost half of the 22 million jobs lost last spring. But even at this rate of progress, Mr Clarida made it clear that it may take another year before the American economy gets back to its previous 2019 peak.

The Federal Reserve’s decision to modify its inflation target policy, where inflation may be allowed to run moderately over two percent and federal funds rates remaining relatively unchanged (0 to .25%) over the next three years, is expected to result in an unemployment rate of four percent and inflation returning to two percent.

Assuming the polls hold and Joe Biden is able to take over the Oval Office on 20 January 2021, a first glance expectation is that Mr Biden will pursue spending bills that, in addition to increases in transfer payments, will increase pools of public capital available for access by private firms or private-public partnerships. Mr Biden’s “Build Back Better” initiative appears, in theory, to call for creating these opportunities.

One potential area for increasing pools of public capital is the financing of energy infrastructure projects. According to language from his campaign platform:

“Biden will immediately invest in engines of sustainable job creation – new industries and re-invigorated regional economies spurred by innovation from our national labs and universities; commercialized into new and better products that can be manufactured and built by American workers; and put together using feedstocks, materials, and parts supplied by small businesses, family farms, and job creators all across our country.”

Mr Biden may not have much re-creating the wheel to do. The United States Department of Energy has a number of financing programs in place that can be used to finance these endeavors. For example, the federal government offers what it calls a “Small Business Toolbox” that helps small businesses, no matter their experience level with government contracting, navigate the requirements for financing.

Mr Biden will have to finance these procurement programs so that these programs can turn around and finance the private companies ready to carry out the federal government’s energy infrastructure agenda. If the Federal Reserve remains on its modified inflation glide path, Mr Biden will have three fiscal years of low interest rates to borrow the funds necessary for his energy infrastructure plans and create the collateral employment of labor that may come along with it.

Mr Biden is likely praying that the “blue wave” narrative, where the Democratic Party sweeps the White House and the Congress, comes to fruition in November. With both chambers of Congress under Democratic control, there may be greater ease at delivering the necessary government financing for his initiatives. If he learned anything from the Obama administration’s first term in office, it is the need to move fast during his first two years to secure the necessary spending bills.

If Mr Biden does not get the “blue wave” then he will have to apply his ‘across the aisle” skills to get Republican senators to buy into his infrastructure plan.

Meanwhile, America is going through a structural employment shift, one that many wage earners will not recover from. Shrinking tax bases due to lower labor force participation and increased tax bills for those who are still working but making less money doth not make a certain second term.

Century Bancorp announces its earnings …

Source: Century Bancorp.

MEDFORD, Mass.–(BUSINESS WIRE)–Century Bancorp, Inc. (NASDAQ:CNBKA) (www.centurybank.com) (“the Company”) today announced net income of $30,609,000 for the nine months ended September 30, 2020, or $5.50 per Class A share diluted, an increase of 5.7% compared to net income of $28,967,000, or $5.20 per Class A share diluted, for the same period a year ago. Total assets increased 14.6% from $5.49 billion at December 31, 2019 to $6.3 billion at September 30, 2020. For the quarter ended September 30, 2020, net income totaled $10,887,000 or $1.96 per Class A share diluted, an increase of 8.0% compared to net income of $10,084,000, or $1.81 per Class A share diluted, for the same period a year ago.

“Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations”Tweet this

The Company’s Board of Directors voted to increase its regular quarterly dividend from 14.00 cents ($0.14) per share to 16.00 cents ($0.16) per share on the Company’s Class A common stock, and from 7.00 cents ($0.07) per share to 8.00 cents ($0.08) per share on the Company’s Class B common stock. The dividends were declared payable November 16, 2020 to stockholders of record on November 2, 2020.

Net interest income totaled $78.4 million for the nine months ended September 30, 2020 compared to $70.5 million for the same period in 2019. The 11.2% increase in net interest income for the period is primarily due to a decrease in interest expense as a result of falling interest rates. Prepayment penalties collected amounted to approximately $946,000 for the first nine months of 2020 compared to $18,000 for the same period last year. The net interest margin decreased from 2.08% on a fully tax-equivalent basis for the first nine months of 2019 to 2.01% for the same period in 2020. This was primarily the result of increased margin pressure during the recent decrease in interest rates across the yield curve. The average balances of earning assets increased for the first nine months of 2020 compared to the same period last year, by $609.0 million or 12.3%, combined with an average yield decrease of 0.55%, resulting in a decrease in interest income of $6.2 million. The average balance of interest-bearing liabilities increased for the first nine months of 2020 compared to the same period last year, by $486.9 million or 12.1%, combined with an average interest-bearing liabilities interest cost decrease of 0.59%, resulting in a decrease in interest expense of $14.1 million.

The provision for loan losses increased by $2,975,000 from $700,000 for the nine months ended September 30, 2019 to $3,675,000 for the same period in 2020, primarily as a result of the economic uncertainties associated with the novel coronavirus disease (COVID–19) pandemic and increased loan balances.

The Company’s effective tax rate increased from 2.0% for the nine months ended September 30, 2019 to 9.5% for the same period in 2020. This was primarily as a result of an increase in taxable income relative to total income and a reduction in tax accruals, during 2019, related to sequestration of the refundable portion of our alternative minimum tax (AMT) credit carryforward. On January 14, 2019, the IRS updated its announcement “Effect of Sequestration on the Alternative Minimum Tax Credit for Corporations” to clarify that refundable AMT credits under Section 53(e) of the Internal Revenue Code are not subject to sequestration for taxable years beginning after December 31, 2017. On March 27, 2020, the Coronavirus, Aid, Relief and Economic Security (CARES) Act was signed into law. As a result of the CARES Act, the full balance of the AMT credit was refunded in 2020.

At September 30, 2020, total equity was $363.4 million compared to $332.6 million at December 31, 2019. The Company’s equity increased primarily as a result of earnings, offset somewhat by dividends paid.

The Company’s leverage ratio stood at 6.79% at September 30, 2020, compared to 7.25% at December 31, 2019. The decrease in the leverage ratio was due to an increase in quarterly average assets, offset somewhat by an increase in stockholders’ equity. Book value as of September 30, 2020 was $65.27 per share compared to $59.73 at December 31, 2019.

The Company’s allowance for loan losses was $33.4 million or 1.12% of loans outstanding at September 30, 2020 compared to $29.6 million or 1.22% of loans outstanding at December 31, 2019, and $29.1 million or 1.22% of loans outstanding at September 30, 2019. The ratio of the allowance for loan losses to loans outstanding has decreased from December 31, 2019, primarily from approximately $232 million of Payroll Protection Program (PPP) loans that are guaranteed by the U.S. Small Business Administration (SBA), which require no allowance for loan losses. Nonperforming assets totaled $1.4 million at September 30, 2020, compared to $2.0 million at December 31, 2019, and $1.1 million at September 30, 2019.

As of September 30, 2020, the Company has COVID-19 modifications of 33 loans aggregating $37,987,000, primarily consisting of short-term payment deferrals. Of these modifications, $37,987,000, or 100%, were performing in accordance with their modified terms.

The CARES Act also allows companies to delay Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13, Measurement of Credit Losses on Financial Instruments (CECL), including the current expected credit losses methodology for estimating allowances for credit losses. The Company has elected to delay FASB ASU 2016-13. This ASU will be delayed until the earlier of the date on which the national emergency concerning the COVID–19 outbreak declared by the President on March 15, 2020 terminates or December 31, 2020, with an effective retrospective implementation date of January 1, 2020.

The Company, through its subsidiary bank, Century Bank and Trust Company, a state chartered full service commercial bank, operating twenty-seven full-service branches in the Greater Boston area, offers a full range of Business, Personal and Institutional Services.

Century Bank and Trust Company is a member of the FDIC and is an Equal Housing Lender.

This press release contains certain “forward-looking statements” with respect to the financial condition, results of operations and business of the Company. Actual results may differ from those contemplated by these statements. The Company wishes to caution readers not to place undue reliance on any forward-looking statements. The Company disclaims any intent or obligation to update publicly any such forward-looking statements, whether in response to new information, future events or otherwise.

Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Condition (unaudited)
(in thousands)
September 30,December 31,
Assets20202019
Cash and Due From Banks$101,679$44,420
Federal Funds Sold and Interest-bearing Deposits In Other Banks 310,901 214,273
 
Securities Available-for-Sale (AFS) 293,277 262,190
 
Securities Held-to-Maturity 2,407,176 2,351,120
 
Federal Home Loan Bank of Boston stock, at cost 13,361 19,471
 
Loans:
Commercial & Industrial 1,315,407 812,417
Municipal 130,047 120,455
Construction & Land Development 9,116 8,992
Commercial Real Estate 784,895 786,102
Residential Real Estate 443,703 371,897
Consumer and Other 19,866 21,893
Home Equity 287,099 304,363
 
Total Loans 2,990,133 2,426,119
Less: Allowance for Loan Losses 33,394 29,585
 
Net Loans 2,956,739 2,396,534
 
Bank Premises and Equipment, net 37,340 33,952
Accrued Interest Receivable 13,223 13,110
Goodwill 2,714 2,714
Other Assets 159,016 154,640
 
Total Assets$6,295,426$5,492,424
 
Liabilities
Demand Deposits$991,590$712,842
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,932,339 1,678,250
Money Market Accounts 1,906,676 1,453,572
Time Deposits 581,866 555,447
 
Total Interest Bearing Deposits 4,420,881 3,687,269
 
Total Deposits 5,412,471 4,400,111
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 231,030 266,045
Other Borrowed Funds 152,248 370,955
 
Total Borrowed Funds 383,278 637,000
 
Other Liabilities 100,160 86,649
Subordinated Debentures 36,083 36,083
 
Total Liabilities 5,931,992 5,159,843
 
Total Stockholders’ Equity 363,434 332,581
 
Total Liabilities & Stockholders’ Equity$6,295,426$5,492,424
Century Bancorp, Inc. and Subsidiaries
Consolidated Comparative Statements of Income (unaudited)
For the quarter and nine months ended September 30, 2020 and 2019
(in thousands)
 
Quarter ended September 30,Nine months ended September 30,
2020201920202019
 
Interest Income:
Loans$21,431$22,117$63,478$65,106
Securities Held-to-Maturity 14,186 14,623 44,701 43,006
Securities Available-for-Sale 818 2,184 3,493 7,305
Federal Funds Sold and Interest-bearing Deposits In Other Banks 69 928 747 3,204
 
Total Interest Income 36,504 39,852 112,419 118,621
 
Interest Expense:
Savings and NOW Deposits 1,726 5,445 7,569 16,788
Money Market Accounts 3,056 5,050 12,090 15,805
Time Deposits 2,858 3,038 9,141 8,724
Securities Sold Under Agreements to Repurchase 241 697 1,176 1,572
Other Borrowed Funds and Subordinated Debentures 1,292 1,852 4,093 5,274
 
Total Interest Expense 9,173 16,082 34,069 48,163
 
Net Interest Income 27,331 23,770 78,350 70,458
 
Provision For Loan Losses 900 75 3,675 700
 
Net Interest Income After
Provision for Loan Losses 26,431 23,695 74,675 69,758
 
Other Operating Income:
Service Charges on Deposit Accounts 2,239 2,310 6,558 6,801
Lockbox Fees 996 937 2,850 3,018
Net Gain on Sales of Loans    154
Other Income 934 1,039 3,112 3,737
 
Total Other Operating Income 4,169 4,286 12,520 13,710
 
Operating Expenses:
Salaries and Employee Benefits 11,362 10,670 33,020 32,621
Occupancy 1,477 1,463 4,448 4,686
Equipment 809 862 2,608 2,440
Other 4,519 4,467 13,306 14,170
 
Total Operating Expenses 18,167 17,462 53,382 53,917
 
Income Before Income Taxes 12,433 10,519 33,813 29,551
 
Income Tax Expense 1,546 435 3,204 584
 
Net Income$10,887$10,084$30,609$28,967
Century Bancorp, Inc. and Subsidiaries
Consolidated Year-to-Date Average Comparative Statements of Condition (unaudited)
(in thousands)
September 30,September 30,
Assets20202019
Cash and Due From Banks$80,686 $74,413 
Federal Funds Sold and Interest-Bearing Deposits in Other Banks 238,525  184,035 
 
Securities Available-For-Sale (AFS) 293,301  325,036 
Securities Held-to-Maturity (HTM) 2,346,502  2,128,082 
 
Total Loans 2,693,000  2,325,136 
Less: Allowance for Loan Losses 31,359  28,936 
 
Net Loans 2,661,641  2,296,200 
 
Unrealized (Loss)Gain on Securities AFS and HTM Transfers (2,861) (3,352)
Bank Premises and Equipment 36,253  26,273 
Accrued Interest Receivable 12,630  13,942 
Goodwill 2,714  2,714 
Other Assets 164,804  133,754 
 
Total Assets$5,834,195 $5,181,097 
 
Liabilities
Demand Deposits$889,237 $764,852 
 
Interest Bearing Deposits:
Savings and NOW Deposits 1,881,897  1,818,017 
Money Market Accounts 1,603,367  1,249,531 
Time Deposits 597,589  512,228 
Total Interest Bearing Deposits 4,082,853  3,579,776 
 
Total Deposits 4,972,090  4,344,628 
 
Borrowed Funds:
Securities Sold Under Agreements to Repurchase 220,796  205,185 
Other Borrowed Funds 169,972  201,804 
 
Total Borrowed Funds 390,768  406,989 
 
Other Liabilities 88,028  79,327 
Subordinated Debentures 36,083  36,083 
 
Total Liabilities 5,486,969  4,867,027 
 
Total Stockholders’ Equity 347,226  314,070 
 
Total Liabilities & Stockholders’ Equity$5,834,195 $5,181,097 
 
Total Average Earning Assets – QTD$5,881,860 $4,971,831 
 
Total Average Earning Assets – YTD$5,571,328 $4,962,289 
Century Bancorp, Inc. and Subsidiaries
Consolidated Selected Key Financial Information (unaudited)
(in thousands, except share data)September 30,September 30,
20202019
 
Performance Measures:
 
Earnings per average Class A share, diluted, quarter$1.96 $1.81 
Earnings per average Class A share, diluted, year-to-date$5.50 $5.20 
Return on average assets, year-to-date 0.70% 0.75%
Return on average stockholders’ equity, year-to-date 11.78% 12.33%
Net interest margin (taxable equivalent), quarter 1.96% 2.08%
Net interest margin (taxable equivalent), year-to-date 2.01% 2.08%
Efficiency ratio, Non-GAAP (1) 55.4% 59.1%
Book value per share$65.27 $59.08 
Tangible book value per share – Non-GAAP (1)$64.79 $58.59 
Capital / assets 5.77% 6.21%
Tangible capital / tangible assets – Non-GAAP (1) 5.73% 6.16%
 
 
Common Share Data:
Average Class A shares outstanding, diluted, quarter and year-to-date 5,567,909  5,567,909 
 
Shares outstanding Class A 3,655,469  3,650,449 
Shares outstanding Class B 1,912,440  1,917,460 
Total shares outstanding at period end 5,567,909  5,567,909 
 
 
Asset Quality and Other Data:
 
Allowance for loan losses / loans 1.12% 1.22%
Nonaccrual loans$1,419 $1,066 
Nonperforming assets$1,419 $1,066 
Loans 90 days past due and still accruing$49 $ 
Accruing troubled debt restructures$2,240 $2,404 
Net charge-offs (recoveries), year-to-date$(134)$146 
 
Leverage ratio 6.79% 7.25%
Common equity tier 1 risk weighted capital ratio 11.36% 11.90%
Tier 1 risk weighted capital ratio 12.40% 13.12%
Total risk weighted capital ratio 13.39% 14.13%
Total risk weighted assets$3,370,541 $2,867,422 
 
 
(1) Non-GAAP Financial Measures are reconciled in the following tables:
 
Calculation of Efficiency ratio:
 
Total operating expenses(numerator)$53,382 $53,917 
Less: other real estate owned expenses   (139)
Total adjusted operating expenses(numerator)$53,382 $53,778 
 
Net interest income$78,350 $70,458 
Total other operating income 12,520  13,710 
Tax equivalent adjustment 5,558  6,875 
Total income(denominator)$96,428 $91,043 
 
Efficiency ratio – Non-GAAP 55.4% 59.1%
 
Calculation of tangible book value per share:
 
Total stockholders’ equity$363,434 $328,960 
Less: goodwill 2,714  2,714 
Tangible stockholders’ equity(numerator)$360,720 $326,246 
 
Total shares outstanding at period end(denominator) 5,567,909  5,567,909 
 
Tangible book value per share – Non-GAAP$64.79 $58.59 
Book value per share – GAAP$65.27 $59.08 
 
Calculation of tangible capital / tangible assets:
 
Total stockholders’ equity$363,434 $328,960 
Less: goodwill 2,714  2,714 
Tangible stockholders’ equity(numerator)$360,720 $326,246 
 
Total assets$6,295,426 $5,299,181 
Less: goodwill 2,714  2,714 
Tangible assets(denominator)$6,292,712 $5,296,467 
 
Tangible capital / tangible assets – Non-GAAP 5.73% 6.16%
Capital / assets – GAAP 5.77% 6.21%

Contacts

William P. Hornby, CPA
whornby@centurybank.com
Phone: 781-393-4630
Fax: 781-393-4071

Covid-19 and the need for talent driving executive decisions on work location …

NEW YORK, Oct. 13, 2020 /PRNewswire/ — A new survey of U.S. business executives concludes corporate decision makers find large urban areas less attractive business locations due to the COVID-19 pandemic. Released today at the International Economic Development Council (IEDC) Annual Conference, which is being held virtually from Dallas, the study shows that nearly 50% of the executives surveyed reported that large urban areas – cities with a population of more than 1 million – are less attractive as business locations due to COVID-19. Respondents also reported that their perception of some state’s business climates has deteriorated due to the way some states have handled the pandemic.

Conducted by Development Counsellors International (DCI) every three years, the “Winning Strategies in Economic Development Marketing” survey has tracked trends in economic development since its inception in 1996. In light of COVID-19, this year’s survey also includes findings about how the pandemic affects corporate location decisions and perceptions of U.S. cities and states.

“Now in its ninth iteration, the Winning Strategies survey reveals the changing perceptions of location decision makers, as well as the tools and tactics that help shape those perceptions,” said Julie Curtin, president of DCI’s economic development practice. “The confluence of a global pandemic, a presidential election and intense scrutiny of equity policies is putting a renewed interest on how location decisions are made, so the results from this year’s survey are especially interesting for communities and site selectors alike.”

Key findings from the 2020 survey, which is based on the aggregate responses of 316 corporate executives with site selection responsibilities, include:

  • States with the Best Business Climates: Texas ranks No. 1 with 48% of respondents citing the state as having a favorable business climate, followed by Georgia at No. 2 with 25%, North Carolina at No. 3 with 22%, Florida at No. 4 with 18% and Tennessee at No. 5 with 13%.
  • States with the Worst Business Climates: California has held the distinction of being the least-favorable state for the past seven editions of the survey, with the percentage rising from 57% in 2017 to 63% this year. New York, Illinois and New Jersey have also been ranked in the top five for the last three editions of the report.
  • Corporate executives are closely watching the presidential election and expecting to pivot if needed. A majority of respondents (55%) reported that should President Trump be re-elected, they—or their clients—will be more likely to explore locations in the United States.
  • Talent continues to rule the decision-making process. Even as the country has seen unemployment rates skyrocket since the start of the pandemic, skills gaps continue to exist and access to skilled talent remains the top location factor in site selection searches.
  • Even amidst the pandemic, companies are moving forward with location decisions. 55% of respondents reported that their company will make a location decision (such as move, expand or consolidate) during the next 24 months—5 percentage points up from 2017.

Best States for Business:

  1. Texas                                 48%
  2. Georgia                              25%
  3. North Carolina                    22%
  4. Florida                                18%
  5. Tennessee                         13%

Worst States for Business:

  1. California                           63%
  2. New York                           33%
  3. Illinois                                 32%
  4. New Jersey                        14%
  5. Florida                                12%

For a free copy of the full “Winning Strategies” survey report or an executive summary, visit aboutdci.com/thought-leadership/winning-strategies.

About DCI
Development Counsellors International (DCI) is the leader in travel and economic development marketing — increasing visitors and business inquiries for places across the globe. Since 1960, DCI has worked with more than 500 cities, regions, states and countries, helping them attract both investors and visitors. DCI has offices in New York, Denver, Toronto and Los Angeles. For more information, visit aboutdci.com or follow @aboutDCI on Twitter.

SOURCE Development Counsellors International

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Citigroup comes out with its earnings report.

New York – Citigroup Inc. today reported net income for the third quarter 2020 of $3.2 billion, or $1.40 per diluted share, on revenues of $17.3 billion. This compared to net income of $4.9 billion, or $2.07 per diluted share, on revenues of $18.6 billion for the third quarter 2019.

Revenues decreased 7% from the prior-year period, primarily reflecting lower revenues in Global Consumer Banking (GCB) and Corporate / Other, partially offset by growth in Fixed Income Markets, Investment Banking, Equity Markets and the Private Bank in the Institutional Clients Group (ICG). Net income declined 34% from the prior-year period, largely driven by the lower revenues, an increase in expenses and higher credit costs. Results include a $400 million civil money penalty in connection with consent orders recorded in Corporate / Other. Earnings per share of $1.40 decreased 32% from the prior-year period, primarily reflecting the decline in net income.

Michael Corbat, Citi CEO, said, “We continue to navigate the effects of the COVID-19 pandemic extremely well. Credit costs have stabilized; deposits continued to increase; and revenues are up 3% year-to-date. Our Institutional Clients Group again had very strong performance, especially in Markets, Investment Banking and the Private Bank. The backbone of our global network, Treasury and Trade Solutions experienced strong client engagement in the face of low interest rates. Although Global Consumer Banking revenues remained lower as a result of the pandemic, we did see higher activity in our mortgage and wealth management products.

“Our capital position strengthened during the quarter with our Common Equity Tier 1 ratio increasing to 11.8% and our Tangible Book Value per share increasing to $71.95. We remain committed to returning capital to our shareholders, subject to the industry-wide approach determined by the Federal Reserve.

“We are committed to thoroughly addressing the issues contained in the Consent Orders we entered into last week with the Federal Reserve and the Office of the Comptroller of the Currency. These investments will not only further enhance our safety and soundness, they will result in a digital infrastructure that will improve our ability to serve our clients and customers and make us more competitive,” Mr. Corbat concluded.

Percentage comparisons throughout this press release are calculated for the third quarter 2020 versus the third quarter 2019, unless otherwise specified.

Source: Citigroup

JP Morgan Chase earnings report

On October 13, 2020, JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) reported 2020 third quarter net income of $9.4 billion, or $2.92 per share, compared with net income of $9.1 billion, or $2.68 per share, in the third quarter of 2019. A copy of the 2020 third quarter earnings release is attached hereto as Exhibit 99.1, and a copy of the earnings release financial supplement is attached hereto as Exhibit 99.2.

Source: JP Morgan Chase

The COVID/AI Era of Law …

For five months now, the United States has been in lock-up.  One of the ugliest hashtags I have seen and heard used is #AloneTogether.  At first it reads like an oxymoron.  If we are alone, how can we be together.  It sounds like the status of the last few years of my first marriage.  Sharing space with an energy pulling against you is draining.

The COVID-19 pandemic may be casting a new meaning on that phrase.  If you have the misfortune of having to share more time in energy draining space with a spouse that you are considering divorcing, #AloneTogether may be the last rallying cry before calling a divorce attorney.

Technology may also impact how we view the phrase.  Zoom calls and TEAMS meetings are a growing part of the workplace lexicon.  The spaces that we enjoyed being alone in at home have become offices and digital conference rooms where everything from sales pitches to digital happy hours are taking place.

For the extra sensitive, walking down a sidewalk and observing people take the extra precaution of taking a wider berth around you while hindering their own breathing by wearing a mask can be disconcerting.  The slightest attempts at saying “hello” or “good morning” are increasingly avoided because of fear that the slightest exhale from a fellow human may lead to a 14-day quarantine or time in a hospital on a ventilator.

In theory, the state quasi-mandated environment of staying away from each other should result in a reduction in analog contacts as our world goes increasingly digital.  Hard for kids to get into school fights when kids are at home distance learning.  Tough to get in a shouting match with a restaurant cashier over an order when Uber Eats, Grub Hub, or Door Dash is picking up your food.

There will be controversies; they will continue.  We are humans, taking conflict to levels that exceed what other lifeforms endure.  Legal philosophy should have us asking “Why are we engaging?” or “What is engagement?”.  Society will have to come up with tweaks to the rules for human engagement in a digital age where a corona virus is forcing on a global scale the reconstruction of society.  Should judges have to consider new threshold principles before trying to apply statutes, laws, rules, code, from a pre-COVID, non-artificial intelligence world to an issue before them arising out of a digital environment?  Will we need a new definition for personal spaces? For zones of danger?

In the area of political law how we structure political engagement and eventually the rules for engagement are already taking on a new twist.  For example, the recent squabble in the United States over funding for the U.S. Postal Service appears to be a result of the controversy over the use of mail-in ballots and the possibility of mail fraud.  As I ponder these questions, I suspect that new legal principles will appear as COVID-19 continues to change how we address the question of whose rule should prevail during political conflict.

What does the narrative of fair trade with China mean?

This morning I watched the Fox Business Network‘s Mornings with Maria.  They have been featuring news clips of an interview that U.S. Secretary of State Mike Pompeo had with host Maria Bartiromo where he criticizes China’s trade policy toward the United States and warns Americans of the Chinese intent to steal American intellectual property and Americans’ personal information.  The United States has been making it clear for years that it is unhappy with what it describes as an imbalance in trade between the two nations.

China has a potentially large consumer market, its emergence stymied in part to its current status as a creditor nation where it finances other nations, including the United States versus living off of the dead aid provided by western nations as part of their policy of noblesse oblige toward emerging, lesser developed countries.  In addition, given its growing economic power, it is easily in a position to influence economic affairs in southeast Asia.  As a provider of inexpensive telecommunications equipment it has been able to enter Europe’s telecommunications market providing competition for American made telecommunications products.

But at the heart of the American narrative may be the fear that the Anglo-American world view or philosophy is being challenged by an alternative Chinese view that, if not held under control, will replace the Anglo view thus making the current American narrative on political economy i.e. the greatness of the republican form of government combined with a free market, less attractive for leadership in other nations to use the American model for governing their domestic and foreign trade affairs.

Pompeo and other American leaders have been using the media to signal to Americans that China’s actions are a threat to the American economy thus a threat to the American way of life.  I can see the broad strokes.  For example, if China continues to lock the US out of additional trading opportunities in China and can price the US out of European and other Asian technology and manufacturing markets, America’s wealth and trade influence would shrink and the US would be forced to become more self-reliant.  America, facing a challenged supply chain, would see shortages and increasing prices for goods and services thus the threat to the American way of life.

Pompeo also describes China’s activity as a threat to American democracy.  That threat I don’t buy into and I see it more as a jingoistic ploy than anything else.  Democracy refers to a citizen’s ability to participate in the process whereby political leaders are selected.  Pompeo has yet to state his case in a cogent manner.  He has insinuated that China has deployed an influence campaign targeting voters and elected officials alike but has provided no specifics.

In addition, the terms fairness and balance are continuously uttered, likely part of the jingoism campaign, as Americans tend to conflate fairness and balance with democracy.  A fair and balanced trade relationship between two countries has nothing to do with how the leaders in each respective country are chosen.  Americans should be asking themselves and their leaders why connecting these points creates such a sound political narrative that US electorate would have no other choice but to support any legal initiatives or actions that promote escalated tensions.

And the legal actions and initiatives are being turned up.  The Justice Department recently told PBS News that 60% of its trade cases are against China and that its actions against China are more in line with stopping illegal activity versus expressing an intellectual bias.

I see law as the codification of an originating philosophy transmitted via a narrative and  refined by politics and policy.  What is missing here is the jurisprudence.  For the citizen to properly understand the government’s legal actions against China trade policy, the focus has to come off of messages that conflate democracy, fairness, and balance, and look for the philosophy that is being promoted.  Conflation promoted by government officials should open up the citizens’ minds to questions about the mismatch between the politics, the policy, and the messaging.

Getting to the why is critical.