Friday, July 19, 2013

PNC performance lagging in the Southeast, for now

As PNC executives tell it, there's still a long, hard slog to go to get the bank's performance in Charlotte and the Southeast up to the level of the rest of its footprint.

A year-plus after entering the region through its acquisition of RBC Centura, the Pittsburgh bank's new territory is lagging behind the rest of the bank in terms of efficiency, sales and other core activity, executives said on their quarterly earnings call this week.

PNC has been focused on getting rid of non-core business and investor-owned real estate that it doesn't want -- and working to replace them with new customers the bank does want.

Analyst Betsy Graseck of Morgan Stanley asked about the South's performance specifically. CEO Bill Demchak: "We don't have exact internal metrics where we compare efficiencies by regions, but I would tell you without having those that the Southeast is much worse than everywhere else."

Later, courtesy a Bloomberg news transcript: "This isn't a one or two or a three year game, it's going to be a long-term game ... We knew that going in."

Much of this is to be expected, of course. PNC has many more products than RBC did, and the new bank had to install completely new teams in some cases. In wealth management, for example, RBC didn't have anything here.

And the bank's perspective certainly isn't bleak. Earlier in the call, Demchak had taken a more positive outlook. He said the bank was making "good progress" in its growth in the Southeast, including "a dramatic increase in new client wins in corporate banking." He said he was pleased with the progress so far.

BB&T EXPENSES HIGH: The Winston-Salem bank had record profits, but a restructuring of the bank's retail markets -- including Charlotte's -- sent expenses way high in the quarter.

WELLS LAYING OFF IN MORTGAGE: As interest rates rise and mortgage demand falls, Wells Fargo is trimming its staff in its mortgage division, the Des Moines Register reports. About 350 people were fired on Wednesday. Almost 60 were in Des Moines; it's unclear where the rest are.

GE CAPITAL WOOS CHARLOTTE BUSINESS: GE Capital toured Hissho Sushi in Charlotte and later hosted 100+ business executives at the NASCAR hall of fame. We've got video of the GE Capital execs rolling sushi.

WATT GETS FIRST APPROVAL: U.S. Rep. Mel Watt got approved by the Senate Banking Committee to be the next head of the FHFA overseeing Fannie Mae and Freddie Mac. It was a close vote, and the Charlotte Democrat still faces a high hurdle in the full Senate.

BLUEHARBOR BANK PROFITS DOUBLE: Net income at Mooresville's blueharbor bank were up 111 percent in the second quarter. Loans are up, deposits down.

FORECLOSURES POINT TO IMPROVEMENT: Foreclosure says are up and foreclosure inventory is down, both signs the housing market is improving, Charlotte hard money lender Lima One says in its analysis of market data from RealtyTrac.

LAMPE LEAVES FOR WASHINGTON: Financial services attorney Don Lampe, who was with Dykema in Charlotte, has left to take a similar role in the Washington, D.C. office of Morrison & Foerster LLP.

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Financial headlines

FOR BANKS, MO' MONEY MO' PROBLEMS?: Sure, big banks are posting record profits left and right. But that could give them less leverage to fight the flood of new, tougher regulations aimed at their capital levels and soundness, The New York Times reports. Sheila Bair: “I sense a sea change in this... It’s not moving with the banks, it’s moving against them.”

SUNTRUST EARNINGS UP: Net income rose 35 percent on the strength of investment banking and better credit quality, Bloomberg reports.

CYBERATTACKS RAMPANT: Half of the world's financial exchanges have been cyber-attacked in the past year, Quartz says. So far, they've been able to keep them at bay. Worst case: A massive withdrawal from the market.

'DETROIT IS BROKE': Detroit has filed for bankruptcy, the largest in the country's history, the Wall Street Journal says. It's not really a surprise, and has been decades in the making, city officials said. Bad news for pension funds, who've tried to block the move. Could be bad news for muni bond investors, as well, depending on how everything goes.

FORMER REGULATOR DOES BUSINESS IN NICHE HE SHUNNED: Former CFPB head Raj Date has launched a company to make home loans to borrowers who don't fit the criteria for mortgages created by his agency, Bloomberg reports. The company will lend to people with high credit scores but who have too much other debt to meet the requirements.

INVESTORS WANT TO OWN HEDGE FUNDS: Investment firms now want to buy stakes in hedge funds instead of just invest in them, the Wall Street Journal says. Blackstone and KKR are among potential buyers.

HIGH-SPEED TRADING SCRUTINY: Regulators at FINRA have sent letters to high-speed trading firms asking them for how they take steps to avoid market disruptions, The New York Times says.

Around Bank Town

ON THE FRONT PAGE: Jerry Orr is out as airport director in a bit of drama. Lawmakers in Raleigh passed the bill moving control of the CLT airport to an authority. But not so fast: A judge has granted a restraining order. .... The General Assembly has also approved the tax overhaul, but it keeps in a good number of loopholes for special interests. .... The Charlotte NBA team has its new name -- and a new business model.

THE COMMUTE: Accidents on North Tryon and on Harris Boulevard.

NUCOR DISAPPOINTS: Charlotte steelmaker Nucor did not meet Wall Street expectations as net income fell in the second quarter, Bloomberg reports. The company blamed falling steel prices as demand sagged.

MORE PROBLEMS AT CAROLINA TRAIL: After being closed for two days in a tax dispute, all is still not well at the Carolina Trail golf club in Huntersville. Some employees say they aren't being paid, and the homeowners association says there's unpaid assessments.