Big investors buying fewer homes in Charlotte

Wall Street-backed investors are still snatching up homes in Charlotte — but below the pace they were this time last year. And way below the pace from this past summer.

Institutional investors bought 14.9 percent of all residential properties sold in the Charlotte metro area in January, down from 16.9 percent a year ago, according to a report this week by RealtyTrac. January's figure did, however, represent a rise over December's 13.4 percent.

RealtyTrac defines an institutional investor as one that buys at least 10 properties in a calendar year. Such investors, backed by private equity, bought thousands of homes in Charlotte last year to rent them out. In cases where the properties were already rentals, the new owners have raised rents and been quick to start the eviction process for tenants who miss payments.

The year-over-year slowdown in the purchases come as home prices continue to post sizable annual gains and inventories continue to shrink. This week, the Standard & Poor’s Case-Shiller home price index reported 7.8 percent appreciation in the Charlotte area in December compared with a year ago.

The slowdown has been seen nationwide, too: Institutional investors bought 5.2 percent of U.S. residential properties sales in January, down from 8.2 percent a year ago and down from 7.9 percent in December.

“Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,” RealtyTrac's Daren Blomquist said in a statement.

In the Charlotte region, the actual number of properties bought by institutional investors totaled 318 in January versus 376 a year ago. Those figures include sales of distressed and nondistressed properties.

Compare those numbers to 687 institutional investor purchases in July, last year's peak for our region.

PNC opens public finance office in Charlotte

PNC Capital Markets has opened a public finance office in Charlotte as it seeks to compete for municipal bond business with the likes of Bank of America and Wells Fargo.

The move puts PNC investment bankers on the ground in Charlotte, which PNC sees as key to helping it grow market share in the region, particularly as it tries to capture more municipal bond business.

Municipal bonds are used to fund projects for governmental bodies and nonprofits. Such projects include the construction of schools, roads, bridges and hospitals. In Charlotte, PNC is hoping to underwrite such bonds.

PNC Capital Markets is part of Pittsburgh-based PNC Financial Services Group, which has bank branches in the Charlotte region. Federal market share data show PNC Bank 12th in the region for deposits.

On Friday, PNC Capital Markets said it is expanding its public finance operation across the Southeast. In addition to Charlotte, PNC has opened a public finance office in Atlanta and New York, the company said Friday.

The Charlotte office is at 4720 Piedmont Row Drive, where the bank also has headquarters for its western North Carolina operation. David Fischer will be managing director for the Charlotte office, where he will oversee the municipal bond business for the Carolinas and other parts of the Southeast.

Although PNC announced the Charlotte public finance office Friday, it actually opened Feb. 5, the bank said.

Bank of America challenges $2.1B in 'Hustle' penalties

The U.S. government's request for Bank of America to pay a $2.1 billion penalty in the so-called “Hustle” case is legally flawed, the Charlotte-based bank argued in court papers filed late Wednesday.

The government is seeking penalties against the bank after a jury found Countrywide Financial Corp. guilty of knowingly selling bad home loans to Fannie Mae and Freddie Mac in the run-up to the housing crisis. The bank bought Countrywide in 2008.

The government initially sought $864 million in penalties. The $2.1 billion figure represent the gross revenue the bank made from the sale of the loans, according to the government’s calculations.

"In it's most dramatic departure from reality, the government would count toward Countrywide's 'gain' the principal amounts Countrywide lent to borrowers in originating the loans," the bank said in its filing.

"Countrywide did not 'gain' $2.1 billion by any stretch of the term; it simply recovered amounts that it had previously paid out," the bank said.

The bank said it suffered a net loss of at least $3 million from the poor performance of the loans.

The government's claim for $2.1 billion is "contrary to law" and unfair to the bank, the bank says.

Bank of America, Buffett reach stock deal

Warren Buffett is helping out Bank of America again -- and benefiting in the process.

The Charlotte-based bank has said it has reached a deal with the billionaire investor's company that will help the bank meet its capital requirements.

Buffett's company, Berkshire Hathaway, invested $5 billion into Bank of America in 2011, offering a lifeline as the company was ailing. At the time, the bank's stock was sinking to around $6 a share during the financial crisis.

In its latest deal with Berkshire Hathaway, Bank of America plans to count preferred shares with a carrying value of $2.9 billion as so-called Tier 1 capital, which measures how well a bank can absorb losses. Regulators closely watch banks' capital levels to evaluate their health.

Bank of America meets regulatory capital requirements already. The bank ended 2013 with $132 billion in Tier 1 common capital. It's 10 percent Tier 1 ratio exceeded the 8.5 percent minimum regulators will require in 2019.

Under the deal, Berkshire Hathaway also will give up a dividend provision that gives the right to recover any missed payments.

Berkshire Hathaway also benefits from the deal, as the bank would agree to wait at least five years before redeeming the preferred stock.

The plan needs approval from the bank's shareholders in May.

Bank of America disclosed the proposal in a filing this week with the Securities and Exchange Commission.

Wells Fargo hires 'big data' chief

Wells Fargo said Tuesday it has hired its first ever chief data officer, a move designed to help the bank make better use of "big data."

The chief, A. Charles Thomas, will be based in San Francisco, where Wells Fargo is headquartered. He will oversee the bank's data strategy and determine ways data can be used to improve risk management and customer experience, Wells Fargo said. He starts the new job in March.

Thomas and his staff will analyze how customers interact with the bank at its branches and automated teller machines and through online and mobile banking platforms, the bank said. Spokesman Josh Dunn said in an email that such research will help the bank identify ways to improve its services, help customers find products and identify potentially fraudulent behavior.

Banks, like other companies, are becoming more interested in capitalizing on the emerging field of big data, a term that can apply to large sets of information businesses have about their customers. A bank might be able to use data on a customer's branch habits to, say, improve their ATM experience.

"This is an important move for us in the tech space and a role that is maturing across industries," Dunn said.

Bank of America has used big data collected on some of its call-center employees to improve productivity. Through analyzing data captured through sensors the bank asked the employees to wear, the bank learned that the most productive workers spoke frequently to colleagues. That led the bank to schedule group breaks instead of solo ones.

Welch Hornsby Investment Advisors expands to Charlotte

Welch Hornsby Investment Advisors said Tuesday it is expanding to Charlotte, opening an office in SouthPark at 600 Fairview Road.

The Montgomery, Ala.-based company provides wealth-management services to high-net-worth clients. It also manages assets for endowments and foundations and supervises retirement assets.

The Charlotte office is the company's third. Its other two offices are in Alabama.

“A presence in Charlotte establishes us in this important Southeastern hub and fits our strategy of providing a solid base for future expansion in the region," President and CEO Edward Welch said in a statement.

The company said it has hired Brandy Hydrick to manage the Charlotte office, where she will also serve as the company's head of financial planning.

Hydrick ran her own independent financial planning firm in Charlotte before being recruited by Welch Hornsby to open the Charlotte office, the company said.

The company said it is still determining how many employees will work in the Charlotte office.

Welch Hornsby said it serves clients in 12 states across the Southeast.

SEC rejects request for BofA, Wells to make risk disclosures

A regulator has rejected shareholder proposals from New York's comptroller that sought to make Bank of America and Wells Fargo disclose which employees could expose them to major losses because of their bonus incentives, according to documents filed with the Securities and Exchange Commission.

The comptroller, Thomas DiNapoli, sought to include the resolutions in the banks' proxy statements.

DiNapoli is trustee of New York's $173 billion pension fund, which has $1.2 billion in investments in the banks, according to a story on the Boston Herald's website. DiNapoli has said he is concerned about a "high risk, high rewards" approach to investing without fully assessing possible downsides.

"Unless banks shed more daylight on their incentive-based pay practices, shareholders will continue to face unnecessary risks," he said Monday. "The SEC should reconsider its decision and review the facts of our request."

The Securities and Exchange Commission rejected the proposals, which would have asked the banks' boards to identify employees who could expose them "to possible material losses."