Friday, September 28, 2012

Microfinance bank coming to Charlotte

A branch of nonprofit microfinance bank Grameen America will be coming to Charlotte, according to the city's weekly council update.

The branch will give loans of up to $1,500 to help unemployed or underemployed people below the poverty line start a business.

The city council two years ago approved $230,000 to help get the branch going. Grameen was tasked with coming up with another $2.3 million. Wells Fargo and the Z. Smith Reynolds Foundation were among donors, the Observer reported last year.

The bank is a part of the Bangladesh-based nonprofit started by Muhammad Yunus that won a Nobel Prize in 2006. Charlotte will be the fifth city in the U.S. to have a branch. Branches already exist in New York City, Omaha, Neb., Indianapolis and Oakland, Calif.

Grameen America is still looking for a location in Charlotte.

BofA cancelling second-lien debt for up to 150,000

Bank of America announced Friday that it is sending letters to 150,000 homeowners eligible for automatic cancellation of their second-lien mortgages, the Charlotte bank's most recent move under the terms of the $25 billion mortgage servicing settlement announced earlier this year.

Letters are going to customers whose second-lien mortgages are owned and serviced by Bank of America. Most are delinquent, and many are on a property with a delinquent first-lien mortgage.

The letters began going out in July and will continue through the end of the year. Homeowners who receive them will have the debt forgiven automatically unless they opt out within 30 days.

Homeowners cannot request to be a part of the program.

Thursday, September 27, 2012

Insurance sales firm adding 125 jobs in Charlotte

TZ Insurance Solutions LLC is opening an office in Charlotte and adding 125 jobs, the Charlotte Chamber announced.

The firm, a subsidiary of New Jersey-based TRANZACT, helps insurance companies find customers. TZ Insurance Solutions hopes to fill 45 jobs in the next two weeks, most of them with licensed health and life insurance agents.

“As the insurance industry continues to navigate through these challenging economic times and changing government regulations, we are uniquely positioned to support insurance carriers in their customer acquisition efforts,” TZ Insurance Solutions vice president Rich Akin said in a statement. “We feel strongly that the Charlotte area will provide us with a professional workforce as we expand our operations nationally.”

People interested in a job there can call (888) 809-4225 or email

Park Sterling, Citizens South merger should close next week

The merger of Park Sterling Corp. and Citizens South Banking Corp. is expected to close next week after shareholders approved it at a meeting Wednesday, the two banks said today.

They banks have already received regulatory approval for the merger, Park Sterling said, setting Monday as the expected date of completion. The banks should be combined by Oct. 10.

The merger of two of the largest Charlotte-area community banks was announced in May. Citizens South reported earlier this month that it had settled a shareholder lawsuit seeking to block the deal.

More than 99 percent of the Park Sterling vote was in favor of the merger, according to a securities filing Thursday afternoon. The Citizens South vote count was not yet released.

Bank cyber attacks continue, but aren't damaging

Welcome to the morning roundup. Here's a look at what's news in banking and finance this morning.

Bank attacks continue, but not damaging. The ongoing cyber attacks against banks reached U.S. Bank and PNC Financial on Wednesday, the Associated Press reports, and some customers continued reporting issues with Wells Fargo's website. The New York Times says the attacks are more of a "nuisance," and haven't damaged the banks' computer systems or customer accounts.

Controversial ref works for BofA. That replacement referee who blew the Seahawks-Packers touchdown call that cost Green Bay the game? He's a vice president for Bank of America in California, American Banker reported.

BofA layoffs in Australia. Bank of America is reportedly now cutting some jobs in Australia, The Wall Street Journal says. About 10 cuts have been made so far in the investment bank there.

Bair wants less leverage. Former FDIC chairwoman Sheila Bair calls in her new book for regulators to double banks leverage ratio requirement, from 4 percent to 8 percent, Bloomberg reports.

Wednesday, September 26, 2012

Investment bank opens office in Charlotte

Banks Street Partners LLC, an Atlanta-based investment bank that does business in the Southeast, has opened an office in Charlotte.

Gary McNorrill, a managing director and general counsel for the firm, will head the Charlotte office, located at 200 Providence Road. He'll focus on banks in the Carolinas and Virginia.

McNorrill graduated from the University of Georgia and earned a law degree at Emory University. Before coming to Banks Street, he was an inevstment banker at JPMorgan Securities and was an attorney at Alston & Bird LLP.

Banks Street Partners helps banks under $10 billion in assets raise capital, advises mergers and acquisitions and guides strategic planning.

Bright Horizons looks at keeping BofA day care open

Bright Horizons, which manages Bank of America's 10 day care centers around the country, is examining whether it can keep any of the locations open now that the bank has said it will no longer fund them, according to two sources with knowledge of the situation.

Bank of America employees have been told over the past few days that the bank will shut down the centers, including the one in Charlotte,  in order to focus on benefits that affect more workers.

Many bank employees who use the centers have been very upset by the changes, which come on top of a pension freeze and thousands of job cuts. Employees are also again being required to pay more for their health care coverage this year, several sources have said.

Bright Horizons was not immediately able to respond to a question about how quickly the company would be able to make a decision on its Charlotte location or any others.

Keeping the Charlotte center open would likely mean Bright Horizons would have to buy or lease the day care building on North Poplar Street from Bank of America, which owns the building.

The bank, then known as NCNB, bought the land and buildings from the Salvation Army for about $2 million in 1991. The day care was constructed and opened in November 1992. The land and building are now valued at more than $12.5 million, according to county property records.

Complaint says BofA doesn't keep up homes in minority communities

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Group claims BofA discriminates in minority communities. The National Fair Housing Alliance announced Tuesday that it has filed a federal complaint against Bank of America, alleging the Charlotte bank does not maintain or market the foreclosed properties it owns in minority communities as well as in white neighborhoods, the Detroit Free Press reports. The complaint cites areas in Grand Rapids, Mich., Atlanta, Miami and other cities. The bank says it denies the allegations, and executives "stand behind our property maintenance and marketing practices."

Cyber attack hits Wells. Days after a likely cyber attack slowed down Bank of America's website, Wells Fargo's became a target as well, The Los Angeles Times reports. Some customers were still reporting issues Wednesday morning.

Fed helping banks, not homeowners. The Federal Reserve's new mortgage-bond-buying program is helping banks much more than consumers, Bloomberg reports. The average interest rate on a mortgage has fallen about a tenth of a percent, while the average yield on a mortgage bond has fallen six tenths.

BBA giving up Libor. The British Bankers Association has voted to give up oversight over the Libor interest rate, The Wall Street Journal reports. The U.K. government is expected to give its recommendations on what should happen to the rate within days.

Tuesday, September 25, 2012

Banks say they'll soon comply with mortgage rules

Welcome to the morning roundup. Here's a look at what's new in banking and finance this morning.

Banks will soon follow mortgage rules. Big mortgage servicers -- including Bank of America -- say they will soon be in compliance with several hundred new mortgage servicing standards that are part of recent legal settlements, Bloomberg reports. The industry says that settlement monitor Joseph Smith, the former N.C. commissioner of banks, should be an effective motivator. Bank of America says it has met all timelines for implementing the rules.

Pawlenty odd choice for bank lobby. Tim Pawlenty's choice as the banking industry's chief lobbyist is an odd choice, New York Times Dealbook's Andrew Ross Sorkin says, since as recently as last year hte former Republican presidential candidate was saying publicly that he went to Wall Street and told them to "get their snout out of the trough." His views on key financial issues also aren't publicly known.

Could Wells buy CIT? An analyst with Stifel Nicolaus put out a research note yesterday saying Wells Fargo could be a good fit for acquiring niche lender CIT Group. The Wall Street Journal says the deal does not seem far-fetched.  Fun fact: CIT Group is run by John Thain, who was chief of Merrill Lynch when it was acquired by Bank of America.

BofA cutting jobs in Asia. Adding to the drip-drop of job cuts at the Charlotte bank, Bank of America is set to cut 40-some jobs in its Asia Pacific markets division, The Wall Street journal reports. Activity in the region has slowed.

Monday, September 24, 2012

Heiks becomes new Fifth Third North Carolina CEO

Fifth Third Bank announced Monday that Tom Heiks has taken over as president and CEO of its North Carolina affiliate. 

The post had been filled by parent company chief operating officer Greg Carmichael since late 2011, when former First Charter Corp. CEO Bob James left his day-to-day role with the bank. Fifth Third entered the North Carolina market by purchasing First Charter in 2008.

Heiks had most recently served as North Carolina market president.

Merrill Lynch fined for not reporting complaints

Merrill Lynch has been fined $500,000 for failing to file more than 650 reports, including consumer complaints, criminal complaints and settlements, the Financial Industry Regulatory Authority said Monday.

The reports are used by FINRA to monitor individual brokers. Between 2005 and 2011, Merrill failed to file consumer complaints as much as 63 percent of the time, and didn't file reports on any arbitrations and criminal and civil complaints in a three-year period, the company said.

"Merrill Lynch failed to report critical information that regulators and investors rely upon," FINRA enforcement chief Brad Bennett said in a statement. "Without timely and accurate reporting by firms, investors only have part of the picture when researching and making decisions about their brokers.”

Merrill Lynch is a subsidiary of Bank of America. FINRA is a private firm that regulates brokerages and exchanges. The company has filed Merrill Lynch twice already this year.

Merrill Lynch accepted the penalty without admitting or denying the charges.

Checking account fees rising quickly

Checking account fees rose significantly this year and free accounts became even more rare, a new survey from found, as banks look for ways to make money from retail customers.

Banks' income from checking accounts has been pinched as new regulations have crimped debit card swipe-fee charges and cut down on overdraft fee programs. At the same time, low interest rates across the board have made money sitting in bank vaults less productive.

Industry leaders predicted other fees to increase in response.'s survey finds evidence that they have.

  • The average monthly service fee on non-interest accounts jumped 25 percent, to $5.48.
  • The average minimum balance needed to avoid those service fees increased 23 percent, to $723.
  • The average ATM fee increased 4 percent, to $2.50.
  • The average overdraft fee increased 1 percent, to $31.26.
"Every bank fee that they can charge, they are charging and raising," IBISWorld banking industry analyst Eben Jose told

Free checking accounts continued to disappear this year, making up only 39 percent of non-interest accounts. That's down from 45 percent last year and 79 percent in 2009. Wells Fargo, for example, ended free checking this year to legacy Wachovia customers who still had free accounts.

BofA's Finucane among advertising's most influential

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Finucane among most powerful in advertising. Ad Age has a short piece on Bank of America chief marketing officer Anne Finucane as part of the publication's series on the 100 most influential women in advertising. It says she has "deftly manag[ed] BofA's messaging and integrating marketing for the acquired Merrill Lynch and Countrywide brands."

Buyer cutting Merrill jobs. The Swiss private bank that recently purchased Bank of America Merrill Lynch's overseas wealth management division is cutting up to 900 of its jobs, according to a Swiss newspaper, Reuters reports. Julius Baer's CEO reportedly discussed the cuts at an investor conference.

How big are the big banks? U.S. rules on reporting the value of derivatives makes the country's largest banks much smaller than they would appear in other countries, The Wall Street Journal says. For example, JPMorgan Chase reports $2.3 trillion in assets, but under European rules, it could be as large as $4 trillion.

U.K. biz bank. The United Kingdom is taking 1 billion euros to set up a state-run bank to lend to small and medium-sized business, The Wall Street Journal reports. The government hopes to bring in another billion euros from private investors, and ultimately lend up to 10 billion euros.

New board member issues. Bank of America recently added a few members to its board in anticipation of older members retiring. Seeking Alpha points out today that several of them come from companies that have had some legal problems lately.

Friday, September 21, 2012

Bank of America considered dropping its name from Merrill Lynch

Bank of America considered this summer dropping its name from the investment bank it bought in 2008, which goes by the name Bank of America Merrill Lynch, CNBC reported Friday.

The discussion came as the Charlotte bank reviews its branding for the first time in more than half a decade.

The CNBC report says surveys went out to a number of Merrill investment bankers, asking wither going back to the simple Merrill Lynch name would help them get more business overseas.

Chief Marketing Officer Anne Finucane told CNBC the bank didn't find evidence the Bank of America"name had hurt.

Charlotteans less ready for retirement, survey says

The Charlotte area is falling behind on preparations for retirement, ranking second-to-last among the 30 largest metropolitan areas, according to a new survey from financial planning firm Ameriprise.

The percentage of adults aged 40 to 75 who say they have saved money for retirement has fallen for the past two years, hitting 69 percent this year, the survey showed. People are also less optimistic about retirement. About 57 percent reported feeling positive about their prospects, down from 63 percent last year and 70 percent the year before.

Only Washington D.C. ranked behind Charlotte. Raleigh ranked No. 6, up 13 spots from last year. Hartford-New Haven, Conn., took the top spot.

The survey was conducted online in late June and sampled more than 10,000 people aged 40 to 75.

Moynihan called the 'Charlie Brown of too-big-to-fail banking'

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

"Charlie Brown of too-big-to-fail banking." Lot of name-calling going around lately. A MarketWatch commentary today calls Bank of America CEO Brian Moynihan the "Charlie Brown of too-big-to-fail banking," since nothing he does seems to go right or be well-received. The writer cites the $5 debit card fee, job cuts, lawsuit settlements and revenue shrinkage as evidence.

Child actors sue BofA. Speaking of lawsuits, there's an unusual one now facing Bank of America. A few child actors have sued the Charlotte bank claiming it illegally charged them monthly fees on blocked trust accounts that the law requires managers to set up for child stars, ABC News reports.

Iran attacked BofA? Security sources told NBC News that it was actually Iran that attacked Bank of America's website earlier this week. The report says that the threats purporting to be from a group affiliated with militant Islam were just a front.

New verification rules for banks. The U.S. Treasury is thinking about setting up a new account information verification system to help combat money laundering, The Wall Street Journal reports. It would require banks to gather and verify more information on all accounts, not just those the bank deems "high risk."

Congressmen lobbying against Volcker Rule. More than 100 members of Congress and their staffs have been lobbying behind the scenes against the Volcker Rule, The New York Times says, citing emails released to a Democratic staff member. That's in addition to public statements and comment letters.

Thursday, September 20, 2012

BNC Bancorp finishes federal bailout exit

BNC Bancorp has fully extricated itself from the federal bailout program, reporting in a securities filing Thursday that the bank repurchased a warrant held by the U.S. Treasury.

The parent company of Bank of North Carolina paid $939,920 to buy back the warrant, which gave the government the right to buy 543,337 common shares in the company at $8.63 per share.

The Treasury auctioned off the preferred stock it held in the bank last month, selling the $31.3 million it held for a total of $28.4 million. Including dividend payments BNC had made, the government reported making a profit on the investment.

"For us, the Capital Purchase Program did what it set out to do. It helped a healthy bank like Bank of North Carolina further enhance its capital levels in a tough economy which allowed us to continue to lend to small businesses and individuals in our local markets, create jobs and expand our brand of personalized customer service throughout the Carolinas," CEO Swope Montgomery said in a statement. "In addition, our repurchase of the warrant from Treasury was a prudent and appropriate investment that will limit future shareholder dilution."

The bank's shares closed Thursday at $7.82.

Bank of America job cuts in two charts

If Bank of America indeed cuts 16,000 jobs by the end of the year as The Wall Street Journal reported, it will mark a significant quickening of its job-cut pace.

The bank did not confirm any job target on Thursday. The target in the charts comes from the figures cited in the Journal.

It is unclear how many of these jobs would be in Charlotte. The Journal cites likely job cuts in consumer banking and mortgage origination, divisions that have workers in the city.

Hover over the line for more information.

Here's what the quarterly percentage change looks like:

Ken Lewis 'never really fit in' with Wall Street, new book says

A new book by former Federal Deposit Insurance Corp. head Sheila Bair paints an unflattering portrait of former Bank of America CEO Ken Lewis, saying he was viewed as a "country bumpkin" and "never really fit in" with the big-bank crowd, according to an excerpt to be published in Fortune magazine.

Bair chaired the FDIC from 2006 to 2011 and helped engineer the Wall Street bailout. Her new book, "Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street From Itself" chronicles the financial crisis.

The excerpt published online Thursday details a meeting of big-bank CEOs where then-Treasury Secretary Hank Paulson tries to convince them to accept the Troubled Asset Relief Program.

She briefly gives her impressions of Citigroup's Vikram Pandit and then Wells Fargo chief Dick Kovacevich before turning to Lewis. Here's the section:

"...I let my gaze drift toward Kenneth Lewis, who stood awkwardly at the end of the big conference table, away from the rest of the group. Lewis, the head of the North Carolina-based Bank of America (BAC) -- had never really fit in with this crowd. He was viewed somewhat as a country bumpkin by the CEOs of the big New York banks, and not completely without justification. He was a decent traditional banker, but as a dealmaker his skills were clearly wanting, as demonstrated by his recent, overpriced bids to buyCountrywide Financial, a leading originator of toxic mortgages, and Merrill Lynch, a leading packager of securities based on toxic mortgages originated by Countrywide and its ilk. His bank had been healthy going into the crisis but would now be burdened by those ill-timed, overly generous acquisitions of two of the sickest financial institutions in the country.
Other CEOs were smarter."
Bair labels JPMorgan Chase CEO Jamie Dimon the smartest.

Wells Fargo could become largest employer bank

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Wells Fargo could become largest employer. With the news last night that Bank of America has set a target of getting its employee count down to 260,000 by years end, Wells Fargo could become the largest U.S. bank by number of employees, The Wall Street Journal says this morning. The San Francisco bank had 265,000 employees at the end of the second quarter. JPMorgan Chase and Citigroup are very close behind, each with more than 260,000.

Pawlenty to lead bank lobby. Tim Pawlenty, the former governor of Minnesota and brief candidate for the Republican presidential nomination, will be the next CEO of the Financial Services Roundtable, one of the banking industry's primary lobbying organizations, Politico reports. The move, expected to be announced Thursday, would give the group more influence in Washington.

Finance group raises cyber threat level. A financial web security organization has raised its warning level and posted a warning on its website about increased risk of cyber attacks, Reuters reports. It came a day after Bank of America had issues with its site, as well as JPMorgan Chase.

Banks could lose another $25 billion in suits. Bondholder suits seeking to force banks to buy back mortgages that went sour could force big banks to set aside another $25 billion, a research organization calculated, according to Bloomberg. More lawsuits are being filed as legal deadlines approach. Most of the work still to be done, the research firm said, is in the private market since issues with Fannie Mae and Freddie Mac have largely been reserved for.

Wednesday, September 19, 2012

Were high-speed traders given an edge?

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

High-speed traders given advantage? The SEC is investigating allegations made by a former Goldman Sachs trader that stock exchanges -- including Nasdaq and NYSE -- have given advantages to high-frequency traders over other investors, the Wall Street Journal reports. At issue are different kind of order types, which can affect the timeline of how they are processed.

BofA social responsibility evolving. In an interview with Forbes, Bank of America corporate social responsibility executive Andrew Plepler says customer demand for more good deeds from companies is changing how the private sector interacts with society. He also says the bank is working on increasing engagement in Asia, Europe and Latin America.

New Goldman CFO. Goldman Sachs has a new chief financial officer for the first time since its IPO in 1999, the Wall Street Journal reports. Harvey M. Schwartz, 48, comes from the sales and trading division. He will replace David A. Viniar, 57, one of the highest-paid execs on Wall Street.

Speaking of Goldman... The New York Times' Dealbook says today that Goldman has been able to maintain its dominance in the investment banking world in part by taking steps to "heal itself from self-inflicted wounds" (think "muppets"). That includes rejiggering its board and coming up with 39 ways to improve client relations.

Tuesday, September 18, 2012

Bank of America website having issues

Updated at 4:45 p.m. 

Bank of America's website appears to be having issues today, with slow load times and occasional messages saying the site can't be accessed.

"The website is not down, it’s available, although some customers may experience occasional slowness," spokesman Mark Pipitone said in an email. "We are working to ensure full availability. Customers may use other channels such as ATMs and banking centers to conduct their business, if necessary."

He said the bank is looking into the cause of the difficulties.

Fox Business reported that a source told them the site was down because of a cyber attack from a group claiming to be affiliated with an Islamic terrorist organization. The group wrote on a site called Pastebin earlier today that they would launch an attack on Bank of America and the New York Stock Exchange starting at 2 p.m. They said the attack would continue until the controversial video that mocks the Prophet Muhammad and Islam is taken down, according to the message.

The bank did not confirm or deny the rumors, but Pipitone wrote: "We continuously take proactive measures to secure our systems."

Last October, the bank's website was down or slow for the better part of a week. While Bank of America did not disclose the reason for the issues, a spokeswoman said it was not because of hacking or malicious software.

Tweets today:

Bank of America among best for working mothers

Bank of America is again among the top 10 companies in the country for working mothers, according to this year's list from Working Mother magazine.

The magazine cites the Charlotte bank's new "sponsorship" program pairing women with senior executives and last year's worldwide online women's conference. It also mentions 10 bank day care centers and a back-up child care program.

Sixty percent of Bank of America employees are women, the magazine reported, including 47 percent of executives. Fifty-seven percent of hires last year were women.

Bank of America was tops of 16 financial services companies named to the top 100. PNC made the list, as did Capital One, Citi, JPMorgan Chase and Goldman Sachs.

Only one other North Carolina company made the top 100: Blue Cross Blue Shield of North Carolina.

Was Occupy Wall Street a fad that 'fizzled'?

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Occupy has 'fizzled.' The New York Times' Dealbook today calls the Occupy Wall Street movement a "frenzy that fizzled," saying it was a fad that has caused little meaningful change except for inserting "We are in the 99 percent" into the lexicon. In the end, the leaderless movement lost focus and failed to establish a meaningful legacy, Andrew Ross Sorkin says.

Fannie Mae overpays Bank of America. An inspector general audit has found that Fannie Mae paid Bank of America more than legally required to transfer the servicing rights of troubled mortgages from the Charlotte bank to servicers who try harder to help people with their loans, Bloomberg reports. Taxpayer-owned Fannie Mae's program transferred about 1.1 million mortgages between 2008 and 2011. The audit did find, however, that Bank of America was not given any "special consideration" in the above-required payments. Instead, it was to ensure a smooth process, the audit says.

Libor changes problematic. Potential reforms to Libor could cause massive confusion in the marketplace, commercial lawyers say, the Financial Times reports. Regulators have been looking at changes to the key interest rate amid investigations that big banks, including Barclays, actively manipulated it.

Monday, September 17, 2012

Stifel downgrades Wells Fargo shares to 'hold'

Analysts with financial services firm Stifel Nicolaus said Monday that they are downgrading shares of Wells Fargo to "hold" as the Federal Reserve's moves to hold down interest rates will start to catch up with the bank.

It ends a long run for the bank, considered one of the strongest U.S. banks in terms of stock performance, as a "buy" for the firm. I wasn't able to determine when Stifel made it a buy, but it's been there since I came to the Observer last year.

Stifel said that while mortgage refinancing will keep the bank strong for the next few quarters, it will likely taper off. At that point, the shrinking net interest margin will affect Wells' earnings more.

Wells shares closed Monday at $35.33, down 2 percent, though it has gained more than 4 percent in the past two weeks as bank stocks have rallied. Stifel said it would recommend buying Wells again in the $32 to $33 range.

N.C. banks shrinking, fixing balance sheets

North Carolina's banks showed smaller but stronger balance sheets in the second quarter, according to a profile released by the Federal Deposit Insurance Corp. on Monday.

Total assets at N.C. banks fell 1 percent, to $1.686 trillion, from the same time period a year ago. The number of banks fell to 93, from 99 a year ago. Total loans as a percentage of assets fell, too.

But the median percentage of past-due and nonaccrual loans as a percentage of a bank's total loan portfolio fell as well, hitting 4.16 percent from 5.42 percent a year ago.

Capital levels increased, as did return on assets.

Big firms jumping in to foreclosure-to-rental market

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Investor gets foreclosed home debt deal. A major investment company buying up foreclosed homes to ultimately rent them out has received a $65 million loan deal from Citigroup, the first major financing deal for the increasingly popular business, the Wall Street Journal reports. It could pave the way for securitization of such home rental payments.

Four years after Merrill. Exactly four years and one day ago, Bank of America announced it would buy Merrill Lynch for $50 billion and Lehman went under. Taking stock of the financial world today, the system is no longer on the brink of catastrophe, but things still aren't great, CBS News says.

QE3 impact lessened. The Federal Reserve's new quantitative easing program -- focused on buying mortgage backed securities -- will be slowed by the fact that banks either can't or won't process mortgage applications any faster, the Financial Times says. That keeps mortgage rates higher.

Friday, September 14, 2012

Citizens South settles shareholder suit over merger

Citizens South reported Friday that it has settled the shareholder suit brought after it announced its acquisition by Park Sterling in May.

The settlement does not report any money changing hands, but adds numerous disclosures to the narrative of the merger shareholders will use to decide whether to approve the merger, including internal earnings projections should the bank have remained stand-alone.

The new disclosures, reported in a securities filing, are hard to follow because they are to be inserted in the narrative in the securities document outlining the merger.

At the time, Citizens South CEO Kim Price had been negotiating with two other banks about a merger. One new disclosure says that Price had asked one of them whether he would be able to join the board of the combined bank, and told no. Citizens South had previously disclosed that the deal did not work out because it would not happen soon enough.

A table inserted in the merger prospectus also includes a financial analysis that predicted a significant increase in earnings, equity and stock price in the three coming years without a merger. For example, Citizens South had estimated tangible book value per share to increase nearly 50 cents between 2012 and 2013. In a presentation given the day of the merger announcement, the two banks estimated the deal to increase tangible book value per share in four years.

The lawsuit was filed shortly after the merger announcement and granted class action status in early August. The two parties reached an agreement this Wednesday, the securities filing says. It still must be approved by the court.

The plaintiff in the suit is expected to file a petition with the court to be awarded attorney's fees, but the bank said it has a right to fight it.

A shareholder vote to approve the merger has not yet been set.

Carolinas unbanked at higher rate than U.S.

A higher percentage of people in North and South Carolina are without bank accounts or regularly use non-bank financial services than the country as a whole, a report from the Federal Deposit Insurance Corp. says.

About 360,000 households in North Carolina, or 9.3 percent, have no bank account, and another 840,000, or 21.7 percent are considered "underbanked," meaning the household has a checking or a savings account at a bank but also uses non-bank check cashing, remittance, money order or payday loan services.

That's an increase from 2009, when 8.1 percent were without bank accounts and 20.3 percent used so-called "alternative financial services," according to the FDIC.

In South Carolina, an equal percentage are unbanked, and 20.6 percent used the non-bank services. That was actually a decrease from 2009, when 10.3 percent had no bank account.

Nationwide, the majority of unbanked households reported not feeling like they had enough money for a bank account or did not want one. The number of people forgoing the traditional banking system increased slightly, perhaps as people have lost trust in the system.

The FDIC, for its part, encouraged banks to reach out and create services tailored to the unbanked and underbanked.

UnbankedUnderbankedFully banked

Bessant to keynote at Sibos conference in Japan

Bank of America technology and operations executive Cathy Bessant will be a keynote speaker at the high-profile Sibos conference next month, held this year in Osaka, Japan.

Sibos, to be held from Oct. 29 to Nov. 1, is a global financial services conference expected to draw more than 7,000 people. Bessant will speak to the technology forum. The conference also includes compliance, corporate and standards forums.

The conference was first held in 1978 in Brussels.

Krawcheck warns of big bank complexity

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Krawcheck warns of bank complexity. Former Bank of America Merrill Lynch executive Sally Krawcheck warned bankers Thursday of the complexity of Wall Street banks during a conference in Manhattan, The New York Times reports. While she did not push a particular method of breaking up big banks, she said she supported the debate over reinstating Glass-Stegall and said executive compensation should be changed.

Wells and Discover. People are still talking about the rumors that Wells Fargo could pursue acquiring Discover Financial, but a Discover executive suggested the company wasn't taking it too seriously, the Wall Street Journal says.

Fed's new action. The Federal Reserve's new course of action will involve buying mortgage backed securities until the market improves, The New York Times reports, a departure from the smaller scale, time limited approach it had followed. Investors liked the news, powering the Dow, but many economists warned that the impact would be small, and could drive inflation.

JPMorgan shares make up Whale loss. JPMorgan Chase shares have now recovered from the steep decline that followed the announcement that it had lost billions in oversize trades, Bloomberg reports. The bank's stock jumped nearly 4 percent on Thursday, reaching $41.40, the first time it had exceeded the $40.74 it posted on May 10.

Wednesday, September 12, 2012

Truliant CEO to advise CFPB

The CEO of Winston-Salem's Truliant Federal Credit Union has been named to the Consumer Financial Protection Bureau's credit union advisory council.

Marcus Schaefer joins 14 other credit union executives on the panel. They're expected to weigh in on the new federal regulator's proposed rules.

Schaefer was a strong advocate for the creation of the CFPB. He testified to the Senate Banking Committee last summer that the regulator was necessary, according to the Credit Union Times.

Non-banks set for more federal scrutiny

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

Non-banks to be named 'systemically important.' The Financial Stability Oversight Council will soon name the first non-banks to be declared systemically important and subject to increased regulation, Bloomberg reports. Such companies could include AIG and GE Capital.

Judge rejects racial bias suit against Merrill. A lawsuit filed by black Merrill Lynch brokers objecting to a bonus program instituted when the company was bought by Bank of America was rejected by a federal appeals court, Reuters reports. The brokers could still win a similar case from 2005 claiming systematic racial bias in hiring and promotion.

Wells Fargo bid for Discover would be 'win-win.' Rumors are still swirling that Wells Fargo could acquire Discover Financial, and Forbes magazine says it would be a good deal for both sides. The magazine says it makes sense in Wells' growth model and would give the fourth-largest card payment processor a broader base.

Tuesday, September 11, 2012

New repurchase rules could affect Bank of America

The federal agency overseeing Fannie Mae and Freddie Mac announced Tuesday new rules governing mortgage put-backs that could help head off the type of protracted battle that the mortgage giants have had with banks like Bank of America.

One of the biggest provisions is that the government-sponsored entities would no longer make repurchase demands on loans where the borrower had made 36 months of "consecutive, on-time payments," according to a statement.

Mortgage putbacks occur after a bank sells a mortgage to another party. If the buyer thinks that the bank that originated the mortgage misrepresented its quality, the buyer can try to force the bank to buy it back. They're often called rep and warranty claims.

These have been a particular bone of contention between Bank of America and Fannie and Freddie in recent quarters. In the second quarter, putback requests reached $22.7 billion, up from $16.1 billion the quarter before. Bank of America had set aside $15.9 billion. Investors have called Bank of America's exposure to repurchase demands their biggest concern.

Of particular contention were put-back requests on loans where the borrower had already made several years of payments. An industry standard is 25 payments.

Other parts of Tuesday's announcement:
  • For HARP loans, putbacks end after 12 months of payments.
  • Fannie and Freddie will review loans within 30 to 120 days of purchase, not when it goes into default.
"For the market to reclaim the strength it once had – and to provide a cornerstone for the mortgage market of the future – it is vital we consider ways to improve the representation and warranty model," Federal Housing Finance Agency head Ed DeMarco said in a speech to bankers in Raleigh on Monday, according to prepared remarks. "Lenders want more certainty about their risk exposure and the Enterprises want to ensure the quality of the loans that are delivered to them."

The new standards don't go into effect until Jan. 1, so they don't cover the loans currently in dispute. Bank of America CEO Brian Moynihan said in the bank's second quarter conference call that a large part of the loans they're dealing with now were originated in 2006 and 2007.

One bailout down, more to go

Welcome to the morning roundup. Here's a look at what's news in banking and finance.

AIG bailout finishing up, more still around. The Treasury's sale of about $18 billion in stock of insurance giant AIG the government bailed out in 2008 is a big step in unwinding one of the most unpopular crisis-era bailouts, The New York Times says. But Uncle Sam still has plenty more to do. The government still owns big chunks of General Motors, Ally Financial, and many smaller stakes in community banks around the country.

Hiding trading risk. Derivatives traders at banks like JPMorgan Chase and Bank of America are planning to skirt new rules designed to safeguard the financial system by allowing to post lower-quality collateral to back their trades, Bloomberg reports. The clients then receive a loan of higher-rated Treasuries to nominally meet the rules -- a process known as "collateral transformation."

Governments enjoy low rates. Savers aren't thrilled with low returns on their deposits, but governments are loving the low interest rate environment, The New York Times says. They're able to refinance debt and borrow cheaply, saving money. Added bonus: government policy helps set the rates.

Research department shakeup. Bank of America is changing things around in its research department after London-based Gary Baker, head of European equity strategies, left the bank, Bloomberg says.

Monday, September 10, 2012

Two more TARP investments in N.C. banks to be auctioned

The U.S. is scheduled to auction off the federal bailout investments in two more North Carolina banks today, the Treasury announced.

The first is Elkin-based Yadkin Valley Financial Corp., which received $49 million through preferred stock sales through the Troubled Asset Relief Program. The bank announced last month that it had evened up with the government on missed dividend payments.

The second is Salisbury's F & M Financial Corp., which had $17 million in bailout money and had been paying dividends.

The Treasury has announced numerous auctions over the past several weeks as the government seeks to extricate itself from the unpopular program. The government will also be selling $18 billion in shares of AIG today.

Bank of North Carolina's TARP investment was auctioned off last month. It was sold at an 8 percent discount, but including dividend payments, the government did not take a loss.

Some big banks rethinking CEO pay

The morning roundup is back after a week-long DNC hiatus. Thanks for bearing with us.

Banks considering new CEO pay structure. JPMorgan Chase and Citigroup directors are considering changes to how they pay their CEOs after shareholder unrest over last year's, the Wall Street Journal reports. JPMorgan's Jamie Dimon is expected to get a smaller bonus after the 'Whale' loss. Citigroup shareholders voted"no this year in their annual "say on pay" vote.

White House could get more financial regulatory power. Republicans in the U.S. Senate are pushing a bill that would give the White House more control over how financial regulations are put into place, a tactic which could delay and weaken financial reform, The New York Times reports.

Fiduciary standard for brokers on hold. The SEC has apparently pressed pause on a rule that would hold brokers to the same fiduciary standard for clients as investment advisers, Bloomberg reports. No action is scheduled for the rest of the year.

Wells Fargo cleans out wrong house. An elderly couple in California lost a number of their possessions after Wells Fargo contractors mistakenly cleaned it out, ABC News reports. The bank had foreclosed on a nearby house and the contractors broke in to the wrong one. The house, in fact, had been paid for in cash.

U.S. selling AIG stock. The government is set to become a minority shareholder in insurance giant AIG by selling $18 billion in stock acquired in the 2008 bailout, the Wall Street Journal says. The U.S. will likely still have a 20 percent stake in the company.

Mooning will get you fired. In what's just a bizarre story, a court turned down the appeal of an investment analyst at a Bank of America subsidiary who argued that mooning his boss was not a just cause for being fired, Time magazine says. The employee was trying to get money from his separation agreement. Be sure to read the court document. It's not every day you see "The 'Mooning'" as a subhead in a judge's opinion.

Thursday, September 6, 2012

Barney Frank 'disappointed' in American Bankers Association

U.S. Rep. Barney Frank told the Observer he is "very disappointed" in news that the American Bankers Association plans to create a fund to donate to super PACs targeting close Senate races involving pro-industry candidates.

"I think the ABA aught to be ashamed of itself," Frank said in a brief interview on the Time Warner Cable Arena concourse late Wednesday.

"I think they will do themselves a lot of harm with the public, pursuing the right to make the same kinds of mistakes they did before," Frank said. "It kind of reminds me of what was said with the kings of France, when they returned to power after the revolution. Someone said, 'Well, they don't seem to have, they seemed to have forgotten everything.' Reply was, 'No, they didn't forget anything, they didn't ever learn anything in the first place.'"

The comments were in response to a Bloomberg report that the ABA seeks to raise several million dollars to influence six to 12 Senate races. House Republicans have sought a roll-back of provisions in the Dodd-Frank financial reform law, but have been largely blocked by the Senate, where Democrats hold a slim majority.

The American Bankers Association described the fund as an “education and advocacy” initiative similar to those that many trade groups set up. “The board approved the proposal so that ABA can more effectively serve its members in today’s environment,” spokesman Jeff Sigmund said in an email.

Frank is the ranking member on the House Financial Services Committee and is the "Frank" in the reform law. He has said he will retire at the end of this term, his 16th.

Frank said in the interview that he has met with several financial industry leaders during the convention in Charlotte, but hasn't made a particular effort to.

"Brian Moynihan lives in my district, in the commonwealth of Massachusetts," Frank said. "I don't have to come to North Carolina."

He also said holding the convention in Charlotte, a major financial center, does not pose a problem for the Democratic Party as some have suggested. Later Wednesday, Senate candidate Elizabeth Warren was critical of banks and Wall Street in her speech.

"It's only in the minds of the media," Frank said. "I don't know any citizen who cares about that. Where people have the conventions is irrelevant."

He said his party's financial industry priority in the next session is to "consolidate" and make sure financial reform is carried out by having the "right people in place" and keeping regulators fully funded.