The same day that Bank of America released the ballot for its annual shareholder meeting, a group of protesters announced its plans to picket the meeting.
The Rainforest Action Network, a frequent demonstrator against the bank's financing of coal projects, said it will protest outside the May 8 meeting. It also pledged to have representatives inside the meeting to introduce a floor resolution to restrict coal financing.
The group rallied outside Bank of America's complex in downtown Boston earlier this month.
Thursday, March 28, 2013
The same day that Bank of America released the ballot for its annual shareholder meeting, a group of protesters announced its plans to picket the meeting.
Wednesday, March 27, 2013
Greensboro-based NewBridge Bancorp, the holding company of NewBridge Bank, said Wednesday that Robert Lowe is leaving the boards of both.
Lowe will officially step down from the boards at the company's annual shareholders meeting, set for May 15.
Lowe retired as CEO of the holding company in 2008. Prior to that, he was chairman and CEO of Lexington State Bank, which merged with Greensboro-based FNB Southeast in 2007 to form NewBridge.
Lowe was chairman of NewBridge Bancorp and NewBridge Bank until 2009, after which he remained on the boards of both.
Earlier this year, NewBridge announced plans to open its first full-service branch in Charlotte.
David Barksdale, Chief Banking Officer for NewBridge, has said the office will open in the second quarter. The bank has said it will relocate its commercial and mortgage banking operations to the new office.
A number of Wells Fargo customers are reporting issues using their debit cards this morning.
The customers said their Wells debit cards were being rejected when they tried to use them for purchases. A bank spokesperson said he is checking into the issue.
The issue comes on the heels of a website slowdown Tuesday, which the bank attributed to a cyber attack. The debit card problems do not appear to be related, the bank said.
I'll be putting updates on CharlotteObserver.com this morning.
Tuesday, March 26, 2013
Bank of America's CEO, in an interview that aired Tuesday with public television's Charlie Rose, praised the federal regulations that have been rolled out in the wake of the financial crisis and said banks must be run better in the future.
According to a transcript of the show, Moynihan also said he could envision himself being the chief executive of the bank -- which was among those that had to be bailed out by the federal government during the downturn -- for the rest of his life.
He also called for moderation in the way industries, such as homebuilding and even his own, conduct business in the future.
Moynihan, elected to CEO in 2009, said Bank of America is now focused on "organic growth." That's a change from the approach of his predecessors, who had created a culture focused on acquisitions, he said, using the bank's 2009 purchase of Merrill Lynch as an example. Ken Lewis, who led Bank of America right before Moynihan became CEO, was at the helm of the bank when the Merrill Lynch deal was negotiated.
Bank of America was among banks that passed federal "stress" tests this month. The annual tests, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are designed to measure how much capital banks would have during a severe economic downturn.
Moynihan lauded the Dodd-Frank Act, federal legislation enacted in response to the Great Recession and that mandates the stress-testing. Moynihan said the "principles" in the act "are all good."
Although Bank of America announced plans this month to buy back up to $5 billion in common stock -- an announcement made after the Federal Reserve approved its 2013 capital-distribution plan -- some analysts remain concerned about its legal woes.
For one, the bank could pay $8.5 billion in a proposed settlement with nearly half a dozen investors to resolve claims over mortgage abuses stemming from its purchase of subprime giant Countrywide Financial. A judge has yet to approve the settlement.
On top of that, on Thursday, Freddie Mac sued Bank of America and other large international banks, accusing them of rigging the London interbank offered rate. It's unclear for how much Bank of America could be on the hook if the banks lose the lawsuit.
Some analysts point to such legal woes as holding back the bank's earnings potential. Moynihan agreed that the bank's earnings are being crimped.
In a description he's used before, he told Rose that it's like Bank of America is climbing a mountain with a 250-pound backpack as it tries to overcome its "heavy burden." Although he didn't specify what that burden is, in a January interview with Bloomberg he described the bank's challenges, such as those related to Countrywide, as making it harder for the bank to compete.
"Our mobile banking or our investment banking or whatever products are as good as anybody else's, and we're winning market share every day," he said. "But we're doing it with this heavy burden upon us. As that burden lifts, just think of how we can out-sprint the competition.
"So the question is, when I remove the 250 pounds we can take off, and that's really where we are."
Bank of America, Moynihan said, has "an inherent earnings power."
Moynihan also said the housing market is rebounding, with housing starts on the rise and construction jobs rising. But, he said, the housing market was overbuilt.
"We shouldn't overbuild again," he said. "We shouldn't over-lend again.
"I hope we just go back to all things in moderation."
He described today's Bank of America as "a simple, more narrow company, where every day we get up and say, 'We got customers and clients and how do we do a better job?'
"Is that wholly different? No. But … it takes away a lot of stuff that was going on and replace it with stuff that's really good."
Toward the end of the interview, Rose asked Moynihan whether the bank had a succession plan in place. Moynihan said the bank did but then went on to talk about the rewards of the job despite the "pounding."
"You know, while there have been times when you sit there and say, 'Jeez, this is a lot of pounding,' you always keep your eye on the purpose you're here. And it's to help those people with their financial lives. And if you really keep focused on that, I could do this the rest of my life."
Wells Fargo said the intermittent slow-downs on its website Tuesday were the result of unusually high traffic volumes, which the bank believes to be part of a cyber attack.
It's the latest U.S. bank to be hit by the so-called "denial of service" attacks. TD Bank and KeyBank confirmed to BankInfoSecurity that they were hit by the cyberattacks last week. Bank of America, BB&T, JPMorgan Chase, Citigroup and PNC have also been plagued by on-again, off-again website slowdowns.
Denial of service attacks attempt to keep legitimate customers from accessing sites by flooding web servers with requests. Wells Fargo's website problems appear to have begun Tuesday morning.
"The vast majority of customers are not impacted and customer information is safe," spokesman Josh Dunn said in an emailed statement. "We apologize to our customers for any inconvenience."
Monday, March 25, 2013
The Better Business Bureau of Southern Piedmont said Monday that it had received complaints that scammers were attempting to access personal information from Bank of America customers through phone calls.
Tom Bartholomy, president of the Southern Piedmont BBB, said his organization received four such complaints involving Bank of America customers on Monday.
He said the complaints centered on scammers calling Bank of America customers to tell them their accounts had been frozen because of unusual activity. The scammers then tried to fish account numbers and other personal information out of the customers, he said.
A Bank of America spokesman said Monday that it doesn’t appear that the problem is widespread.
While it’s not unusual for the Southern Piedmont BBB to receive three to four complaints a day on bank-related scams, those complaints usually affect different banks, not just one, said Bartholomy, of the BBB.
Bartholomy said consumers should always be wary when a caller purporting to be from a bank doesn’t seem to know personal information that should already be on file with the bank, such as an account number.
A Charlotte-based executive at Ally Financial has joined the Federal Reserve's branch in Richmond, Va., according to a news release from the Richmond Fed.
Brent Stanton was named assistant vice president of treasury and payment services, part of the Fed's operations that handles financial transactions for the U.S. Treasury.
Saturday, March 23, 2013
For the first time in four years, Bank of America is among the top 10 commercial and multifamily lenders, according to a 2012 data the Mortgage Bankers Association released this week.
Bank of America fell off the association's top 10 list in 2009, the same year it bought Merrill Lynch. Since then, San Francisco-based Wells Fargo has been the country's No. 1 originator of commercial and multifamily loans.
The MBA ranks 111 originators in its annual report.
In January, Bank of America reported that it had loaned nearly $8.7 billion to small businesses in 2012, an increase of 28 percent from 2011. Also in January, the bank said it had pumped up its number of small-business bankers by 1,000.
“With the creation of the small business banker role, Bank of America responded directly to what our clients asked for: locally based small-business experts who provide small businesses with the financial solutions necessary to sustain and grow their business,” Robb Hilson, Bank of America small-business executive, said in a January press release.
But in a fourth-quarter report, the U.S. Small Business Administration said some small businesses are struggling to get loans. In the fourth quarter, small-business lending was up for the first time in 10 quarters, the SBA said.
Lending for small and large businesses is improving only slightly, the SBA said.
Thursday, March 21, 2013
Though it is selling one of its few Triangle branches, Yadkin Valley Financial Corp. says it's not planning to pull back in the region.
Yadkin Valley Financial announced Thursday it is selling its branch in Creedmoor, which is 15 miles northeast of Durham, to the Oxford-based Union Bank & Trust Company. The branch had operated under the Cardinal State Bank name.
Yadkin CEO Joe Towell said in a press release that the sale was "consistent with the strategic geographic focus" of the bank. The $1.9 billion-in-assets company, based in Elkin, has most of its 34 branches in the crescent between Charlotte and Winston-Salem, with a few in the Boone/Blowing Rock area.
With the sale, Yadkin Valley will be left with three Triangle-area locations, in Durham and Hillsborough, under the Cardinal State name.
Despite citing the geographic focus, Yadkin Valley Financial says it is not planning any similar moves.
"We are pleased with our operations in the Triangle and we are optimistic about future growth in that market over time," spokeswoman Jill Sutphin told the Observer by email. She said the sale was a "unique opportunity."
Terms of the deal were not disclosed. The Creedmoor branch had about $23 million in deposits, according to the latest FDIC data, making it one of Yadkin Valley's smaller branches.
Union Bank will take on the deposits and the branch's loans, the press release states. The employees at the branch will become Union Bank employees. The deal is expected to close in the next 90 days.
Another slice of Charlotte real estate has been given Leadership in Energy and Environmental Design certification, with Wells Fargo announcing Thursday that its history museum in uptown has received the second-highest LEED rating.
The museum opened in 2011 in the office tower known as Three Wells Fargo, 401 S. Tryon St. The gold certification applies only to the museum's interior.
LEED has four certification levels. They are, from lowest to highest, basic certification, silver, gold and platinum.
The city of Charlotte is home to roughly 80 LEED certifications, according to data provided Thursday to the Observer by the U.S. Green Building Council, which oversees the LEED program.
Wells Fargo has 10 museums throughout the country, many of which are on the West Coast, and a mobile museum, according to its website. The Charlotte museum is Wells Fargo's first to be granted LEED certification, according to the company.
The Charlotte museum features, among other things, a stagecoach built in the 1800s.
Wednesday, March 20, 2013
U.S. Rep. Robert Pittenger called for a lighter regulatory environment for community banks at a hearing of the House Financial Services Committee today, saying that he's heard from community bank presidents in the Charlotte region who describe the post-Dodd Frank landscape as "oppressive."
Pittenger, a Charlotte Republican elected to the office last fall, was a director at Park Meridian Bank for 14 years, in the 1990s and early 2000s. The bank sold to Regions Bank in 2001. He cited that experience and said he hoped for a return to a lighter regulatory environment more like that era.
He described difficulty in obtaining capital, the lack of new bank charters and consolidation in the industry as symptoms.
"All this leads us to believe that the need for relief today, to create that same environment back when we had back during those positive years, and to recognize that perhaps what we’re doing today through the regulations are creating creating more difficulty and impediments than protections," he said.
BB&T, whose website has experienced outages for at least the past two days, on Wednesday continued to offer no explanations as to what was causing the sporadic disruptions.
On Wednesday, the website Sitedown was peppered with complaints, most stemming from the morning, that the Winston-Salem-based bank's site was not working.
From a 5:57 a.m. comment on Sitedown: "Second day and cannot logon."
"No access for 2 days," someone commented about a hour later, at 6:40 a.m.
The website appeared to be working normally Wednesday afternoon.
On Tuesday, BB&T spokesman David White told the Observer that the outages started Tuesday afternoon, but he would not provide details on the cause. At 2:45 p.m. Wednesday he wrote in an email to the Observer that service had been restored but offered no explanation for the source of the outages.
Bank of America reached a post-recession milestone last week, with the Federal Reserve blessing its 2013 capital plan.
Rather than increase its quarterly dividend from a mere 1 cent, where it’s been since 2009, the Charlotte-based bank has opted to buy back up to $5 billion in common stock and redeem approximately $5.5 billion in preferred stock.
Before the Fed OK’d Bank of America’s capital plan, some analysts suspected that the bank would be seeking the agency’s approval for a modest — say, 2- to 3-cent — increase to its dividend and permission to buy back shares.
But the bank surprised many by choosing only the latter.
So, what does the bank’s decision mean for shareholders, and what does it say about the health of the bank?
Below are answers to those and some other questions that might be on the minds of investors and the public in the wake of the bank’s buyback announcement.
At what price will the bank buy back shares?
Jerome Dubrowski, a Bank of America spokesman, said the shares would be bought at whatever the market price is at the time they are repurchased. In other words, if you bought shares at $44 apiece years ago, don’t expect to see the bank buying them back at that price. Shares were going for about $12.80 Wednesday afternoon.
Can I sell back my shares directly to the bank?
Dubrowski declined to go into detail, beyond what the bank said in a press release, on how the shares will be repurchased. According to the press release, the shares might be repurchased on the open market or through “privately negotiated transactions” over the next four quarters.
Alan Knuckman, chief market strategist for Optionshop, an online futures broker, said it’s unlikely the bank will be buying back shares from the average shareholder. Rather, he said, the bank will likely buy back shares from institutional investors — he used the hypothetical example of Goldman Sachs — who have hundreds of thousands, if not millions, of shares.
Does Bank of America’s choice of a buyback over a dividend increase tell us anything about the health of the bank?
Steven Clark, an associate professor of finance at the University of North Carolina at Charlotte, says the buyback “tells us they’re sitting on a good bit of cash. Ultimately, it’s probably a good sign that they’re sort of generating this excess cash.”
Todd Hagerman, an analyst with Sterne, Agee & Leach, said the buyback is a sign of the times for the banking industry. “Effectively, we’re coming out of arguably one of the worst financial crises in the last 50 years in the United States,” he said. “It’s the best decision in the current times to buy back your shares when your stock is trading below tangible book value.”
Also, Hagerman said, buybacks are easier for a bank to halt, whereas a dividend increase “tends to be more permanent in nature.” Indeed, Bank of America, in its press release, said the repurchases could be suspended.
How much longer will Bank of America’s dividend be stuck at 1 cent?
Hagerman said there’s a strong likelihood that Bank of America’s dividend will increase next year. But, he said, the bank’s revenues need to stabilize. Hagerman also expects to see another share-buyback program from the bank next year.
Dubrowski declined to comment on the bank's 2014 capital plan. CEO Brian Moynihan, in a January fourth-quarter earnings call, said the bank is interested in giving capital back to shareholders. “Our intention is to return it,” he said during the call.
What’s better for shareholders, a buyback or a dividend increase?
Dividends are used by some shareholders as income, so a higher dividend means more income. But a buyback means fewer outstanding shares of a company’s stock, giving shareholders a larger stake in the company.
Clark said that while buybacks and dividends are both ways to return capital to shareholders, they are not one and the same. “In some sense, a buyback is preferable,” Clark said, “because presumably if the company is out repurchasing shares, those who want to liquidate their holdings can sell on the open market and generate cash that way.”
But when a dividend is increased, he said, all shareholders get the higher dividend. “The dividend, of course, is typically just treated as income and taxed as such,” he said.
Hagerman said dividends have “a more permanent connotation” to investors because of the perception that a buyback could be suspended at any time.
What’s the outlook for Bank of America’s stock?
Knuckman, in a March 8 report titled “BAC Back,” said Bank of America’s stock has "more room to recover.”
In 2008, the stock was going for roughly $40. While it’s far from that price, the stock is up from where it was just late last year, when it was around $10 per share. In 2012, Bank of America's stock was the best Dow Jones Industrial Average performer. The stock more than doubled in value last year, rising by 108.8 percent.
“From a trading standpoint, I think it’s been very attractive,” Knuckman said. “Bank of America’s stock has had an amazing resurgence. I’m looking for this to outpace the sector in general as a trading opportunity.”
The parent company of Cabarrus Bank and Trust, Bank of Stanly and Anson Bank and Trust is now looking to combine the banks and find a new name that isn't tied to a specific area.
It's a strategic reversal for Uwharrie Capital Corp., based in Albemarle. For more than a decade, the company has operated the banks separately, with the county names, to attract customers who wanted to keep their money local. A marketing team is now working with the bank to review possibilities for a new name.
"It will be something that brands us as a community bank but not particularly to any geography," CEO Roger Dick said.
The company announced the plan in a securities filing. Uwharrie predicts it will save between $750,000 and $1.2 million per year. Dick said that would mainly come from computer system and regulatory compliance costs. The bank lost $241,000 for shareholders last year.
The combination is expected to close in the fourth quarter.
The change is also a reflection of the strain on the community bank model. Thirty years ago, Dick said, a small bank could thrive with as little as $25 million in assets. Now, bankers say you need as much as $1 billion. All told, Uwharrie's three banks have about $545 million in assets.
"I’ve used the analogy with our board," Dick said. "We might be a great wagon maker, but it’s the turn of the century, and Henry Ford down the street is talking about a horseless carriage."
Tuesday, March 19, 2013
BB&T's website went down Tuesday afternoon, and the Winston-Salem-based bank was not able to immediately provide an explanation for the problem.
"Currently, BB&T is experiencing intermittent outages on BBT.com and we are working to correct this," bank spokesman David White wrote in an email to the Observer when asked about why the site was not working.
White said the outages began Tuesday afternoon.
BB&T is feeling the impact of the Federal Reserve’s objection to its capital plan: Standard & Poor’s has lowered its outlook for the bank from stable to negative.
In announcing the move Monday, S&P cited both the Fed’s objection last week to the Winston-Salem-based bank’s capital plan and S&P’s own concerns about “weakness” in the way the bank manages risk.
A bank’s rating outlook is different from its overall credit rating. S&P affirmed its “A-minus” rating for BB&T.
A company rated A-minus is considered by S&P to be above investment grade. But, S&P said, if more “deficiencies in risk management” surface for BB&T, the agency could lower the bank’s credit rating.
In an emailed response to the Observer, BB&T said its A-minus rating makes it “the second-highest rated regional bank in the country. The rating outlook, which is designed for investors, does not mean a credit rating will change.”
BB&T was one of two banks -- the other was Ally Financial -- that did not get the green light Thursday from the Fed to increase dividends or buy back stock after a review of the 2013 capital-distribution plans of 18 major U.S. banks. BB&T must now resubmit its capital plan to the Fed.
The Fed’s opposition to BB&T’s plan came after the bank passed a federal “stress test” that analyzed how the capital levels of the 18 banks would fare in a severe economic downturn. The Fed and BB&T have not provided specifics on the “qualitative” reasons that led to its objection to the bank’s plan.
But this month BB&T revealed in its annual report that it had to re-evaluate its calculation for risk-weighted assets. Specifically, the bank has changed the weights it assigns to some unfunded lines of credit to businesses.
BB&T’s need to change the calculation led Moody’s Investors Service earlier this month to downgrade its outlook for the bank from stable to negative.
Allen Tischler, a senior vice president for Moody's, told the Observer Tuesday that BB&T is “an otherwise healthy” bank.
S&P, in its report Monday, said BB&T’s calculation adjustment might have hurt its chances of winning the Fed’s approval for its capital plan.
The Fed did not object to the capital plans of Bank of America or Wells Fargo. Bank of America plans to buy back $5 billion in shares as part of its 2013 capital plan.
S&P rates Bank of America at A-minus and Wells Fargo at A-plus. The agency has had a negative outlook for both banks since 2011.
Tischler declined to speculate on what Moody's might do when it comes to BB&T’s outlook or rating if the bank fails to get Fed approval for a resubmitted capital plan. But another objection from the Fed “would raise questions” about the bank “and could undermine franchise value,” he said.
|The scene outside last year's Bank of America annual meeting. |
Photo by Diedra Laird.
Last year, activist groups promised a "spring of discontent" ahead of the annual May meeting. Nothing like that has been discussed so far this year, though Charlotte typically hosts a number of protesters each year for Bank of America's meeting.
The protests, however, may be a little more muted this year since Bank of America's stock has risen more than 60 percent since the last shareholder meeting. Fury over the bank's proposed $5 debit card fee also appears to have died down since then.
It's now looking like the parliament in Cyprus -- that Mediterranean nation with about as many inhabitants as Mecklenburg County -- will reject the bailout package that includes the across-the-board levy on insured deposits.
Industry types already said they didn't think a larger economy like Spain would try such a plan. But worries about European deposits forced the Dow Jones Industrial Average down earlier this week, and sent U.S. regulators and bank industry groups scrambling to assure people that this sort of deposit tax couldn't happen here in America.
Former FDIC chairwoman Shiela Bair, on American Public Media's Marketplace this morning: "This would never happen in the U.S. because we respect the rule of law and we have a very strong agency called the Federal Deposit Insurance Corporation that stands up for insured depositors and protects them."
The American Bankers Association: "While the situation in Cyprus is a real concern for depositors in Cypriot banks, it has no implication for depositors in U.S. institutions... Simply put, U.S. insured depositors are safe and their deposits are protected by a strong FDIC fund, a financially secure banking system and the full faith and credit of the U.S. government."
Perhaps most interestingly, Business Insider dug up a letter written by the Federal Reserve in 1941 explaining why a deposit tax would be a terrible idea. Here's the full document.
Monday, March 18, 2013
Wells Fargo today said it increased philanthropic giving in Greater Charlotte to $8.1 million in 2012, up 1,520 percent from $500,000 in 2011.
The San Francisco-based bank said the Charlotte spending was part of $15.6 million it invested in communities across North Carolina in 2012.
In the Charlotte area in 2012, the bank said its giving included:
- $160,000 to create the Wells Fargo Sense and Science Garden in uptown;
- $250,000 to create the Veteran’s Employment Initiative, which provides tuition support and career-planning help to those returning from active military duty;
- $2.5 million to ProjectLIFT, a program designed to increase the high school graduation rate
- More than $750,000 to nonprofits to support community development programs and initiatives in affordable housing, financial literacy and work force development; and
- $500,000 to Grameen America to provides microloans to entrepreneurs in low-income communities.
At their upcoming annual meeting, BB&T shareholders will get to vote on what has become for them a very familiar ballot item.
For the fourth year in a row, the Massachusetts Laborers' Pension Fund is asking shareholders to support a proposal that would make the Winston-Salem-based bank provide semiannual disclosures on political spending. The request, on which shareholders get to vote at the meeting in Fort Lauderdale, Fla., next month, seeks disclosure on spending to influence legislation and public opinion on political issues and to participate in campaigns in support of, or against, candidates.
Bank of America shareholders are also set to vote at their annual meeting on a proposal that would ban the use of the bank's corporate funds for political purposes.
BB&T's board is asking shareholders to vote against the request. In the bank's 2013 proxy statement, the board says the company doesn't use corporate funds as contributions to political candidates, parties or committees. Rather, the board says, the company sponsors political action committees, "which allow associates to pool their financial resources to support federal and state candidates who support effective legislation important to BB&T and its shareholders.
"In light of BB&T’s policy prohibiting the use of corporate funds for political contributions, the fact that BB&T already provides all legally required disclosures regarding political contributions and the fact that much of this information is already publicly available, this proposal is duplicative and unwarranted and would cause the corporation to expend unnecessary time and resources without providing any additional benefit to shareholders."
But Barry McAnarney, executive director of the pension fund, which owns 15,650 shares of BB&T, told the Observer Monday that he would like more spending-related disclosure from the bank. For one, the pension fund wants BB&T to provide details on any payments it might make to trade associations, he said.
McAnarney said some corporations in recent years have found themselves the subject of news stories focused on to which causes they've given money. In the proxy statement, the pension fund argues that "Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value."
The pension fund also says "publicly available data does not provide a complete picture of the company's lobbying or political expenditures."
Depending on the situation, some political contributions -- whether to liberal or conservative causes -- can have an adverse effect on a company's bottom line, McAnarney said.
"We just want people to be transparent," he said. "I’m a full believer that transparency only helps in organizations."
So far, BB&T shareholders don't think the additional disclosure is necessary. They've voted down the pension fund's previous requests in 2012, 2011 and 2010, a fact that BB&T notes in the 2013 proxy statement.
Friday, March 15, 2013
Wells Fargo's top executives all received a boost in total compensation last year, according to a regulatory filing made Thursday.
The higher compensation coincides with stronger financial results. In 2012, Wells posted earnings of $18.9 billion, up 19 percent from $15.9 billion in 2011. Revenue rose 6 percent in 2012, to $86.1 billion.
The San Francisco-based bank's CEO, John Stumpf, saw his 2012 compensation, which includes stock awards, rise 15 percent, to $22.8 million from $19.8 million the year before. But Stumpf's salary was unchanged, at $2.8 million.
Timothy Sloan, chief financial officer, received an 8.1 percent bump in compensation, to $9 million from $8.3 million.
The largest increase in compensation went to David Hoyt, senior vice president of wholesale banking. Hoyt's compensation rose 21.8 percent, to $12.8 million from $10.5 million.
Wednesday, March 13, 2013
BB&T CEO Kelly King was given $11.7 million in total compensation in 2012, an increase of 56.9 percent from the year before, the bank reported Tuesday in a filing with the Securities and Exchange Commission.
King's total compensation includes stock awards. In 2011, the figure was $7.45 million.
His base salary for 2012 increased 1.9 percent to $979,813. In 2011, his base salary was $960,688.
Other top executives for the Winston-Salem-based bank also saw larger compensation in 2012 from the year before:
- Christopher Henson, chief operating officer, was given a 5.4 percent increase to his base salary, which rose to $639,750 from $606,750. His total compensation climbed to $5.03 million from $3.6 million, an increase of 39.7 percent.
- Ricky Brown, community banking president, saw his base salary rise to $639,750 from $606,750, an increase of 5.4 percent. His total compensation rose to $5.5 million from $3.9 million, an increase of 41 percent.
- Clarke Starnes, chief risk officer, had a base salary of $539,375, up 6.7 percent from $505,625. His total compensation increased 41 percent, to $4.16 million from $2.95 million.
- Daryl Bible, chief financial officer, saw his base salary increase 6.7 percent, to $539,375 from $505,625. His total compensation was $3.18 million, up 33.6 percent from $2.38 million.
Tuesday, March 12, 2013
Wells Fargo & Co. said Tuesday that is has awarded CEO John Stumpf roughly $1 million in restricted stocks as part of his 2012 compensation.
The 27,398 restricted share rights, awarded Friday, were disclosed in a filing with the Securities and Exchange Commission. On Friday, the stock of the San Francisco-based bank, the largest home lender in the U.S., was trading at around $36.50, putting the value of the award at about $1 million.
The rights will be vested in three one-third installments on March 15, 2014, March 15, 2015 and March 15, 2016.
Wells Fargo, which has East Coast headquarters in Charlotte, is expected to announce this month how much its top executives made in 2012.
Bank of America and Wells Fargo are expected to disclose any day now how much their top executives made in 2012.
Spokesmen for the banks said Tuesday that proxy statements containing the compensation information are set to come out this month. The spokesmen said they couldn’t provide the dates on which the filings will be made.
According to a 2011 filing, Bank of America’s CEO, Brian Moynihan, received total compensation -- stock awards included -- of $8.08 million that year, up from $1.94 million the year before. Wells Fargo paid its CEO, John Stumpf, $19.8 million in total compensation in 2011, an increase from $18.9 million in 2010, according to its proxy statement from that year.
Moynihan, in 2010, had no stock awards, which in 2011 accounted for $6.1 million of his total compensation.
Last year, he was awarded $5.9 million in stock, and this year his stock bonus rose to $11 million.
The proxy statements don’t just include compensation details. They can also contain stockholder proposals and nominees for a bank’s board of directors.
Bank of America has managed to keep stockholder proposals regarding the bank’s dividend off its annual meeting ballot. It's also succeeded in keeping stockholder proposals on executive pay off the ballot.
Also this week, Bank of America -- and its investors -- are expected to learn whether the Federal Reserve will allow the bank to increase it dividend after it passed a Fed stress test last week. Bank of America's dividend is at 1 cent. The Fed will let the bank know Thursday whether that can be increased.
Friday, March 8, 2013
Wells Fargo said Friday it would commit $55 billion in loans to women-owned businesses by the end of the decade, renewing a commitment it first made in 1995.
The bank said it has lent $38 billion to women-owned firms in the 18 years since first putting an emphasis on the demographic.
Some of Wells' peers have made pledges to women-owned businesses in the past. Bank of America was honored by an organization earlier this month for its corporate spending among women-owned firms.
Bank of America has paid out more than $40 billion in legal settlements over the past three years, nearly double that of the other six largest banks combined, according to analysis by SNL Financial.
The Charlotte bank's $41.6 billion total has come through settlements and litigation on everything from shoddy mortgage servicing practices to shareholder suits to loans sold to be made into securities that soured.
Wells Fargo came in as a distant second in SNL's list, at $8.3 billion. Several settlements stemmed from Charlotte-based Wachovia, which Wells scooped up during the financial crisis.
Together, the nation's six largest banks and insurance giant MetLife have been ticketed for more than $62.6 billion in legal settlements since 2010.
Still, all these settlements have had little impact on the banks' overall expenses. Even at Bank of America, litigation costs have never made up more than 2 percent of the bank's overall noninterest costs, SNL found.
Bank of America has set aside another $19 billion for potential losses on mortgage putback demands, or when securitizers attempt to force banks to buy back loans they've sold, claiming misrepresentation of their quality.
It's been this type of uncertainty that's held back the bank's stock price. Despite being the best performer in the Dow Jones Industrial Average last year, Bank of America shares are trading about a third of the price they were five years ago.
Thursday, March 7, 2013
Concerned about "weaker internal controls" at BB&T, Moody's Investors Service has downgraded its outlook for the bank from stable to negative.
The setback for BB&T stems from the bank revealing in its annual report Friday that it needed to adjust its calculation of risk-weighted assets related to unfunded lending commitments, Moody's said.
"This reflects weaker internal controls than Moody's expected for a bank with BB&T's strong track record," Moody's said. "Specifically, BB&T is highly rated when compared to both U.S. and global peers, and its failure to conform to longstanding regulatory guidance is a concern."
The downgrading comes as Winston-Salem-based BB&T wages a court battle with the Internal Revenue Service over the bank's use of foreign tax credits. BB&T is challenging the IRS over the bank's 2002-07 use of the credits and hoping to get back $892 million in penalties and other related payments it made to the agency in 2010 after the credits were disallowed.
Even though Moody's downgraded its outlook for BB&T, it affirmed its ratings for the bank, including its A2 senior debt rating, A1 deposit rating and a1 baseline credit assessment.
Also, on Thursday, BB&T was among banks that passed a federal "stress test," mandated by the Dodd-Frank financial reform law.
Complaints against lenders made to the North Carolina attorney general increased 8 percent last year, according to data the office released Thursday.
More than 4,300 written complaints were received on issues including interest rate increases, late payment fees and foreclosure help scams, the office said. That's up from about 4,000 the year before.
N.C. Attorney General Roy Cooper was one of the primary negotiators in the $25 billion mortgage servicing settlement reached in February with the nation's largest banks and state attorneys general. Since then, attorneys general around the country have received complaints related to mortgage servicing issues.
But lenders actually fell from the top spot as the largest source of complaints. Telemarketers received the most complaints, with 6,126 coming from perceived violations of the national "Do Not Call" registry that allows people to opt out from the cold calls. Another 3,418 came about telemarketing scams and fraud, like fake sweepstakes.
See the full list here.
Wednesday, March 6, 2013
Fifth Third Bank said the president of Johnson C. Smith University and the chief human resources officer for Carolinas HealthCare System have been named to its North Carolina board of directors.
Ronald Carter, president of the university, and Debra Plousha Moore, who is also executive vice president for Carolinas HealthCare System, join seven other board members. They are:
- Francisco Alvarado, CEO of Marand Builders;
- Brett Carter, of Duke Energy Corp.;
- Tom Heiks, president of Fifth Third's North Carolina affiliate;
- Bob James, of Grant Thornton;
- Bo King, of King’s Office Supply;
- Hugh Morrison, of MB Commercial Real Estate; and
- Teresa Tanner, Fifth Third's chief human resource officer.
According to George Dick, Fifth Third spokesman, the bank has 56 branches in North Carolina, with the bulk, 40, in Greater Charlotte.
Wells Fargo might want to "test" the sale of its mortgage-servicing rights, the bank's chief financial officer said, opening up the possibility that Wells might join the likes of Bank of America and other lenders that have sold off the servicing of some of their loans.
But Wells Fargo is not under any capital pressure to sell the rights, Tim Sloan said during an investor conference that was broadcast online Tuesday. Sloan did not say when Wells might start selling the rights, if it does at all.
Some lenders have been selling off the rights to service the mortgages they originate. For example, Bank of America in January said it signed agreements to sell the servicing rights on 2 million home loans worth a total of roughly $306 billion.
Fannie Mae, Freddie Mac and Ginnie Mae owned some of those Bank of America loans, while the rest of the mortgages were part of securities not backed by the government-sponsored enterprises.
San Francisco-based Wells, the U.S.'s largest residential mortgage lender and servicer, is heavily focused on cross-selling its products and services. In his presentation, Sloan touted that Wells had record cross-sales in the fourth quarter, with its retail-banking operation cross-selling 6.05 products per household.
The bank's goal is eight products per household, he said.
"The longer a customer has been with Wells Fargo, the more products that they have with us," Sloan said.
But, if Wells no longer services a homeowner's mortgage, it could mean a lost opportunity to cross-sell to them.
Sloan made it sound like any decision by Wells to sell the rights to service its mortgages might not be made in the near future.
"We don't feel that we're under any terrible pressure to sell our MSR," he said. "We've got an adequate amount of capital.
"We thought it was a good idea to hold onto the servicing, because in a low (interest) rate environment like we've been in, which creates a tremendous amount of refinance volume, generally you get the first call as a servicer."
In 2012, Wells serviced $1.87 trillion in residential mortgages, including those owned by other lenders.
Tuesday, March 5, 2013
As Baird grows in Charlotte, the Milwaukee-based wealth management and capital markets firm could make the city a Southeastern hub.
The Charlotte office now has 13 financial advisers, but hopes to grow to 25 over the next couple years, office manager Landrum Henderson told the Observer. That would make it the largest office in the Southeast, surpassing Atlanta.
Baird is also considering moving some research and back-office operations to the city to create the hub, he said.
The firm has had an investment banking team in the city since 2008, when its bankers came over from Wachovia. The capital markets and fixed income operations now have 22 bankers in Charlotte.
Baird's Charlotte wealth management office opened in 2010 and has since grown to about $1.2 billion in assets under management. More than half of its financial advisers, including two last month, have come from Morgan Stanley Smith Barney.
Wells Fargo's chief financial officer said he expects the company's mortgage revenues to decline in the first quarter compared with the fourth. That drop would come on the heels of what Timothy Sloan called "very strong" mortgage-related third- and fourth-quarter earnings for San Francisco-based Wells.
Wells is the largest residential mortgage lender and servicing company in the U.S. Roughly 13 percent of the company's revenue stems from its mortgage business, Sloan said Tuesday at an investor conference broadcast online.
The first-quarter decline, Sloan said, won't be because "business isn't great. It's a great business."
"Our expectation is that volumes are coming down," he said. "You're seeing that in the industry data."
Residential mortgage originations are expected to decline in 2013. The Mortgage Bankers Association has forecast a decline in refinance and purchase activity to $1.41 trillion in 2013 from $1.75 trillion in 2012, a drop of 19 percent.
In 2012, Wells posted earnings of $18.9 billion, up 19 percent from $15.9 billion in 2011. Revenue rose 6 percent in 2012, to $86.1 billion.
But industry observers have wondered whether Wells can continue to see such gains, especially if mortgage rates were to increase. Addressing those concerns, Sloan said the company is focused on diversifying its revenue streams outside of its mortgage business. During the investor conference, he also pointed to increases in fee revenue and the company's push for cross-selling its products and services.
Sloan boasted that, despite the economic downturn and changes to regulations affecting the banking industry, Wells has had 12 consecutive quarters of growth in diluted earnings per common share.
"Our ability to grow through all of those challenges reflects the benefit of our diversified model," he said.
But concerns remain, especially about operating costs, Sloan said. Some expenses in 2012 related to foreclosure reviews, which were required under a consent order involving the U.S. Office of the Comptroller of the Currency and eight mortgage servicers, including Wells and Bank of America.
In the fourth quarter, Wells saw $125 million in expenses related to foreclosure reviews and roughly $500 million in such costs for all of 2012, Sloan said, adding that those costs are expected to go away by the second quarter; in January, the OCC said it had reached a settlement with 10 mortgage-servicing companies, including Wells and Bank of America.
Sloan also said during the investor conference:
- Growing net interest income remains the company's focus. "We believe we can continue to grow net interest income even in this low-rate environment."
- In the fourth quarter, Wells had record cross-selling performance. It's retail banking business cross-sold 6.05 products per household.
- In 2012 alone, Wells originated $524 billion in mortgages. "We love the mortgage business," Sloan said.
Monday, March 4, 2013
BB&T is expected to have its case against the Internal Revenue Service heard today in the U.S. Court for Federal Claims as the bank fights to get back nearly $900 million from the IRS.
In the dispute, which is centered on an arcane type of foreign tax credit, Winston-Salem-based BB&T is challenging the IRS over the bank's 2002-07 use of the credits. In 2010, the bank paid the IRS $892 million in penalties and other related payments after the agency claimed the bank shouldn't have taken advantage of the credits. BB&T, apparently believing it didn't owe the IRS the payments after all, later sued the agency to recover the millions.
The type of foreign tax credit that BB&T used has also come under scrutiny in cases involving other financial services companies and banks, such as Wells Fargo and the Bank of New York Mellon Corp. The banks, in complex deals involving British banking giant Barclays, tried to reduce their U.S. tax liability through so-called Structured Trust Advantaged Repackaged Securities, or STARS.
So complicated that they have befuddled some courts before which cases over the credits have come, STARS transactions involved the creation of trusts and subsidiaries in the U.S. and overseas. The U.S. government has viewed STARS as shams to exploit tax laws. Banks, though, have argued that the deals were legitimate ways to get low-cost financing for the banks.
In what could be a setback for BB&T in the case, a U.S. Tax Court judge ruled Feb. 11 against BNY Mellon's use of the credits in 2001 and 2002. BNY had claimed about $200 million in credits. As a result of the ruling, BNY has said it will take a roughly $850 million after-tax charge in the first quarter of this year. BNY also said it plans to appeal the ruling.
After learning of the ruling against BNY, BB&T last week announced that it will record a charge of $281 million in the first quarter to increase its reserves as it prepares for a own worst-case scenario in the bank's legal feud with the IRS. The amount is more than half the bank's fourth-quarter profit of $506 million. For all of 2012, BB&T reported net income of $1.9 billion, which the bank said was a record amount.
"This could be $500 million to the upside still. It could be another 300 or so million dollars to the downside," Motley Fool financial analyst Matt Koppenheffer said in an online video. "But we're talking about percentage points on BB&T's $21 (billion), $22 billion in shareholders equity. Shareholders want to watch this. This is not pennies. But it's not life or death for BB&T here."
BB&T, in a press release Tuesday, said it was confident in the argument it was preparing to present to the court. BB&T has not provided details on that argument it will make.
David White, BB&T spokesman, said the case is set to be heard in Washington, D.C.
BB&T did not include the press release on the $281 million charge on its webpage for "News Releases of Interest to Investors." White said that section of the site is primarily used for earnings-related press releases.
Friday, March 1, 2013
After more than three years, the Federal Deposit Insurance Corp. has lifted its cease and desist order against Bank of Granite, its parent company announced Friday.
The Granite Falls-based bank was acquired by FNB United in 2011 as part of a recapitalization plan to save both Bank of Granite and FNB United subsidiary CommunityOne. With the new capital, FNB United has been working to reduce the percentage of troubled loans on its books.
Though the combined bank's management have worked on cleaning up the two banks together, they file separate financial reports, have different charters and answer to different regulators.
"We are very pleased that the FDIC has determined to take this action acknowledging the progress we are making to restore the bank to financial health," CEO Brian Simpson said in a statement.
Bank of Granite's consent order had been issued in 2009, after the FDIC determined there was reason to believe the bank had "engaged in unsafe or unsound banking practices." It required, among other things, higher capital levels to be maintained.
CommunityOne remains under a consent order with the Office of the Comptroller of the Currency, according to the federal agency's records. It, too, requires higher capital levels.
FNB United is working on merging the two banks, a process that will end with the charters being combined. Simpson told the Observer that the lifting of the FDIC consent order was not required in the process, but marks a milestone.
Bank of America once again appears on a list of top companies that "level the playing field" for women-owned businesses to compete for corporate contracts, according to a news release from the Women’s Business Enterprise National Council.
It's the 11th time the bank has appeared on the list.
The Charlotte bank is the only financial company to appear on the list of 32 corporations. Walmart, AT&T, IBM, Exxon and other big names also appear.
Bank of America has worked on the issue for an umber of years. In the 1990s, under then-CEO Hugh McColl's tenure, the bank reported increasing its spending at minority and women-owned businesses from $11 million to $490 million.