Friday, January 23, 2015

Philadelphia councilman seeks to ban deposits with BofA

Bank of America is getting some negative vibes in the city of brotherly love.

A member of Philadelphia's city council is seeking to ban the city from depositing its funds with Charlotte-based Bank of America and New York-based Citigroup, The Philadelphia Inquirer reports.

According to the Inquirer, the move comes after the city in 2013 filed suit in federal court against nine major banks, including Bank of America and Citigroup, in connection with their manipulation of the London Interbank Offered Rate, or Libor, which artificially suppressed the city's returns on interest-rate swap agreements.

On Thursday, Councilman James Kenney introduced a bill that would not permit the city to give its deposits to the two banks. Here's an excerpt from the story:

According to Kenney's bill, municipal entities such as Philadelphia "were paid lower amounts during the life of their swaps, and they were subjected to huge — and sometimes devastating — financial penalties when they terminated the investments, which were artificially inflated by defendants' misconduct." 
Citigroup and Bank of America "are the two worst actors in the whole game," Kenney said. "To park citizen money in those banks while we're in a bad-swaps deal seems stupid."
The bill does not affect other types of business with the banks, the story says.

I reached out to Bank of America and Citigroup for comment. A Citigroup spokesman said the company had no comment. Here's what a Bank of America spokeswoman said in an email:
Given we have not received any correspondence from the City of Philadelphia relating to this bill, we'd prefer not to comment.

Aquesta Bank profit rises 3.6 percent

The parent company of Cornelius-based Aquesta Bank said Friday its fourth-quarter profit was 3.6 percent higher than the same quarter a year earlier, as the community bank grew its loans and deposits.

The bank recorded profit of $374,000, or 15 cents per share. That was up from $361,000, or 14 cents per share, a year ago, Aquesta Financial Holdings said.

Jim Engel
Also Friday, Aquesta reported its full-year results for 2014, which were better than its 2013 results.

In 2014, it made $1.71 million in profit, or 67 cents per share, up from $1.47 million, or 57 cents per share, in 2013.

Aquesta was established in August 2006. Its strategy is to be the dominant community bank in the Lake Norman area, where all of its six branches are currently located.

Last year, it opened two branches: one in Huntersville and its second in Cornelius.

In November, Aquesta President said Jim Engel said the bank has no plans for additional branches at least until 2017.

When the bank does start adding branches, it will likely eye three main sites, he said: the area west of Lake Norman, Huntersville and a yet-to-be-determined area in south Charlotte.

At the end of December, Aquesta had $263.2 million in assets, up from $233.9 million at the end of December 2013. The bank grew its total loans to $172.3 million from $130.3 million over the same period. It grew its total core deposits to $119.8 million from $97.7 million.

In addition to its banking business, Aquesta operates an independent insurance agency that represents multiple carriers of business and personal lines of property and casualty insurance.

Wednesday, January 21, 2015

Moynihan: BofA's cybersecurity unit can spend as much as it needs

Underscoring the rising focus on cybersecurity at large financial institutions, Bank of America’s CEO said Wednesday the bank’s cybersecurity operation can spend as much as it needs to protect the lender and its customers.

“I go to bed every night feeling comfortable that that group has all the money (it needs),” Brian Moynihan said in a Bloomberg Television interview from Davos, Switzerland, where he has been attending the World Economic Forum this week. “They never have to ask.”

“The only place in the company that doesn’t have a budget constraint is that area,” he said. “Why would I take my judgment and say, ‘You could do this cheaper?’”

(For those interested in watching the video above, Moynihan's comments about what the bank is spending on cybersecurity come roughly five minutes in.)

Moynihan said the Charlotte bank, the second-largest in the U.S. by assets, spends more than $400 million a year on cybersecurity. “And it's going north of that.”

His comments come at a time of growing concern among major U.S. companies about cyberattacks. In November, Sony Pictures became the victim of a destructive online attack. Before that incident, recent data breaches affecting Target, Home Depot and other large retailers made national headlines.

Banks large and small say their cybersecurity costs are rising. Wells Fargo CEO John Stumpf, speaking last week to analysts on an earnings conference call, said the San Francisco-based lender is “spending more on cyber today.”

One ongoing area of concern for banks are so-called “distributed denial of service” attacks. In such attacks, criminals overwhelm a bank’s computer or telecommunications networks with large amounts of data requests, which can slow or block customer access to online accounts.

In its latest annual report, Bank of America says its websites have been subject to “a series” of denial of service incidents. Those incidents have not resulted in unauthorized access to Bank of America or customer information, according to the report. But the report says the bank believes such incidents may continue.

The bank’s cybersecurity group is “judicious” in how it spends money on cybersecurity, Moynihan said.

“But the reality is you’ve got to be willing to do what it takes at this point.”

Tuesday, January 20, 2015

Moynihan: Swiss currency decision a boon for BofA

The end of the cap on the Swiss franc is leading to major losses for some banks — but it's been a good thing for Charlotte-based Bank of America, its CEO told CNBC Tuesday.

New York-based Citigroup, Germany-based Deutsche Bank AG and England-based Barclays Plc are said to have suffered $400 million in cumulative losses following the Swiss central bank’s decision to abandon the cap on the franc's value against the euro, Bloomberg reported Monday. Those losses may be followed by others in coming days, according to the news agency.

But Bank of America CEO Brian Moynihan told CNBC that his bank has benefited from the Swiss currency shock that rocked markets and companies last week.

"We made money in the last few days and we helped our customers," Moynihan said in the CNBC interview in Davos, Switzerland, where he's attending the World Economic Forum, the annual gathering of financial and political elites from across the world. "It hasn't been a big impact on us but it caught everybody by surprise."

Here are more excerpts from CNBC's story on the interview:
Moynihan said that his bank made money in the currency markets and trading in the wake of Thursday's announcement that the Swiss franc would no longer be pegged to the euro. 
He said the Swiss National Bank decision was good even though it caused some "dislocation in the system." 
"The volatility helps activity, and if you keep your exposures low, any activity actually helps generate revenue," he said. "We were fine, and we look forward to letting the economy adjust."

Why bankers will be watching the State of the Union

My prediction of the day: More bankers than normal will be tuned in to tonight's State of the Union address.

Here's why:

During the address, President Barack Obama is expected to propose a fee — some people are referring to it as a "bank tax" — on the largest U.S. financial institutions, a group that includes Bank of America and Wells Fargo.

Specifically, the proposal calls for a 0.07 percent fee on the liabilities of the roughly 100 U.S. financial institutions that have assets of more than $50 billion each.

According to a fact sheet released by the Obama administration over the weekend, the fee is designed to make it more costly for the institutions to finance their activities by borrowing heavily. That, in turn, would reduce the probability of major defaults that can ripple through the economy, the administration says.

If the idea sounds familiar, it's because Obama proposed a similar tax in 2010, when the financial crisis was fresher on the minds of many Americans than it is today. That proposal, designed to recover taxpayer funds used to bail out big banks, went nowhere.

To be sure, the odds of this new proposal going anywhere are long. I mean, there's that whole Republican-controlled-Congress variable you've got to factor in to the equation.

And you can bet that the banks, which already lament post-financial crisis regulations as being too costly, will lobby hard against the proposal if it seems to start gaining any traction.

In a Forbes column, Tim Worstall writes that the tax is founded on a good idea. But, he writes, its chances of passing would be improved if it were presented as an premium charged to banks in exchange for an insurance backstop from the federal government.

"It’s not a tax: it’s an insurance premium and if the banks don’t want to pay it they can not have these liabilities and thus not need the insurance," he writes.

"Put that way Obama’s proposal might actually have a chance. ... Call it a change to the FDIC’s insurance premiums and attain the same goal that way."

For another view, here's what investment bank Keefe, Bruyette & Woods said about the fee in a report Monday:

We view this as political posturing and not a serious policy proposal. In our view, chances of this proposal passing are low. 
Instead we think it is part of the administration's effort to draw contrasts with congressional Republicans and make it look like the White House is against Wall Street, while Republicans are defenders of the industry. We view this to energize the President's political base.

And here's what the Financial Services Forum, a Washington, D.C.-based group whose members are the CEOs of 18 large financial services institutions that do business in the U.S., has to say about the proposal. The statement below is from forum President Rob Nichols:
We urge policymakers to reject this tax targeting a small group of companies and instead focus on achieving broad-based, pro-growth tax reform that ensures our economic recovery continues.
As the largest financial institutions continue to simplify, reduce risk and leverage, build capital, provide the credit to keep the economy growing, and make the necessary investments to protect customers from cyber threats, it would be counterproductive to layer on one more way to make it more difficult to achieve those public goals.

McHenry moves up on banking panel, Pittenger reappointed

Rep. Patrick McHenry, of Lincoln County, has been named vice chairman of the House Financial Services Committee, while Rep. Robert Pittenger, of Charlotte, has been reappointed to the committee.

The appointment is a move up on the committee for McHenry, who has served on it since his first term in 2005.

In addition to the vice chairman position, McHenry will be a member of the Capital Markets and Government Sponsored Enterprises Subcommittee and the Oversight and Investigations Subcommittee.

Pittenger was named to the committee in 2012, the year he was elected to his first term. He was sworn in for his second term earlier this month.

Pittenger is also on the Financial Institutions and Consumer Credit Subcommittee and the Monetary Policy and Trade Subcommittee.

The two Republicans are among three Charlotte-area lawmakers on the committee. Mick Mulvaney, a Republican from Indian Land, is the third.

Monday, January 19, 2015

BofA: 800,000 customers signed up for Apple Pay

Bank of America says about 800,000 of its customers have enrolled in Apple Pay, nearly three months after the Charlotte-based bank began making the service available.

The disclosure was tucked inside last week's press release for Bank of America's fourth-quarter earnings. To put that number in some perspective, Bank of America says it has approximately 17 million mobile users, of which 800,000 is only about 5 percent.

Apple's new mobile payments system allows shoppers to use their iPhones to make purchases at participating stores. The system, whose adoption is being closely watched by the payments industry, debuted in October.

Since then, some banks have scrambled to give their customers access to the service, at a time when consumers are expecting to do more and more on their mobile phones. Wells Fargo has even been promoting Apple Pay in advertisements in Charlotte.

(You can see which banks are participating in Apple Pay at this page on Apple's website. The list has only 39 banks, a number that took me by surprise as I was expecting perhaps more by now.)

According to a post earlier this month on, major credit unions have been slow to sign on with Apple Pay. Of the top 10 banks in the U.S., only two — Bank of New York Mellon and HSBC — haven't joined Apple Pay, according to

Bank of America's roll-out of the service hasn't been snag-free.

The same week Apple Pay launched, Bank of America disclosed that some of its customers were double-billed for purchases they made with the service.