Monday, September 30, 2013

Park Sterling, Bank of North Carolina leap in local market share

Recent acquisitions have pushed Park Sterling Bank and Bank of North Carolina significantly up the ranks in Charlotte-area deposits, new data from the FDIC shows.

The two community banks were the biggest gainers, relative to their size, in the federal government's annual snapshot of local market share released Monday. The rankings show the deposits in branches as of June 30.

The data also shows Bank of America has lost its position as No. 2 in Charlotte-area branches. BB&T now outstrips the bank, with 72 branches to Bank of America's 65. Wells Fargo has the most, with 97.

Charlotte-based Park Sterling Bank jumped from No. 13 to No. 7 in the Charlotte metro area, more than doubling its local deposit base to $876 million. That's by virtue of its acquisition of Gastonia's Citizens South Bank, which closed last fall -- making it the community bank with the largest deposit base in the area.

Bank of North Carolina, based in the Triad, went from No. 15 to No. 9 in this year's rankings with about $570 million in local deposits. It bought Charlotte-based commercial bank First Trust late last year and opened a regional headquarters in the city.

The region's big banks remain at the top of Charlotte's rankings. Bank of America's market share declined slightly, but the bank still commands 77 percent and $163 billion. Wells Fargo, BB&T, Fifth Third and SunTrust round out the top five.

But Bank of America's dominant position also highlights the shortcomings of the data. An Observer analysis earlier this year showed that Wells Fargo is actually winning the Main Street battle for market share -- and it still has more branches and workers in the area by far.

The problem lies in where banks record giant corporate accounts and out-of-town brokered deposits. Since Bank of America's corporate headquarters are in Charlotte, the data is skewed. That effect was also demonstrated in last year's rankings, when PNC Bank plummeted in local market share after taking over Raleigh-based RBC Bank. The new entrant had moved corporate deposits up to its headquarters in Pittsburgh.

The data also further illustrates Bank of America's trend of closing branches. The bank now has 65 branches in the Charlotte market, down from 70 last year. Wells Fargo's 97 branches is one more than last year. BB&T added two branches.

U.S. case against CommunityOne comes to an end

Federal prosecutors in Charlotte have formally dismissed charges against CommunityOne Bank, the bank announced Monday, another milestone in the bank's recovery over the past two years.

The U.S. Attorney's Office for the Western District of North Carolina had originally accused the Asheboro bank of not having a strong enough anti-money laundering program after a customer allegedly operated a Ponzi scheme using accounts at the bank. In 2011, the U.S. Attorney's Office agreed to defer prosecution provided that CommunityOne paid $400,000 toward victims of the scheme and beefed up its protections.

That agreement was reached just as the bank was working on a $310 million recapitalization and merger with Bank of Granite to save both banks.

Executives at the combined bank have spent the two years since then working to bring it back to health. Bank of Granite was released from its consent order with federal regulators in March, and the CommunityOne subsidiary got out from its consent order in June. That enabled their merger to be complete.

CommunityOne now has 52 branches across the Piedmont and mountains of North Carolina.

Report: N.C. loses largest percentage of bank branches

North Carolina has lost the largest percentage of bank branches of any state in the past year, a new report shows.

SNL Financial's findings show the state has had a net decrease of 85 branches, or 3.12 percent.

The report comes on the heels of a separate study by SNL that found that Charlotte-based Bank of America has sold more branches than any U.S. bank in 2013.

North Carolina had 19 branch openings from July 1, 2012, to this past June 30. But 104 branches closed in the state during the period.

Nationwide, banks are closing branches and opening smaller ones as more customers migrate to online and mobile banking. With less traffic to teller lines, banks are also cutting back on the number of tellers with which they staff branches. Cutting branches results in cost-savings for banks at a time when they are grappling with new, expensive regulations. Bank executives often refer to the trimming of branches as "right-sizing" or "optimizing" their branch networks.

The SNL report quotes Greg Jacobi, an executive for Connecticut-based Webster Financial Corp., who said his bank is going to get millions of dollars in operational efficiency from closing about 30 branches in the next three to five years.

Harry Davis, economist for the Raleigh-based N.C. Bankers Association, a trade group, told the Observer this summer that North Carolina could stand to lose branches. With 2,725 branches last year, North Carolina had more than 40 states, according to the SNL report.

“There is too much brick and mortar in banking in North Carolina and nationwide,” Davis said at the time. “We have entirely too many banks and too many bank offices.”

Friday, September 27, 2013

Ex-Countrywide official: Loan approval process took 13 minutes

A former employee for Bank of America's Countrywide Financial Corp. testified in federal court Thursday that a Countrywide unit created a way to approve home loans in just 13 minutes, according to news reports.

The executive, Edward O’Donnell, filed a lawsuit against Bank of America, claiming Countrywide misled Fannie Mae and Freddie Mac about the poor quality of the loans they were sold. Last year, in a case stemming from O’Donnell's, the U.S. Department of Justice sued the bank.

O'Donnell claimed Countrywide removed quality control checks in order to speed up loan approvals under a program known as the High Speed Swim Lane, or "Hustle." But on Thursday, he testified about a separate Countrywide program, called New Customer Acquisition, that also resulted in fast loan approvals.

In his testimony, O’Donnell, who now works for Fannie Mae, said some Countrywide officials grew concerned in mid-2007 when an NCA employee finished the “cleared-to-close” approval process of reviewing and approving paperwork for a home loan in 13 minutes, Bloomberg reported.

Here's an excerpt from the story:

Assistant U.S. Attorney Jaimie Nawaday showed jurors an e-mail that indicating that the review process began at 3:53 p.m. and the loan was “cleared-to-close” at 4:06 p.m. 
“It would not be enough time,” O’Donnell said, listing the raft of paperwork an employee would have to review including title searches, deeds, taxes, a review of the credit and employment history of the borrower, a determination of whether the home was located in a flood zone, property appraisals and a comparison with similar properties.
The trial is ongoing. O’Donnell was scheduled to testify again Friday.

The government had said Hustle continued after Bank of America bought Countrywide. But it has since modified that claim, saying Hustle ended in May 2008. Bank of America bought Countrywide in July of that year.

The bank also points out that Hustle ended before it bought Countrywide and says it believes no fraud was committed.

In October, the U.S. Attorney for the Southern District of New York filed a civil mortgage fraud lawsuit against the bank and Countrywide, saying Hustle resulted in more than $1  billion of taxpayer losses because of toxic home loans that were sold to Fannie and Freddie.

Bank of America had sought summary judgment, which would mean no trial. But in August, U.S. District Judge Jed Rakoff in Manhattan ruled “that there remain genuine factual disputes” in the case, allowing it to move toward trial.

The Hustle lawsuit was the first civil fraud case brought by the Department of Justice over mortgage loans sold to Fannie or Freddie.

Wells exec from Charlotte to head bank's brokerage

Mary Mack, one of the highest-ranking Wells Fargo executives in Charlotte, has been tapped to lead the Wells Fargo Advisors brokerage, the bank announced Friday.

She will be taking over for Danny Ludeman, another former Wachovia executive who led the brokerage since the Charlotte bank's acquisition in 2009. Ludeman had been head of Wachovia Securities for 10 years before that.

Mack has been the head of the Wells Fargo Advisors Financial Services Group, which includes investment products, strategic and advisory solutions and lending sevices.

Mack has lived in Fort Mill, S.C., for a number of years and serves on the board of trustees at Davidson College, her alma mater. She's expected to move to St. Louis in the next few years, though she's already been spending most of her time there already.

Analysts downgrade Bank of America stock

The bank analysts at Guggenheim Securities have downgraded Bank of America stock from a "buy" rating to "neutral" in a report released this morning, citing the "short-term headwind" presented by falling mortgage banking revenue and pressured capital markets activity. As interest rates have shot up this summer, mortgage applications have plummeted because refinancing has become less attractive. The analysts also moved Goldman Sachs from "buy" to "neutral."

Bank of America's shares are up 21 percent so far this year, and have gained 60 percent from this time last year. But going forward, Guggenheim writes that the bank needs to improve its returns for the stock price to go appreciably higher. Continuing to put legal issues in the past should help, the analysts write.

The Charlotte bank's stock was down half of one percent in pre-market trading.

CHARLOTTEANS FEELING BETTER ABOUT RETIREMENT: This year, about half of Charlotte is feeling optimistic about retirement, according to a survey this week from Ameriprise Financial. That might not sound great, but at least it's better than last year, when only three in 10 said they were optimistic. But even those feelings might not be warranted. Charlotte made a big jump in the rankings of cities feeling confident in retirement, but stayed near the bottom in actual retirement preparation. Only 60 percent said they've put money in a retirement account -- the lowest percentage in four years.

CAPITAL GUARDIAN HAS NEW PRESIDENT: The boutique wealth management firm has brought in Larry Gratch to be its new president and chief operating officer. He had been with Pershing LLC, which is a part of Bank of New York Mellon.

****This is a preview of The Charlotte Observer's Bank Watch Morning Report, bringing you banking news from the region, the top financial headlines, and the news driving activity in the Charlotte market.****

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Thursday, September 26, 2013

Bank of America added back to a Dow Jones index (not that one)

Bank of America said Thursday that it's been added back to a Dow Jones index -- just not the one you'd probably think of.

You'll recall that Bank of America was dropped from the premier Dow Jones index -- the Dow Jones Industrial Average -- just this month. Goldman Sachs took the Charlotte bank's place in the list of 30 blue-chip companies.

Bank of America isn't getting its place back there, but it will now be a member of this year's Dow Jones Sustainability Index. That list has 140 companies in North America and 333 worldwide. Bank of America has appeared there from time to time. I don't have a full list, but I know the bank was on there in 2002.

The index includes companies that meet certain sustainability criteria, including supply chain management,
climate strategy and engagement with stakeholders

For the record, the two Dow indices have performed in the same league so far this year. The Dow Jones Sustainability Index is up 12 percent year-to-date, while the Dow Jones Industrial Average is up 16 percent.

Bank of America sells most branches in 2013, report says

Bank of America has sold more branches than any other U.S. bank so far in 2013, as the Charlotte-based bank continues to slash expenses, a report shows.

SNL Financial said the bank had sold 118 branches in six deals as of Sept. 17, giving up $4.05 billion in deposits in the process. None of the sales were in North or South Carolina.

At a distant second was SKBHC Holdings, which sold 15 branches totaling $257.7 million in deposits.

The volume of branches sold by Bank of America underscores its efforts to cut costs.

The company is about two years into a massive companywide cost-cutting program known as Project New BAC, under which it has also been shedding jobs. In the second quarter, the bank's employee headcount fell another 2 percent, hitting just more than 257,000. That pushed the bank beyond the 30,000 job cuts executives targeted when the Project New BAC process began.

In discussing second-quarter results with reporters in July, Chief Financial Officer Bruce Thompson said the companywide headcount numbers will continue to fall as the bank shutters branches and reduces the number of delinquent loans it manages.

In July, SNL reported that Bank of America has dropped more branches over the past four years than any other bank, with half of them in areas where the median income is below $50,000.

In one of the deals this year, the bank sold 24 branches with $778.8 million in deposits and $7.7 million in loans to Indiana-based Old National Bancorp. Bank of America's biggest branch deal this year, in terms of number of locations, involved Washington Federal Inc., which bought 51 branches, according to SNL.

SNL said overall branch deals have declined this year as banks and thrifts opt to consolidate and close locations rather than sell them. SNL said one reason for the drop is that banks no longer want to shrink their footprints in a market or their size.

SNL said 2013 is on pace to end with roughly 79 U.S. branch deals, down from 88 last year and 81 in 2011. So far this year, there have been 56 deals involving the sale of 240 branches.

Wednesday, September 25, 2013

Wells Fargo's Schulte to be 2016 Chamber chairwoman

Wells Fargo's East Coast head, Laura Schulte, will serve as the Charlotte Chamber's chairwoman in 2016, the organization announced Wednesday.

Schulte came to Charlotte in 2009, when Wells Fargo acquired Charlotte-based Wachovia. She's immediately delved into civic organizations, and now serves on the boards of the Foundation for the Carolinas, Charlotte Center City Partners, Bechtler Museum of Modern Art, Charlotte Country Day School, and UNC Charlotte.

She will now serve as second vice chairwoman of the Chamber. Michael Tarwater, CEO of Carolinas HealthCare System, is the incoming chairman, and Piedmont Natural Gas CEO Tom Skains will serve after him.

Groups: Bank of America discrimination involving foreclosures continues

Fair housing groups that claim Bank of America has taken better care of bank-owned homes in white neighborhoods than non-white ones added more cities to its federal complaint Wednesday.

The National Fair Housing Alliance and four of its member organizations announced that they have found evidence of discrimination in five additional cities: Denver; Las Vegas; Memphis, Tenn.; Philadelphia; and Tucson, Ariz. That brings to 18 the number of metropolitan areas in which the groups claim to have uncovered the discriminatory practices.

On Wednesday, the groups added the cities to an amended complaint first filed with the U.S. Department of Housing and Urban Development exactly a year ago. The complaint alleges violations of the federal Fair Housing Act.

In addition to claims that the bank has done a better job of maintaining homes in white communities than in predominantly black, Latino and other non-white neighborhoods, the civil rights groups said the bank has made more of an effort to market the homes in white areas. For example, in nonwhite areas the bank is less likely to put a for-sale sign in the yard, the groups say.

The groups also said Wednesday that they have found fresh discrimination in four metro areas mentioned in their original complaint. Those four areas are Atlanta; Dayton, Ohio; Miami; and Washington, D.C. The evidence has been turned over to HUD, the groups said.

Dan Frahm, Bank of America spokesman, denied the groups' allegations.

"Bank of America applies uniform practices to our management and marketing of bank-owned properties regardless of their location," he said. "The NFHA's suggestions to the contrary are just untrue."

Frahm said Bank of America is looking at the homes the civil rights groups have taken issue with "to find out whether we even have responsibility for those properties and, if so, what their status is."

When the groups first made their claims last year, there were "numerous" flaws in their methodology, he said.

"Examples of that would be the majority of the properties that they faulted us for a year ago were the responsibility of other entities to maintain and market, not Bank of America," he said.

The groups also didn't disclose the condition that properties were in right before Bank of America took ownership of them, he said. "They also included properties that we had already reached agreements with organizations, including local charitable organizations, to whom we would donate properties."

The bank's alleged practices involving REO, or real estate-owned, properties began at least in 2011 but continue to this day, the groups say. All told, Bank of America's discriminatory practices have been found in roughly 40 cities, according to the alliance.

In an online presentation to reporters Wednesday, the alliance showed what it said were recent photos of homes Bank of America-owned homes. A home said to be in Denver, and supposedly photographed in August, had unlocked doors and a vandalized kitchen and broken windows.

"The new evidence we have shows a continuing pattern of discriminatory maintenance and marketing by Bank of America," Shanna Smith, president of the alliance, told reporters. "The quality control of their areas in white neighborhoods is excellent. It's very hard to find a bad REO in a middle-class, working-class white neighborhood."

The alliance said Wednesday that it plans to add even more cities to its complaint against Bank of America in coming weeks.

Last year, the alliance filed complaints against the Charlotte-based bank and two other lenders, San Francisco-based Wells Fargo and Minneapolis-based U.S. Bancorp.

In June, Wells Fargo agreed to pay $30 million to the alliance and 13 fair housing groups and $11.5 million to HUD. But the complaints against U.S. Bancorp and Bank of America are ongoing, the alliance said.

Frahm said the bank has been cooperating with HUD "with any information that they've been looking for from us."

U.S. Bancorp spokeswoman Nicole Garrison-Sprenger said in an email that the "vast majority" of the properties the alliance have called attention to are not serviced by the company, which is the parent of U.S. Bank.

U.S. Bank, she said, is a trustee for investment pools where securitized mortgages are held. As trustee, the bank is not responsible for maintaining the properties, she said, adding that that's a servicer's role.

"When we do own a property, we have a strong and comprehensive process in place to regularly inspect and maintain properties to marketing standards where we have legal access, regardless of their location," she said.

Smith, the alliance's president, said the organization started looking at how banks were maintaining bank-owned properties in 2009. The alliance has met with Bank of America to discuss its concerns, she said, adding that the bank has not fixed the problems, she said.

"They were all talk and no show," she said.

Frahm, the Bank of America spokesman, pointed out that it's in the best interest for the bank, the owners and the neighborhoods for the homes to be sold, rather than allowed to just sit on the market.

"We have worked hard to transition properties to new owners, and our real estate-owned inventory has dropped by almost 70 percent in the past year," he said.

Tuesday, September 24, 2013

Former Bank of America mortgage head eyes buying companies

The former head of Bank of America’s mortgage operations wants to raise about $100 million to buy mortgage banking companies as the housing market undergoes a shift from refinancing activity to more purchases, according to Inside Mortgage Finance.

The publication says Art Ringwald, who left Bank of America in 2001, before the bank's purchase of Countrywide Financial Corp., wants to buy residential finance companies at a time when home purchases are expected to continue overtaking refinancings as a percentage of mortgage originations.

According to the Mortgage Bankers Association, refinancings, by dollar volume, are expected to make up 36 percent of U.S. mortgage originations next year. That's down from 61 percent this year and 71 percent last year.

Inside Mortgage Finance said Ringwald believes a “significant number” of mortgage banking companies will be on the market.

The Observer could not immediately reach Ringwald Tuesday.

His comments to Inside Mortgage Finance come as small lenders, like their big peers, have been hurting lately, thanks to the slump in refinancing activity. Earlier this month, the Observer reported on how mortgage bankers in the Charlotte area have been affected by the decrease.

Some companies told the Observer that they’ve had to change their business models and retrain workers as refinancings have dried up. At least one company -- Wyndham Capital Mortgage in Charlotte -- has laid off workers, according to a document obtained by the Observer.

Inside Mortgage Finance said Ringwald, co-founder and partner in Southeast Capital Partners, helped grow Charlotte-based Bank of America from the nation’s 21st biggest lender to No. 5.

The story is Ringwald is expected to appear on Inside Mortgage Finance's website Thursday.

Financial crisis flashback: Bailout proposal gets political

Five years ago today, lawmakers on both sides of the aisle weren't too happy about the Bush administration's proposed $700 billion bailout of the nation's big banks. Candidates in the '08 election also jumped on it. Job cuts also were in the works at Bank of America and, locally, Bank of Granite.

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Monday, September 23, 2013

Financial crisis flashback: Democrats and Bush work on bailout; Morgan Stanley-Wachovia talk cools

On this day five years ago, Democrats and President Bush were nearing an agreement to bail out the nation's largest banks. Meanwhile, Morgan Stanley's purchase of a stake in a Japanese bank threw cold water on the notion that it might merge with Wachovia. Over the weekend, the Fed had approved Morgan and Goldman Sach's bid to convert to bank holding companies.

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Friday, September 20, 2013

BB&T to take $250 million hit on tax case

BB&T will have to take a $250 million charge this quarter after a judge ruled against it in a tax case, the bank said Friday. The IRS had challenged the bank on its use of foreign tax credits in a transaction completed in 2002.

CEO Kelly King said in a statement the bank still will remain profitable in the quarter.

"We are surprised and very disappointed with the court's ruling and continue to firmly believe that this was a legitimate financing transaction," he said in the statement.

Charlotte foreclosure-help company barred, ordered to repay customers

A Charlotte company that charged homeowners upfront fees to help them avoid foreclosure has been ordered by a judge to repay customers and is banned from offering such services in North Carolina, Attorney General Roy Cooper said.

The announcement comes after Cooper filed suit in September against Community Mortgage Assistance Program. Under North Carolina law, it’s illegal to collect fees in advance for foreclosure assistance or loan-modification services. Cooper said Community Mortgage charged consumers as much as $1,500 in advance and claimed to have a 98 percent success rate in saving homes from foreclosure.

On Thursday, Cooper's office announced that Wake County Superior Court Judge Paul Gessner has approved consent judgments against Community Mortgage and Tidewater Financial, of Wilmington. The judgments were OK'd last week.

Community Mortgage and its owner, Koy Lynn Chiu, have been ordered to pay $4,000 in refunds, according to Cooper's office.

Tidewater also charged homeowners upfront fees for help in lowering mortgage payments, Cooper's office said. Tidewater and its owner, Elaine Madej, are barred from charging the upfront fees and must pay $8,200 in refunds, Cooper said.

Cooper said Community Mortgage and Tidewater not only charged the upfront fees, but also failed to give "meaningful help" to the clients.

Community Mortgage and Tidewater could not be reached for comment.

If the court orders are violated, the companies will face at least $30,000 in civil penalties, Cooper said.

Cooper said roughly 1,200 consumers have complained to his office over the past five years about schemes involving foreclosure assistance and loan modifications.

Park Sterling Bank exec named to Risk Management Association

Nancy Foster
Park Sterling Bank's chief risk officer has been named vice chair of The Risk Management Association, the Charlotte-based community bank said Friday.

Nancy Foster will serve a one-year term that began Sept. 1.

Foster is also a member of RMA’s Executive Committee, Enterprise Risk Management Council and Community Bank Council, the bank said.

Before joining Park Sterling, Foster was chief risk officer for CIT Group.

Also this month, the association named Kevin Oden, chief market and institutional risk officer for Wells Fargo in Charlotte, to its Market Risk Council.

The association is based in Philadelphia.

Financial crisis flashback: Bailout proposal jolts markets higher

Five years ago today, the Bush administration was putting the finishing touches on a bank bailout that would exceed the annual budget for the Pentagon. A wild week on Wall Street had just concluded.

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Thursday, September 19, 2013

Ex-Panther Jake Delhomme joining a bank board

Former Carolina Panthers quarterback Jake Delhomme is joining the board of a Louisiana bank after a year of providing “key leadership,” MidSouthBank said Thursday.

The bank is based in Lafayette, La., the same city where Delhomme, 38, played in college and just miles from where he grew up. For the past year, the former Pro Bowler has advised the bank’s directors on managing credit, interest rates, liquidity, regulatory compliance, and reputation risk, the bank said.

“He has mentored young bankers, instilling a strong work ethic in them, and in turn has been mentored by our veteran board members, which is among the many reasons the bank wanted to formalize his association with the board,” MidSouth Bank chairman Will Charbonnet said in a statement.

MidSouth is not a huge bank by any means, but it's not tiny either. It had $1.9 billion in assets at the end of the second quarter, according to the FDIC's call report.

Delhomme took the Panthers to their only Super Bowl in the 2003 season and holds the franchise records for total passing yards and touchdowns.

Since retiring, Delhomme has helped run a business training and breeding race horses. Last month, he was elected president of the Louisiana Thoroughbred Breeders Association board of directors.

He’s not the only former Panther to break into finance. Long-time wide receiver Muhsin Muhammad is a managing partner at Axum Capital Partners, which bought a controlling stake in the Wild Wing Cafe chain last year.

Charlotte is second-hottest housing market for institutional investors

The Charlotte metropolitan area is the second-hottest market in the U.S. for rental-home purchases by institutional investors, according to a report released Thursday.

Irvine, Calif.-based RealtyTrac, which studied 9,583 Charlotte-area home sales from May to July, said 20 percent of the properties were bought by institutional investors, defined as someone who has purchased at least 10 residential properties in a 12-month period.

The No. 1 market was Atlanta, where 24 percent of the properties went to institutional investors.

Institutional investors have been flocking to the Charlotte area in recent months.

The Observer reported in July on the trend of Wall Street-backed investment groups snapping up homes in middle-class neighborhoods across the city to turn them into rentals. Private equity giant Blackstone has been among the buyers. In general, investors are buying homes in the Charlotte area for between $100,000 and $200,000 -- in cash deals.

In a press release Thursday, RealtyTrac's chief economist, Jake Adger, said institutional investors can drive up home prices and lead to a scarcity of listings. Last week, the Charlotte Regional Realtor Association reported that the average sales price of existing homes sold in August was $237,635, an increase of 11.1 percent from August 2012 and the largest year-over-year gain so far in 2013.

The supply of existing, for-sale homes has remained tight in Charlotte. There was 5.4 months of inventory in August, down from 7.6 months a year ago.

Three Charlotte-area counties made RealtyTrac's list of the "Top 25 Investor-Saturated Single-Family Rental Markets" released Thursday. Those are defined as markets where there were 500 or more sales to institutional investors from May to July.

In Cabarrus and Mecklenburg counties, 25 percent of the homes sold during that period went to institutional investors. In Gaston County, 17 percent were bought by the investors.

Financial crisis flashback: U.S. works on bailout; economists warn of weakness for 'the next several months'

Five years ago today, the federal government was working on a plan to bail out the nation's largest banks. Bank of America was mentioned as a potential buyer of WaMu. And some economists in Charlotte said the economy could be weak for "the next several months." We know how that one turned out.

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Wednesday, September 18, 2013

BB&T says mortgage 'right-size' coming in 2014

BB&T has so far largely been immune from the wave of mortgage-related layoffs that's affected banks across the industry -- but that's set to change in first part of next year, Chief Financial Officer Daryl Bible told investors Wednesday.

As rising interest rates have dramatically slowed home mortgage refinancing activity, big banks like Wells Fargo and Bank of America have laid off thousands of workers. Wells Fargo announced another 150 layoffs in Charlotte on Wednesday, part of nearly 1,900 mortgage job cuts across the country. Those came after 284 layoffs in Charlotte and 2,300 nationwide. At nearly the same time, Bank of America laid off more than 2,000 workers across the country in its mortgage unit.

BB&T's mortgage business has slowed at a pace comparable to its peers. Where two-thirds of the Winston-Salem bank's mortgage activity had come from refinances, it's now projected to make up only 30 percent this quarter, Bible said. Total mortgage volume is set to fall between 10 and 15 percent, and applications are down 30 percent.

But that decline hasn't translated into layoffs, as it has at Wells Fargo and Bank of America. That's because BB&T is in the middle of a large-scale restructuring of its mortgage operations. Before, a huge chunk of its mortgages were originated out of its retail branches. The bank now wants to move all the loan origination into its mortgage banking unit, to make it easier to comply with new regulations from the Consumer Financial Protection Bureau, Bible said.

"We are going to get through this transition first, and probably be a quarter or two behind from some of our peers," Bible told investors at the conference in Boston. "So I would say, first half of 2014 is before we start to right-size our business."

BB&T is the No. 3 bank in the Charlotte market, behind Bank of America and Wells Fargo.

Financial crisis flashback: Reports emerge that Wachovia's in talks with Morgan Stanley

Five years ago today, investors were taking the stock market on a wild ride as they digested news of the unfolding crisis. Also, reports emerged that Wachovia was in talks with Morgan Stanley about a merger.

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Tuesday, September 17, 2013

Wells Fargo hits a billion transactions without receipts

Wells Fargo's option of letting ATM customers forego printed receipts has sure cut down on a heck of a lot of paper use. The bank announced Tuesday that it has completed 1 billion paperless transactions since 2009, when it first began letting people decline the print-out.

That equates to 63,000 miles of receipt paper. It's cliche to say that would wrap around the Earth more than twice. So I'll put it this way: That amount of paper would get you from Wachovia's former headquarters out to San Francisco and back nearly 12 times.

Today, customers will decline the receipt about half the time. In North Carolina, it's 35 percent of the time. ATM users have long had the option of having the receipt emailed to them. Earlier this summer, Wells Fargo made a text receipt an option as well.

Bank of America asks for racketeering case to be dismissed

Bank of America is seeking the dismissal of a federal lawsuit that accuses it of operating a scheme involving home mortgage modifications.

On Monday, the Charlotte-based bank submitted its reply to the lawsuit, which was filed in July in Colorado, where co-defendant Urban Lending Solutions has operations. The suit accuses the bank and Urban of participating in a racketeering enterprise that wrongfully denied borrowers seeking modifications under the federal Home Affordable Modification Program. Urban is a contractor to whom the bank sent HAMP work.

According to the suit, Bank of America and Urban violated the federal Racketeer Influenced and Corrupt Organizations Act by operating "an association-in-fact enterprise designed to mislead and deceive borrowers through use of the United States mail and wires." Bank of America, the lawsuit says, "acted as the kingpin of that enterprise."

Bank of America, in its reply, says the RICO claim is flawed on a technical level. The bank says a RICO enterprise cannot be made of only the defendants in a case.

"Plaintiffs have attempted to evade this requirement by accusing defendants of forming an enterprise with their own employees," the bank says. "The complaint fails to describe an enterprise distinct from the defendant corporation."

The lawsuit also fails to "allege specific facts," the bank said. It called the case "one of hundreds" brought by U.S. borrowers who complained they did not receive permanent HAMP modifications "or did not receive them as soon as they would have liked."

Courts have "almost uniformly" dismissed those cases, the bank said, adding that the RICO claims are "hollow."

The bank's reply comes just weeks after a federal judge rejected a class-action request for a separate lawsuit in Massachusetts. That suit also claims borrowers were wrongly denied HAMP modifications by Bank of America.

Urban, in its response Monday to the Colorado lawsuit, says the suit fails to "specifically allege any wrongdoing" by the company. Urban is also seeking to have the case dismissed.

"Through their baseless allegations, plaintiffs impugn the sterling reputation of Urban Lending, one of the fastest-growing minority-owned companies in the United States and the nation's leading minority-owned mortgage solutions provider," the company's response says.

Financial crisis flashback: AIG bailed out, BofA focuses on 'Thundering Herd'

On this day five years ago, the markets were still digesting the government's emergency $85 billion bailout of insurance giant AIG. Meanwhile, Bank of America was turning its attention to keeping the "Thundering Herd" it would acquire from Merrill Lynch on board. And troubles were evident Washington Mutual.

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Carolina Trust Bank CEO to retire

Carolina Trust Bank CEO Mike Cline will step down from the position at the end of the year or as soon as a successor is found, the bank announced Monday. The 62-year-old Cline has been in the role since the bank was chartered 13 years ago. In that time, the bank has gone from one branch to eight and grown to $265 million in assets.

Before taking the job, Cline had been an area vice president at First Citizens Bank. Sockwell Partners of Charlotte will help look for his replacement.

BB&T PUSHES CORPORATE BANKING INTO MIDWEST: The Winston-Salem bank announced Tuesday a new team of bankers to be based in Chicago, with the goal of expanding its corporate banking presence throughout the Midwest. The team will focus on agribusiness, food and beverage in particular. ""The hiring of these seasoned corporate bankers continues the acceleration of our national growth strategy," CEO Kelly King said in a statement. "We believe that BB&T's relationship-based, values-driven approach along with a strong balance sheet will resonate solidly with clients in the Midwest."

****This is a preview of The Charlotte Observer's Bank Watch Morning Report, bringing you banking news from the region, the top financial headlines, and the news driving activity in the Charlotte market.****

Monday, September 16, 2013

Bank of America releases 'mid-cycle' stress test results

 In a major, hypothetical downturn, Bank of America could incur $26.1 billion in losses over nine quarters but remain above capital levels required by regulators, the bank said Monday.

The Charlotte-based bank released the findings as part of so called "mid-cycle" stress tests that the biggest U.S. banks must conduct. The tests are required under the Dodd-Frank Act.

Other major banks, including Wells Fargo, also released results Monday.

Bank of America, the second-largest U.S. bank by assets, said its Tier 1 common capital ratio would drop as low as 8.4 percent in the "severely adverse" scenario that includes a global recession. That's above the minimum of 5 percent required by regulators. Its other capital ratios would also top the required minimums.

San Francisco-based Wells Fargo also said that its capital ratios would remain above required minimums over nine quarters. It said its Tier 1 common ratio could dip to as low as 9.9 percent. Wells, the fourth-largest U.S. bank by assets, estimated it could have a net loss of $3.8 billion.

Since the financial crisis, the nation's largest banks have been subject to yearly "stress tests" that are meant to check whether a bank would be able to withstand another substantial downturn in the economy. This is the first year that they have been required to test themselves in the middle of the year.

In the mid-cycle tests, the banks are allowed to craft their own scenario to gauge how they'd fare. Bank of America said its scenario was based on the U.S. economy "falling into a deep six-quarter recession followed by a sluggish recovery and accompanied by a global recession."

Also Monday, Citigroup Inc., the third-largest U.S. bank by assets, released its mid-cycle stress test results. It said it could have $21.2 billion in losses over nine quarters in a hypothetical downturn running through the second quarter of 2015.


Tuesday, September 10, 2013

BB&T cuts roughly 3 percent of its branches, CEO says

BB&T Corp. recently closed roughly 43 branches as part of “a natural pruning process,” its CEO told investors Tuesday.

Kelly King, whose presentation was part of the Barclays Global Financial Services Conference in New York, said the figure amounts to around 3 percent of the Winston-Salem-based bank’s branches.

The cuts come as other big banks, such as Charlotte-based Bank of America, have been closing branches as foot traffic to teller lines declines and more customers migrate to online and mobile banking.

None of the 43 are in the Charlotte region, BB&T spokesman David White told the Observer Tuesday.

“I know there’s a lot of conversation going on these days about the future of retail banking and how fast people will close branches and all that,” King said. “I personally think all that is a bit overblown.”

BB&T is trimming branches as analysts are keeping a close eye on the bank’s expenses. The bank reported in the second quarter that noninterest expenses rose 4.9 percent to $1.5 billion, at a time when other banks have lowered costs.

BB&T said the higher expenses stemmed partially from a restructuring of its regions, which it reduced from 37 from 23. Expenses were also higher because of the addition of new systems and personnel costs related to the company’s purchase last year of Fort Lauderdale, Fla.-based BankAtlantic, the bank said.

The bank has told analysts that expenses should fall throughout this year.

While BB&T has closed branches, it is in opening mode in Texas, a market for which the bank has growth plans. Last year, the bank announced it will open 30 branches in Texas.

On Tuesday, King said Texas is a “big, whopping opportunity for us.”

BB&T is the 17th-largest bank in the U.S. by assets, according to Federal Reserve data. In Charlotte, it has the third-largest market share, behind No. 2 Wells Fargo and No. 1 Bank of America.

NewDominion doubling business banking staff

Brimming with enthusiasm after its $10 million capital raise, Charlotte-based NewDominion Bank is looking to move more aggressively into business lending -- doubling its business banking team from six to 12 with a team leader, three business bankers and two business banking associates. It's also added a consumer loan administrator.

“We doubled our customer-facing team,” CEO John Hipp said in a statement. “After completing the capital raise in June, now is the time for us to shift to offense. Delivering high touch relationships and quick decisions is what differentiates us."

Back in May, Hipp told the Observer the goal is to become a $1 billion to $2 billion in assets bank, and ultimately to go public.

PNC EXPERIMENTING IN THE SOUTHEAST: The Pittsburgh bank says its performance in the Southeast is still very much a "bet on the table" a year after taking over for RBC Bank, CEO Bill Demchak told investors Monday. But he also said that the new markets provide a venue for experimentation with how to serve retail customers.

"We will never have the physical presence that we traditionally had in the Northeast at Midwest markets," he said, according to a transcript. "But we don't actually think that that would fit the banking model of the future."

Instead, what you'll get in markets like Charlotte are new models of banking like cash-free branches focused on sales.

****This is a preview of The Charlotte Observer's Bank Watch Morning Report, bringing you banking news from the region, the top financial headlines, and the news driving activity in the Charlotte market.****

Monday, September 9, 2013

Mortgages to fall to two-year low, but Wells says it will adjust

Rising mortgage rates have dramatically slowed the flood of refinancings that have propelled Wells Fargo to record earnings in recent quarters, but Chief Financial Officer Tim Sloan spent the better part of an hour Monday assuring investors the bank would be able to keep growing.

Sloan estimated that the bank would originate $80 billion in mortgage loans in the third quarter, which would be a nearly 30 percent drop from the quarter before. It would also end a string of seven straight quarters of $100 billion-plus in originations, according to Wells latest earnings report.

"We've been in this business for over 30 years, and we've seen cycles in terms of the growth of the business and decline in the business," Sloan told the audience at the Barclays-sponsored conference in New York City. "We will continue to make adjustments."

One big adjustment has been in staffing of the Wells Fargo's mortgage fulfillment division. The bank has announced more than 3,000 jobs cuts in the past two months in that unit, Sloan said, including nearly 300 in Charlotte.

Sloan pointed out that the headcount has fluctuated widely in the past three years as the bank has responded to the market. The bank added about 6,000 employees in 2010, then cut back by 5,000 the next year, according to a slide in Sloan's presentation. Before the most recent cuts, the bank had added 10,000 employees over nearly two years.

Sloan said cost adjustments would continue over the next quarter or two. In the meantime, he said Wells Fargo's other lines of business should continue to improve -- without offering many specifics -- and keep the bank's earnings improving as well. The bank's earnings per share have increased for 14 quarters in a row.

"The expenses will come out of the next couple of quarters," he said. "We're hopeful to be able to grow earnings over that same period."

Thursday, September 5, 2013

CFPB director Richard Cordray speaks in Charlotte

Consumer Financial Protection Bureau director Richard Cordray spoke to the National Baptist Convention gathered in Charlotte on Thursday, describing his organization as holding steady the proverbial ladder to financial success that Americans struggle to climb.

The convention is the largest group representing black Baptist congregations. Cordray wrapped his 15-minute speech in biblical allusions and spoke to the difficulties minority communities have faced in particular in the aftermath of the financial crisis.

"Many people who were entirely innocent -- you know them in your congregations -- got hit the hardest," he said. "Considerable time has passed, but you know best that African-American families are still reeling from the crisis. Unemployment remains high, net worth has sunk, inequality has widened. For these families, the Great Recession is far from over."

He said the consumer bureau has focused on four areas within the financial industry: deceptive marketing, particularly in mortgages; "debt traps" like payday loans; dead ends where customers have few options, like in debt collection; and discrimination in access to credit.

Cordray deviated only slightly from his prepared remarks. You can read those here.

Uwharrie Capital struggling to find places to lend

Uwharrie Capital Corp. is having a hard time finding places to lend money, says the CEO in a quarterly letter to shareholders released Wednesday.

Though assets have grown, total loans are down more than 6 percent over a year ago -- because of lack of loan demand, the bank says. Instead, the bank is keeping its money low-yielding liquid assets as a response to potentially rising interest rates. "This balance sheet mix is not particular to Uwharrie Capital Corp, but rather the banking industry as a whole," CEO Roger Dick writes in the letter.

The bank also notes a $680,000 charge stemming from a foreclosed property held on the books. A new appraisal dramatically reduced its value, Dick writes. But he's not so sure it was reasonable. "Appraisals continue to be a challenge for the industry, which reflect more stressed sales than economic values," he writes. "The appraised value of any property may or may not reflect the true market value. This can only be determined upon final sale."

ALLIANCE NABS RETAIL BANK MANAGER FROM PARK STERLING: Gastonia's Alliance Bank and Trust named Sally D. Dunn to be its new retail banking manager. She previously had managed Park Sterling Bank's branches in Belmont, Mount Holly and Stanley. “We have, once again, reached out into the greater Charlotte banking community and found an excellent addition to our team here in Gastonia.” CEO Don Harrison says in a statement.

CORNELIUS PROPERTY MANAGER EXPANDING: Flush with business now that large institutional investors are buying homes left and right, Cornelius-based property manager Park Avenue Properties is planning to set up five satellite offices in Raleigh, Greensboro, Greenville, S.C., Charleston, S.C., and Memphis. They're already doing steady business in the Charlotte area where Blackstone and American Homes 4 Rent are buying up hundreds of homes.

****This is a preview of The Charlotte Observer's Bank Watch Morning Report, bringing you banking news from the region, the top financial headlines, and the news driving activity in the Charlotte market.****

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Wednesday, September 4, 2013

Park Sterling launches mobile banking apps

Responding to the steady flow of banking transactions from branches to phones, Charlotte-based Park Sterling Bank launched this week a suite of mobile banking apps.

Available for iPhone, iPad and Android, the apps allow personal banking customers to check balances and transfer money between accounts. The apps do not support business accounts yet.

The number of mobile banking users has doubled in the past year, according to a Pew study. More than 35 percent of people with cell phones now use mobile banking, up from 18 percent in 2011.

Tuesday, September 3, 2013

PNC Financial Services Group names western N.C. wealth director

PNC Financial Services Group said Tuesday it has named a wealth director for its western North Carolina operation, which includes Charlotte.

The appointment of Jennifer Green comes as Pittsburgh-based PNC seeks to build its wealth-management business in western North Carolina. PNC acquired RBC Bank’s Raleigh-based U.S. business last year, but RBC’s wealth-management operation was not part of the sale.

Green's territory also includes Asheville, Gaston County and Greensboro. Most recently, she was head of PNC’s health care banking group for the Southeast.

Chanticleer Holdings signs lease for another Hooters in South Africa

Charlotte-based investment company Chanticleer Holdings continues to expand its Hooters empire in Pretoria, South Africa, announcing Tuesday it has signed a lease for a fifth restaurant in the country. 

Chanticleer, a Hooters franchisee focused on owning Hooters in other countries, said plans call for the restaurant to be built and open by the end of this year. Chanticleer said it has signed a five-year lease, with an option to renew, for the restaurant.

The deal brings to eight the company's total number of international Hooters restaurants in Africa, Hungary and Australia, where one of its Hooters is under construction and expected to open this year. Chanticleer also has Hooters expansion plans for Brazil and this month signed a letter of intent to acquire a Hooters in Nottingham, England.

As it's grown in South Africa, Chanticleer has faced setbacks. In September 2012, Nasdaq halted trading of the company’s stock after Chanticleer disclosed that financial statements for its South African Hooters operations had not been audited for fiscal 2011. Chanticleer launched an investigation, after which it said it found its former South African chief financial officer had fabricated financial statements and misappropriated company funds, according to Chanticleer’s filings with the Securities and Exchange Commission.

The money has been repaid and the incident reported to South African and U.S. authorities, Chanticleer CEO Mike Pruitt told the Observer.

In August, Chanticleer announced a new venture: It signed an agreement to acquire Charlotte-based American Roadside Burgers, a deal expected to close Sept. 30. American Roadside has two outlets in Charlotte -- one on Church Street uptown, one in SouthPark -- and one each in Columbia, Greenville, S.C., and Smithville, N.Y.

Chanticleer plans to open American Roadside Burgers locations in other countries and the U.S., Pruitt said.

Bank of America selling its stake in China Construction Bank

Bank of America plans to sell its remaining stake in the China Construction Bank on Tuesday for about $1.5 billion, the Wall Street Journal reports. The move would end an eight-year investment the Charlotte bank no longer wanted as it has continued to cut costs and shed assets.

The bank took a 10 percent stake in the giant Chinese lender in 2005. CEO Brian Moynihan sold off the majority of it two years ago as the streamlining initiative known as Project New BAC got underway. That project also included selling stakes in foreign assets like credit card portfolios in Spain and an investment in Santander.

What's left to sell today is about 1 percent -- at a discount to the Chinese bank's closing price from Tuesday, the Journal reports.