Thursday, October 31, 2013

REIT buys Gastonia medical building

A real estate investment trust out of Tennessee has purchased the Summit Crossing Medical Office Building in Gastonia, an advisory firm who helped out on the deal says.

The 91,000-square-foot building next to CaroMont Regional Hospital went for $20.3 million, according to Denver-based Fairfield Asset Advisors. The previous owners, a company based in North Myrtle Beach, engaged the firm to help sell.

Fairfield said the buyer is a Tennessee real estate investment trust but would not disclose the name.

"The successful closing of this transaction shows the type of demand that is out there in the marketplace right now for health care real estate," Fairfield managing partner Greg Trainor said in a statement.

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CommunityOne Bancorp returns to profitability

CommunityOne Bancorp has posted its first operating profit since 2008, the Asheboro-based bank said Thursday in announcing third-quarter results.

Executives attributed the improved third-quarter results partially to higher interest income from larger loan and securities balances. Results were also helped by a $6.7 million decrease in noninterest expenses from a year ago, a decline driven in part by staff reductions in the wake of the bank's June merger with Bank of Granite.

The bank reported $4 million, or 18 cents a share, in net income, compared with a loss of $4.7 million, or 22 cents, a year ago.

“Obviously we are very pleased with our return to profitability," CEO Brian Simpson said in a statement. “This quarter marks an inflection point for our company."

In May, FNB United Corp., the Asheboro-based parent company of CommunityOne and Granite Falls-based Bank of Granite, received regulator approval to formally combine the two banks. FNB had operated them since they were pushed together in a 2011 recapitalization meant to save the two struggling lenders. The merger was completed after regulators released Bank of Granite and CommunityOne from consent orders earlier this year.

Also during the third quarter, federal prosecutors in Charlotte dismissed charges against CommunityOne. The U.S. Attorney's Office for the Western District of North Carolina had accused the 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 July, FNB changed its name to CommunityOne Bancorp, which has since shifted its headquarters to Charlotte, where it's executives where already based since the recapitalization. All of its branches now operate under the CommunityOne name.

The merger also gave CommunityOne a presence in Charlotte. It has 53 branches in North Carolina.

Wednesday, October 30, 2013

Bank of America's possible legal losses rise

Bank of America now believes it could lose another $5.1 billion over what it has already set aside for the multitude of legal issues facing the Charlotte bank -- a sharp increase from just three months ago, according to a quarterly securities filing made public Wednesday.

The bank also faces the possibility of two future lawsuits by the government, the filing shows. An unnamed U.S. attorney's office has recommended that the Department of Justice sue over mortgage bonds, the bank disclosed Wednesday. The New York Attorney General's office has also told Bank of America that it plans to sue Merrill Lynch after investigating residential mortgage backed securities it sold. That investigation was first disclosed in August.

The bank estimated it could lose $2.8 billion beyond its reserves in a similar filing in August. Investors have long worried that the bank's three-year legal saga might not yet be over, particularly after JPMorgan Chase set aside another $9 billion to handle legal issues in the third quarter.

In a quarterly earnings call with analysts earlier this month, Bank of America executives said they believe they have a handle on what the bank could still face.

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Falfurrias exits investment in Capital Bank

Hugh McColl-founded private equity firm Falfurrias Capital partners has ended its investment in Capital Bank Financial Corp., another institution led primarily by Bank of America alumni. 

Falfurrias sold 275,000 shares in the bank last week, garnering about $6 million, according to a document filed with the Securities and Exchange Commission. The Charlotte private equity firm no longer owns shares in the bank.

"It's all about strategy for us," Falfurrias managing partner and former Bank of America CFO Marc Oken tells me. "Capital Bank is one of the finest banks in the Southeast. But the reality is that bank stocks are constrained." Oken cited low interest rates and regulatory pressure as weights on bank stocks.

Known as North American Financial Holdings at the time, the bank raised $900 million from a number of investors in 2009 with a strategy of buying up troubled banks. It went public in September 2012, and shares are up about 25 percent since then. Capital Bank is headquartered in Coral Gables, Fla., but has corporate offices in Charlotte. It's led by former Bank of America executives Gene Taylor and Chris Marshall.

PITTENGER SAYS CFPB IS AMONG 'MOST UNACCOUNTABLE AGENCIES IN AMERICAN HISTORY': U.S. Rep. Robert Pittenger, the Charlotte Republican, criticized the Consumer Financial Protection Bureau's organizational structure and funding on Capitol Hill on Tuesday, saying it has led to "overly burdensome regulation and overly aggressive enforcement action." The remarks came as a House Financial Services Committee panel kicked off a hearing looking at the numerous legislative proposals to change the fledgling regulator.

BIG BANK SETTLEMENTS TOP $65 BILLION: And more will be coming. SNL Financial is out with another of its periodic running tallies of megabank legal settlements on Tuesday, and it shows banks have topped $65 billion in legal settlements -- without even including JPMorgan Chase's $5.1 billion settlement with the FHFA last week. Bank of America makes up about two-thirds of the total.

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Tuesday, October 29, 2013

Where Bank of America, Wells Fargo rank for fee income

Take a minute to guess which bank makes the largest percentage of its profits from fees.

If you picked Bank of America or Wells Fargo, you're wrong.

According to a ranking from Bank Director magazine, Charlotte-based Bank of America, the second-largest U.S. bank, and San Francisco-based Wells, the fourth-largest, aren't even in the top 10.

The list, which the magazine compiled for the first time and released Tuesday, ranks 50 publicly traded banks based on their average ratio of noninterest income to total operating revenue for 2011 and 2012.

It puts Bank of America in 13th place and Wells Fargo in 14th. Noninterest income made up 48.1 percent of Bank of America's operating revenue, while it was 47.5 percent for Wells Fargo. The only other North Carolina-based bank on the list is BB&T, at No. 34 with 37.6 percent.

Smaller banks -- those with less in assets -- tended to rank higher. For example, No. 1 is Bank of New York Mellon Corp., which got 79.4 percent of its profits from noninterest income.

The magazine points out that the banks and thrifts at the top of the list do very little lending. Instead, they make the bulk of their revenue by providing investment-management and transaction-processing services, such as corporate trust and securities clearing for institutional investors -- and they charge fees for such activities.

The magazine said fee income falls into three categories:

  • Fees charged to consumers. This includes fees for debit card transactions and using overdraft protection. But, the magazine says, regulations have cut sharply into consumer-based fees at most banks. 
  • What banks earn by selling home and automobile loans to third parties that turn them into securities for investors. Those fees have generated a lot of income for banks that took advantage of the refinancing boom by originating mortgages they sold to Fannie Mae and Freddie Mac.
  • What banks make from providing services, such as investment banking, insurance brokerage and cash-management.
For Bank of America, investment and brokerage services, investment banking, consumer banking service charges and credit cards drove fee income the most, the magazine said. The bank made less in fees from originating mortgages, as it has de-emphasized that business, according to the magazine.

At Wells Fargo, mortgage banking fees generated 27 percent of its noninterest income in 2012. But the bank made slightly more from trust and investment-management activities last year.

The magazine said there can be downsides to having a business model that emphasizes fees for services. For example, securities analysts and institutional investors place different values on some forms of fee income. Those based on activities that tend to be cyclical or highly volatile are considered to be less desirable than more stable drivers, according to the magazine.

Hugh McColl backing Mel Watt for FHFA

U.S. Rep. Mel Watt
Former Bank of America CEO Hugh McColl has publicly thrown his support behind fellow Charlottean U.S. Rep. Mel Watt in his fight to be confirmed as director of the Federal Housing Finance Agency.

President Barack Obama nominated the 11-term congressman in May for the position overseeing Fannie Mae and Freddie Mac. While the Senate has held hearings on his confirmation, a final vote has been a long time coming.

The debate over Watt's future has grown more heated this week. On Monday, South Carolina Sen. Lindsay Graham said he would try to block all Obama's nominees until there was more information from the White House on the September 2012 attacks in Benghazi. The same day, White House Chief of Staff Denis McDonough called Watt's confirmation a top priority and met with housing and finance leaders to get them to help get Watt through.
Hugh McColl

McColl appears to have answered the call. In a letter to newspaper editors obtained by Politico, the former chairman says there's "no reason not to" confirm Watt to the Federal Housing Finance Agency directorship.

"I have known Mel Watt for 40-some odd years, both as a lawyer and as a U.S. Congressman," he writes. "I know him to be highly intelligent, a man of impeccable character and a straight shooter. While Chairman of the Board of Bank of America, I consulted with him on many occasions about banking legislation. We did not always agree with each other, but I always knew that I was getting an honest opinion and one that was well thought out."

McColl specifically calls on North Carolina's senators, Republican Richard Burr and Democrat Kay Hagan, to support his confirmation. Senate Democrats are hoping to vote on it this week.

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Bank of America to open 'express' branch at EpiCentre

Bank of America will bring its new, smaller type of branch to Charlotte next week, when an "express center" opens at the EpiCentre.

Spokeswoman Tara Burke said the existing Bank of America branch at the EpiCentre will be changed to the new format. The branch closes 3 p.m. Friday for the conversion work, but will reopen Nov. 7 as the express center, she said.

With a Bank of America flagship branch at its headquarters building nearby, the EpiCentre site "just made sense" for the first express center in Charlotte, she said.

Bank of America unveiled the express branches this month. They come as banks re-examine the role of branches amid the rising use of online and mobile banking and report a decline in use of tellers. Wells Fargo and PNC Financial Services Group are also experimenting with smaller branches.

Bank of America said the express branches will not have tellers. But they come equipped with the bank's new Teller Assist automated teller machines, which allow real-time access to tellers via video screens outside of normal banking hours. The bank touts that extended access as a key component of the express branches.

The bank declined to say how many tellers worked at the EpiCentre branch. It said displaced tellers are relocated to other sites within the same market and that the express centers are not part of a strategy to reduce headcount.

The branches are also staffed with a manager and a personal banker. Customers can access mortgage and other specialists remotely via teleconferencing at some of the express branches, but not the one at the EpiCentre.

Bank of America also says personnel at the new branches will be able to show customers how to download the bank's mobile banking app. The bank has said the new branches will complement its traditional branches, which will generally be within three miles from an express center.

Bank of America's first express center opened on Wall Street in late August. The bank has said it plans to open five more express branches in the U.S. by the end of the year. Boston is among the cities that will get the new branches, the bank said.

Burke said the bank has not released other locations, or opening dates, for additional express branches in Charlotte.

Monday, October 28, 2013

Bank of America verdict could 'embolden' Department of Justice

The jury's verdict against Bank of America last week could "embolden" the U.S. Department of Justice to extract more and larger penalties from big banks, analysts with credit ratings agency Moody's write Monday.

The Charlotte bank was found liable for fraud last week in Countrywide Financial's program of speedily processing and selling mortgage loans to Fannie Mae and Freddie Mac in the months before the financial crisis. Known as the Hustle, for "high-speed swim lane," the program ended up in hundreds of millions in losses for the mortgage giants as the loans went bad. Federal prosecutors said Countrywide didn't check to make sure the loans were quality and misrepresented what was being sold. (Bank of America bought Countrywide in 2008.)

But the government used its own, new interpretation of the Financial Institutions Reform, Recovery and Enforcement Act to make its case, Moody's analysts wrote. The law had generally dealt with cases in which banks are the victims of fraud by an outside entity. The judge in the case, however, agreed that that a bank could both be the perpetrator and victim of a fraud.

The main implication: The U.S. can now use that law's 10-year statute of limitations and broad subpoena power to conduct longer and more wide-ranging investigations into large American banks.

"Last Wednesday’s verdict may embolden the DOJ to take more cases to trial," Moody's wrote in a Monday report. "In any event, the DOJ now has more leverage to extract heftier fines as part of any settlement."

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Former Wachovia CEO Ken Thompson joins Rinehart advisory board

Three big names in Charlotte banking will be joining the advisory board of a local boutique wealth management firm.

Former Wachovia CEO Ken Thompson, who left the bank in the summer of 2008 as mortgage problems became evident, will be the biggest name on Rinehart Wealth Management's new board.

Thompson still lives in Charlotte, and has been working as a principal at New York-based Aquiline Capital Partners and serves on BNC Bancorp's board.

He'll be joined by Charles Conner, one of the three co-founders of investment bank Bowles Hollowell Conner & Co. That firm rose to national prominence as one of the first to focus on middle-market companies.

Cindy Wolfe, the Charlotte president of Bank of the Ozarks, will be the third external member of the advisory board. Her bank opened its first full-service branch in the city in March, and is building another in Cornelius.

“Ken, Charles and Cindy are proven visionaries in the financial world,” firm CEO Mary Rinehart said in a statement. “Their vast knowledge and expertise, as well as their admirable community involvement, will be nothing short of beneficial to Rinehart’s future and our clients.”

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Bank of America survey: Higher percentage of wealthy to delay retirement

The ranks of wealthy Americans planning to delay retirement continue to grow, even though the economy is improving, according to survey findings released Monday by Bank of America.

The Merrill Edge fall 2013 survey, which is based on responses of the "mass affluent," finds that 61 percent plan to retire later than they anticipated, up from 56 percent a year ago and 29 percent two years ago.

Meanwhile, the percentage of those who say they plan to retire earlier than anticipated is lower than two years ago. Only 9 percent fall into that group, compared with 31 percent in fall 2011.

The report defines the "mass affluent" as those with $50,000 to $250,000 in total household investable assets. It's a group that makes up roughly 33 million households in the U.S., the report says.

Among other survey findings, saving for retirement is the No. 1 concern for the wealthy, followed by paying down debt. That's a reversal of a trend during the recession, when getting rid of debt was the biggest priority, followed by saving for retirement.

The report comes after Wells Fargo last week issued results from a study on the retirement outlook for the middle class. According to that report, 59 percent of the middle class said their No. 1 financial concern is paying the bills, up from 52 percent in 2012. Saving for retirement is in second place, with 13 percent saying it's a priority. Four in 10 middle-class Americans said saving and paying the bills at the same time is not possible.

The Merrill Edge survey was conducted Sept. 9-17 and had 1,016 participants. It has a margin of error of plus or minus 3.1 percent.

Friday, October 25, 2013

Park Sterling posts record results

Charlotte's largest community bank announced Friday that it earned $4.2 million in the third quarter, record operating results that were up 20 percent from the quarter before and about five times more than a year ago.

Park Sterling Bank's results were boosted by loan growth for the first time after three quarters in a row of decline. Executives said strong results in its metro areas -- including Charlotte, Raleigh and Wilmington in North Carolina -- drove that increase.

But like several other banks, the overall balance sheet shrunk -- primarily because Park Sterling repaid the U.S. Treasury for the remaining federal bailout preferred stock on its books and because of the industry-wide mortgage decline.

Park Sterling will once again issue a dividend of 2 cents per share, the second time it has done so. The bank also announced it would exit the wealth management custody business, which processes trades for institutions.

BNC BANCORP GROWS PROFITS: The parent of Bank of North Carolina earned $5 million in the third quarter, nearly five times what it was a year ago. The bank's assets have shrunk nearly 4 percent, however, since the start of the year as BNC uses cash to pay back wholesale deposits as they come due. The company doesn't want to keep rolling over these brokered deposits it got from its acquisitions because it considers them "inefficient." The results don't include Randolph Bank and Trust since the sale closed Oct. 1.

CHARLOTTE-BASED TITLE COMPANY ANGLING FOR DODD-FRANK BUSINESS: Pantheon National Title, a minority-owned company launched in 2011, is hosting a cocktail hour for mortgage bankers in Washington D.C., hoping to get more business from firms needing to add more diversity in their supply chain as a result of the financial reform law.

WELLS SURVEY FINDS RETIREMENT A LOWER PRIORITY FOR MIDDLE CLASS: Ordinary folks are much more concerned with paying the bills every month than saving for retirement, according to a survey done by Wells Fargo's wealth, brokerage and retirement people (many of whom are in Charlotte). Half of people don't think they'll have enough saved, and about one-third say they'll work until at least 80 years old.

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Thursday, October 24, 2013

Wells Fargo donates $500,000 to prevent homelessness

Wells Fargo said it is giving $500,000 to an endowment focused on homelessness, as part of the bank's $6.6 million Neighborhood Lift project.

A Way Home Endowment Fund, managed by the Foundation for the Carolinas, will help prevent homelessness among working families and veterans, the San Francisco-based bank said Thursday.

Earlier this month, the bank announced the Neighborhood Lift project for Charlotte, saying the $6.6 million in funding included $500,000 to help low-income renters. But it wasn't until Thursday that the bank named the endowment as the recipient.

The bank launched Neighborhood Lift in February of last year to help U.S. communities with large inventories of unsold homes in the wake of the housing downturn. Since then, the bank has providing Neighborhood Lift funding to other cities, including Atlanta, Los Angeles and Phoenix.

The Neighborhood Lift project also includes $5.5 million in downpayment help that Wells Fargo will provide to Charlotte homebuyers. Under the program, eligible buyers will receive grants of $15,000 apiece. A event for those interested in applying will be held Friday and Saturday at the Charlotte Convention Center. For more information, go to

Yadkin Financial Corp. reports $4.3M in 3Q profit

Yadkin Financial Corp. said Thursday it had profit of $4.3 million, or 30 cents a share, compared with a loss of $81,000, or 1 cent a share, a year ago.

The Elkin-based bank has branches in the Charlotte region. 

“We continue to demonstrate that 2013 is about solid profitability at Yadkin," Joe Towell, president and CEO, said in a statement. "We continued our trends in growing loans, reducing nonperforming assets and increasing our net interest margin. We are pleased to maintain attractive credit metrics while growing our loan portfolio, primarily in our desired categories of commercial and industrial, owner occupied real estate, and consumer."

Last year, Yadkin reported a significant loss in the fourth quarter as the bank used new capital to get millions of bad loans off its books, a move executives called a "success" that will position the bank for growth. Since then, the bank has returned to profitability. It had income of $4.2 million, or 30 cents a share, in the second quarter of this year.

Bank of America to cut 3,000 jobs

Bank of America Corp. is planning to cut 3,000 mortgage jobs in the fourth quarter, The Wall Street Journal reported Thursday.

Bank officials could not be immediately reached for comment.

According to the newspaper, which cites people familiar with the matter, the cuts come as the Charlotte-based bank seeks to reduce expenses amid a drop in home-loan refinancing activity and its delinquent loan portfolio. Bank of America, like other banks, are seeing lower demand from consumers to refinance loans as mortgage rates rise.

The newspaper, quoting a person familiar with the matter, said the bank on Thursday notified about 1,200 employees in its legacy mortgage group and its home loans fulfillment unit that they will be let go. Bank of America is also planning to cut 3,000 jobs in its legacy asset servicing group. The group manages the bank’s mortgage portfolio, servicing current and delinquent loans, the newspaper said.

The fourth-quarter cuts include full-time employees and contractors who handled delinquent loans that Bank of America inherited when it bought Countrywide Financial Corp. in 2008. According to the newspaper, most of the jobs cuts will affect temporary contracting companies.

The cuts are expected to impact California, Texas and Florida. It was not immediately clear if Charlotte will be affected.

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Tuesday, October 22, 2013

SunTrust Banks sued over force-placed insurance

Atlanta-based SunTrust Banks, the sixth-largest bank in the Charlotte metropolitan area, said Tuesday that it has been named in three class-action lawsuits involving force-placed insurance.

The cases are in U.S. district courts in California, Florida and Georgia, the bank said. In the California case, the bank said, its motion to dismiss was partly granted and denied. The bank said it is still seeking to have the other two cases dismissed. It disclosed the lawsuits in a securities filing.

SunTrust is among other banks to be sued over force-placed insurance, which critics say has led to abusive practices against borrowers. A lender or mortgage servicer will impose the insurance on a property if a homeowner lets their policy lapse. Regulators have grown concerned about the high premiums that come with the force-placed policies, as well as the insurance company payments to lenders and mortgage servicers in order to compete for their business.

SunTrust said it is being accused in the lawsuits of getting "kickbacks or other improper benefits" from insurers and not adequately negotiating the policies on behalf of borrowers.

The Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, is studying the force-placed industry and considering a nationwide ban, according to news reports.

What construction is happening at Bank of America's HQ?

People walking and driving by Bank of America's headquarter's at Trade and Tryon streets recently might have noticed the construction crews outside the building and thought, "I wonder what's going on there?"

We asked the bank to explain.

Spokeswoman Jennifer Darwin told us that workers are replacing pavers and waterproofing materials outside the building's entrances.

"We're doing some required maintenance," she said. "The building has been here for about 25 years."

Don't expect the project to result in any big changes to the appearance of the area around the building.

"It will look very similar to what it looks like today, if not exactly the same," Darwin said.

The project, which started in September, is expected to be finished by April. The work is being done in phases, to block only one entrance at a time.

Charlotte-based construction company Rodgers is the contractor.

 Photo by Rick Rothacker

Krawcheck: Bank of America's 'real center of power' in Boston

In a rare candid look at Bank of America's inner workings, former wealth and investment management head Sallie Krawcheck writes that the "real center of power was in Boston" and said she was never able to crack the inner circle under CEO Brian Moynihan.

She also describes a confusing corporate culture brought about by the bank's series of acquisitions.

Since being pushed out of Bank of America two years ago, Krawcheck has become a prolific writer and prominent voice in the business world. Her missives on the banking industry and corporate culture have garnered her more than a quarter-million subscribers on LinkedIn.

And her latest post on the networking site gives an intriguing glimpse into her time at Charlotte's big bank.

Exhibit A: Krawcheck writes that the "real center of power was in Boston," while she was based in New York. That meant Krawcheck wasn't privvy to the "meetings-before-the-meeting" or other bits of face time where the real decisions are made, she writes.

Krawcheck was a high-profile addition to Bank of America in 2009, when then-CEO Ken Lewis brought her on to shepherd the newly acquired Merrill Lynch and the bank's legacy wealth management division. When she was hired, Lewis told Krawcheck he'd be on board at least two more years, she writes. Instead, he announced his departure two months later. Moynihan, who lives in Boston, was named as his successor.

"This left me without the person who was most invested in my successful transition to the company, and with significantly changed marching orders," she writes. "While I asked (and asked and asked) for feedback on how I was doing, I lacked a real sponsor at the senior leadership table."

She also writes that the corporate culture at Bank of America was incredibly confusing as its leadership changed and the bank swallowed acquisitions that spread its executives across the country.

"I knew there was no real alignment of values when I found myself second- and third-guessing my comments in management team meetings before I made them," she writes.

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Monday, October 21, 2013

BofA could face $6 billion settlement on mortgages

As regulators close in on a record-setting penalty against JPMorgan Chase, another massive settlement could be reached with Bank of America.

The Federal Housing Finance Agency is reportedly pursuing $6 billion from the Charlotte bank over mortgage-backed securities sold to Fannie Mae and Freddie Mac that later went bad, according to the Financial Times.

That report comes as the same agency zeroes in on a $4 billion accord with JPMorgan, the nation's largest bank by assets, the Financial Times says. The Federal Housing Finance Agency penalty against that bank could be part of a $13 billion total settlement with other government agencies.

Bank of America has been battling a lawsuit against the Federal Housing Finance Agency since 2011. Some industry analysts had worried that a settlement could reach as much as $11 billion.

Should the $6 billion Bank of America deal come to fruition, it could confirm fears that analysts discussed during the second-largest U.S. bank's earnings call last week. After learning that JPMorgan had a total of $23 billion set aside to deal with litigation amid a "volatile" regulatory climate, the analysts had worried that more legal trouble could be in store for Bank of America.

Executives at Bank of America said it had paid more than any other bank in settlements over the past three and a half years, and said they thought there were adequately prepared.

Bank of America declined to comment.

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Sabal Financial Group CEO on Charlotte choice for lending hub

Pat Jackson was raised in York County and went to Winthrop University, but it’s been about 30 years since he’s called the Charlotte area home.

Today, he lives on the West Coast, where he's CEO of Sabal Financial Group, based in Newport Beach, Calif.

A farm he owns in his hometown of Clover has given him a reason to visit the Charlotte area. But now he has another excuse.

Around late August, Sabal opened a homebuilder-finance office in Charlotte, in the SouthPark Towers office building at 6000 Fairview Road.

Jackson said Charlotte will be the mid-Atlantic hub for the lending operation, which is in addition to similar offices already open in Arizona, Florida and elsewhere.

Initially, the Charlotte operation will employ about three people, Jackson said, but that could grow as more loans are made.

Sabal, whose other services include providing bank holding companies with analysis of lenders that they might acquire, started the homebuilder operation last year. The company hired a former Bank of America executive, Tom Farrell, to head it.

Jackson said Sabal is seeking to lend to smaller, private builders that typically have been struggling to get financing from banks in the wake of the housing downturn.

While that potentially means more access to lending for homebuilders in the Charlotte area, it also means paying the higher interest rate that Sabal charges in exchange for taking on risk that others won’t.

The Observer recently interviewed Jackson on the hub. His comments have been edited for brevity and clarity.

Why pick Charlotte for the hub?

We think Charlotte offers us, even over Atlanta, some real advantages. One, it’s got a great airport. It’s centrally located. I’m particularly, personally, very, very partial to Charlotte. Charlotte offers for us a real opportunity to continue to diversify our business.

We’re in the financial services business, primarily around real estate, and given the deep bench of banking that Charlotte has historically had, as we continue to grow there’ll be a fertile ground for bringing in great talent who are maybe not interested in working for a big bank.

Any other plans for Charlotte?

As we continue to grow, running everything out of California will not allow us to take advantage of all the different businesses that we have. We will need to pick kind of our East Coast spot. Charlotte is a very strong candidate for doing that.

We’ll use our builder-lending business to establish this hub. And as we see how that goes and other lending businesses continue to grow kind of on the same trajectory that the builder-lending business has grown, we’ll likely cohabit in one of those locations. I would say that right now Charlotte’s probably the No. 1 candidate for that.

You, obviously, see a lending void to fill. Tell me how hard it is for some homebuilders to get bank loans.

You’ve got banks absolutely lending to homebuilders. But if you look at the space that we serve, which is primarily the smaller and midsize builders, they’ve had a tough five years, and often their balance sheets are pretty roughed up. The vast majority of the smaller builders can’t fit the bill. There is always going to be a market for people who want new homes.

We think that there’s an interesting dynamic at work there, where builders are starting to fill the void, and because of the lack of financing they’ve had a real problem. And we believe that we have a unique product to help them fill that void.

But you’re also charging them higher interest rates.

Yeah, we do. But it’s not as high as you might think. You hear the term "hard money." We’re not anywhere remotely close, which is typically double-digit interest rates. We’re kind of in the 7 percentage rate … depending on the perceived risk that we see in that project. It’s for a risky project, which is land and homebuilding. That’s still perceived as being a pretty high-risk financing.

How big are the projects you finance?

We’re doing projects that are typically 100 lots and less, which kind of falls in the $50 million total commitment and below. If you just kind of think about it, the public homebuilders typically are looking for larger projects than that, and that by its very nature starts to match up what our target project size is. It naturally starts to gravitate to the smaller, more regional homebuilder. And because they’re not public, some of the resources that they would have to them for financing are lessened.

It ends up being, typically, the non-publics that we’re dealing with. Typically, it’s going to be a nichey builder. You don’t see the publics building out 15 lots in Myers Park. That’s absolutely what we do.

The homebuilding industry complains about a lack of developed lots. Why don't you fund that?

We’re not really looking at that right now. Because we’re just a lender, we’re really not interested in taking development risk. We are only really focused on entitled land.

What was it like growing up on a farm?

As a young boy, I would walk out in the fields at night, and I could see the glow of Charlotte way off in the distance. That was our Oz.

Unfortunately, Charlotte has grown into my farmland to the point where it’s not the same feel as it was.

Sunday, October 20, 2013

Wells Fargo focusing attention on mobile banking

Wells Fargo is testing a number of new mobile-based services around the country and is focusing hard on what makes smartphones unique, executives say.

The bank is taking a hard look at how it can take advantage of what sets a smartphone apart from traditional online banking, vice president and senior product manager Armin Ajami says. The camera, for example. Voice technology. Location-based services. Notifications.

Another main point of emphasis is on what the San Francisco bank calls "omnichannel." That refers to using multiple ways of accessing the bank at once. For example, how would a person want to use the bank's smartphone app while visiting a branch? That could entail booking an appointment with a banker, or pre-ordering a foreign currency, Ajami said.

Wells Fargo's mobile banking offerings are up to about 11 million customers since launching in 2007, nearly half coming through the iPhone. The channel is continuing to grow at about 30 percent year over year, the bank says.

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Friday, October 18, 2013

Bank of America considering account without overdrafts

Bank of America is considering a new type of account that would not allow customers to overdraft at ATMs or through an automatic bill payment, the Wall Street Journal reports. The new account would be the latest move by the Charlotte bank to pull back from a practice that allows customers to spend more money than they have in their accounts – in exchange for lucrative fees for banks.

Regulators have cast a critical eye on overdrafts over the past few years, and a federal rule change required bank customers to actively opt-in to overdraft protection.

Bank of America took things a step further and ended the ability to overdraft using a debit cards. That decision was estimated to cost the bank $1 billion in annual revenue.

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Thursday, October 17, 2013

Cunningham & Co. expanding mortgage operations

The mortgage industry may be contracting, but Greensboro-based Cunningham & Co. says it has added to its mortgage sales force in Charlotte and is opening three new offices this month.

Lately, the headlines have been filled with news of lenders large and small shrinking their mortgage business and laying off workers. Rising interest rates have slowed a flood of refinancings to a trickle.

But even in the flush times, new home purchases made up 70 percent of Cunningham's mortgage volume. That's since bumped up to 82 percent.

"We certainly benefit from refinance activity, but our model is focused on the Realtor community, the builder community, past customers, and referrals we get from those sources," CEO Hank Cunningham said Thursday.

Cunningham said the current environment made it even more imperative for the company to expand into new markets. Two new offices in Tennessee and a new office in Chapel Hill will likely pave the way for more expansion into South Carolina and Virginia.

Competition making commercial loans more unattractive

The competition for commercial loans is getting a little too rich for Capital Bank's blood.

The company founded by former Bank of America executives to buy up troubled banks reported profits of $11.4 million in the third quarter, up 29 percent from the same period a year ago, Capital Bank Financial Corp. reported Thursday.

But the loan portfolio decreased in the quarter. CEO Gene Taylor attributed the decline to red-hot competition for good loans. Other banks, he said, have been offering loan terms that Capital Bank just doesn't believe it can profitably beat.

"We are seeing intense competition involving long-term fixed rates and unattractive credit terms for commercial and commercial real estate loans that we believe would be imprudent for us to match," Taylor said in a statement accompanying the bank's earnings release. He said the bank is investing more in its sales staff to try to get the loan portfolio growing.

Capital Bank is headquartered in Coral Gables, Fla., but has corporate offices in Charlotte, and branches in North Carolina, South Carolina, Tennessee, Virginia and Florida.

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Uwharrie Capital pays back rest of its bailout investment

The Albemarle-based parent company of Uwharrie Bank said Thursday that it has finished paying the government back the $10 million bailout investment the U.S. Treasury made in the bank during the financial crisis.

The bank had paid back the first $7.7 million in April. Last year, the company disclosed it would issue new preferred stock to pay back the Treasury.

Uwharrie Bank is the new name for Bank of Stanly, Anson Bank & Trust, and Cabarrus Bank & Trust after they combined.

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Wednesday, October 16, 2013

A growing Babson Capital unveils art exhibit

CEO Tom Finke, at left, at Babson Capital's art unveiling.
Soon after it moved its offices to the 33rd floor of the Duke Energy Center last fall, Babson Capital CEO Tom Finke took a look at the white walls around its newly finished staircase and said "We could use some art or something in here."

The investment manager certainly met that challenge. Babson held an open house Wednesday evening to unveil a new art exhibit spread throughout its lobby, courtesy of a partnership with the McColl Center for  Visual Arts. It features more than two dozen works from Charlotte-area artists ranging from sculptures to paintings to pottery. All are for sale.

The open house comes as Babson Capital is rapidly growing. Since it moved to the Duke Energy Center a year ago, it's had its fastest period of asset growth, and now has $185 billion under management, Finke said. In Charlotte, its employee base has increased from 94 to 119. It's taken on new portfolio managers, analysts, and executives in business development, legal and finance.

Babson has also created an emerging market debt team that will ultimately be run out of the Charlotte office. It will focus on sovereign and corporate debt in countries like Brazil, Russia, India and China.

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Tuesday, October 15, 2013

19th century Charlotte banker to be inducted in hall of fame

This year's class to be inducted into the North Carolina Banking Hall of Fame will have a historical bent. Among the contemporary bank executives slated to be honored this year is a 19th century Charlotte businessman who was called
the "building and loan king of North Carolina" by the newspapers of his day.

Samuel Wittkowsky was born in 1835 in Prussia, and came to the United States in his late teens. He lived in New York before ultimately settling in Charlotte. He worked as a store clerk, opened several dry good stores and manufactured hats in Statesville. In 1879, he became the first president of the Charlotte chamber of commerce -- known as the Board of Trade at that time.

A few years later, he founded the Mechanics Perpetual Building & Loan Association, where he would serve as president until his death in 1911. The lender was one of the first in the state to offer home mortgages to allow middle-class people to own their own houses.

The institution later became the Home Federal Savings and Loan Association, and built a headquarters on Tryon Street in 1967. The uptown building is now home to Chima Brazilian Steakhouse.

The savings and loan was ultimately bought by First Charter Bank in the late 1990s. The Charlotte community bank would ultimately be merged into Fifth Third Bank.

The hall of famers are selected by the N.C. Bankers Association, the state's main industry group. Seven in all will be inducted into the hall at a Sunday event in Pinehurst.

The others include one more historical figure: Thomas Battle, the founder of Rocky Mount and president of its first bank. He was the first elected chairman of the state bankers association.

The rest:

SunTrust Banks to open Charlotte branch

Atlanta-based SunTrust Banks said Tuesday it will open a branch in Charlotte at 12916 Walker Branch Road in January. The site is southwest of the city, about two miles from the South Carolina border.

The bank also announced Tuesday that it will be putting new, upgraded automated teller machines in North Carolina.

The branch opening comes as SunTrust seeks to grow its market share in the Charlotte area. SunTrust acquired branches in Charlotte — and in other parts of North Carolina — after it bought Memphis, Tenn.-based National Commerce Financial Corp., parent company of Central Carolina Bank, in 2004.

According to the latest federal data, SunTrust has 15 branches in the city. With $712 million in deposits, it's sixth in the city for market share.

In June, Bill Peele, president of the bank's Mecklenburg/South Carolina region, said SunTrust is eyeing sites in the Lake Norman area and just across the South Carolina border as locations for additional branches.

Meanwhile, the bank is enhancing its ATMs as many other banks do the same. SunTrust's new ATMs will allow customers to set preferences, and same-day credit will be given for deposits made before 9 p.m. The machines will also have touchscreens, allow envelope-free deposits and provide receipts that display a copy of the deposited checks.

“As customer banking preferences change, we want to ensure a wide range of options, from strategically located branches, to online and mobile channels and efficient and user-friendly ATMs,” Brad Dinsmore, the bank's head of consumer banking and private wealth management, said in a statement.

Monday, October 14, 2013

Bowles, Hollowell and Conner reunite and reminisce

Back before Bowles Hollowell Conner & Co. was nationally known, it was a fledgling investment bank just trying to make payroll, the three co-founders remembered Monday.

Charlotte businessmen Erskine Bowles, Tom Hollowell and Charles Conner shared a stage at the Westin Hotel uptown to receive a lifetime achievement award from the Association for Corporate Growth for their contributions to the city's financial community outside its big banks. Their eponymous firm was one of the first investment banks to cater specifically to the middle market, or deals ranging roughly from $5 million to $250 million.

After spending time at Morgan Stanley, Bowles said he saw an opportunity in that middle-market space. Since the deals were were relatively small, large firms were farming them out to their most junior and inexperienced staff. A bank dedicated solely to that market could do a much more quality job, he decided.

Still, at the start, it could be a challenge to convince companies to employ the upstart bank for their most important transactions. The co-founders would regularly inflate the number of deals they had done in the past year as they made their pitch to potential clients, Bowles and Hollowell related Monday. Bowles remembered a business trip to Germany with only $28 in their pockets. And more than a decade after its 1975 founding, their company was still at about a dozen employees.

It wasn't until later, as it began a string of more than two dozen deals with private equity firm Forstmann Little and another dozen with industrial company Textron, that Bowles Hollowell Conner became a magnet for talent from across the country.

Bowles Hollowell Conner never opened other offices around the country or branched out into other lines of business. But by the mid-1990s, it was completing more than $3 billion in deals annually. The bank sold in 1998 to First Union, the Charlotte bank that would later become part of Wachovia and later Wells Fargo.

The awards dinner was hosted by the Association for Corporate Growth. Continuing the theme, private equity firms from around the country will traverse uptown to meet with the cluster of boutique investment banks that call Charlotte home. Nearly all of them have alumni of Bowles Hollowell Conner in their leadership ranks.

More than 100 of the bank's alumni packed the Halcyon Restaurant on Monday night for a first-of-its-kind reunion.

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Friday, October 11, 2013

N.C. Bankers Association economist: Economy 'stuck in a rut'

The U.S. economy is expected to keep experiencing slow growth, resulting in weak employment gains that are holding back consumer spending, the economist for the N.C. Bankers Association said in a report Friday.

Harry Davis said the U.S. economy "is stuck in a rut and will continue to disappoint for several more quarters." The economy is not creating enough jobs, he said, adding that many that are being produced are low-wage positions in the hospitality and tourism industry.

"Growth for high-paying professional jobs continues to disappoint," he said. Also, as companies look to cut costs, they are using more part-time workers, he said.

Consumer confidence is not improving enough, with annual growth of only about 2.5 percent, he said. Anemic salary increases and job growth, as well as higher gasoline prices, are restraining consumer spending, which makes up 70 percent of the economy, he said.

As for North Carolina, it continues to have one of the highest unemployment rates in the U.S., he said. At 8.7 percent, the state is No. 6, tied with Georgia and Washington, D.C., according to August figures.

Davis' report isn't filled with only bad news.

He said more jobs might be created in North Carolina next year because of tax and regulatory changes. The state's unemployment rate might approach 8 percent by the end of next year, he said.

He also said housing, vehicle sales and the energy sector are bright spots for the economy.

Wells Fargo CEO calls for end to Washington 'logjam'

Wells Fargo's CEO called on Washington officials Friday to end a government shutdown that had entered its 11th day, calling it "troublesome."

A prolonged shutdown and potential U.S. default are "unnecessary," said John Stumpf, who implored government leaders to "set aside partisan differences" and "break the logjam." The head of the country's fourth-largest bank by assets also warned that the crisis "will likely create new needs" for Wells Fargo's customers.

Stumpf''s comments came during the San Francisco-based bank's third-quarter earnings call. Before the shutdown and uncertainty over a U.S. default, the U.S. economy was experiencing moderate growth, with gains in consumer spending, business investment and employment, Stumpf said.

But lenders say the shutdown is hurting the economy and having an impact on businesses, who were already feeling uncertain about the economy and reluctant to borrow. The shutdown has made them even less likely to take on additional debt or spend cash they've saved during the recent recession, lenders say.

Asked by an analyst on the call whether the shutdown has begun affecting sentiment among the bank's customers, Chief Financial Officer Tim Sloan said it's too soon to tell.

"Surely what happens in Washington is not helpful," Stumpf said.

Here's a look at other highlights from the earnings call:

  • Sloan doesn’t expect any relief from the refinancing slowdown. If mortgage rates remain where they are, he said, the bank will see lower mortgage originations in the fourth quarter.
  • Stumpf said a smaller type of branch the bank is piloting in Washington, D.C., costs 40 percent less to operate than traditional Wells Fargo branches. The new “neighborhood" branches allow Wells to open them in places where it might not have the space for a traditional branch, the bank has said. Stumpf said more of the smaller branches will be opened. "We don't know how many yet."
  • Wells Fargo wants more of its customers to have a credit card with the bank, which is why it's partnered with American Express. Under that deal, announced in August, Wells will be issuing credit cards accepted on the American Express network. Stumpf said about 36 percent of Wells' customers have a card with the bank. That’s up from around 18 percent after the bank bought Wachovia, but Stumpf wants it to be higher.
  • Five years ago this month, Wells Fargo bought Wachovia. Stumpf mentioned the anniversary. "Five years later, we couldn't be more excited about the future," he said.

Thursday, October 10, 2013

SunTrust Banks to pay more than $1B in settlements

SunTrust Banks said Thursday it will pay more than $1 billion in settlements reached with federal agencies over alleged mortgage violations and would record a loss of $323 million in the third quarter as a result.

The Atlanta-based bank, which has branches in the Charlotte region, said it will provide $500 million in "consumer relief" and pay $468 million in cash under agreements reached with the U.S. Department of Housing and Urban Development and the Department of Justice.

The company said the agreements settle claims arising from government-backed mortgages originated by SunTrust from January 2006 to March 2012. Also, under the National Mortgage Settlement, the bank is settling claims involving its mortgage servicing and origination practices.

SunTrust also said Thursday it will pay a $160 million penalty under a previously announced agreement with the Federal Reserve.

The bank reports third-quarter results next week.

Former Bank of America mortgage head joins Citigroup

A former head of the home mortgage business for Bank of America is going to work for Citigroup in its banking subsidiary.

Barbara Desoer will start work Oct. 15 as chief operating officer for Citibank NA, according to a memo from Gene McQuade, CEO of Citibank.

Desoer had held various executive posts within Bank of America, including president of the consumer real estate operation that was formed when the bank bought Countrywide Financial Corp. To take the job, she moved from Charlotte to Countrywide's base in Calabasas, Calif., a state she had lived in previously.

Desoer left Bank of America last year. She was said to have been a candidate for Bank of America CEO and replace Ken Lewis, who resigned in 2009. That position ultimately went to Brian Moynihan.

"Barbara brings to Citi a wealth of experience in banking and finance accrued during a 35-year career with Bank of America," McQuade says in the memo. He called Desoer "a senior leader in retail and commercial banking during the early integration of Bank of America and Nations Bank.

"Barbara is the ideal person to deepen the management bench both of CBNA and of Citi, and we’re delighted to have her join our team."

Citigroup is based in New York.

BB&T creates video game to teach leadership skills

Move over, "Candy Crush."

BB&T said it has created a free gaming app for people itching to learn some leadership skills.

The Winston-Salem-based bank unveiled the game, "Legacy: A BB&T Leadership Challenge," Thursday. It can be found on iTunes and Google Play. Austin, Texas-based Chaotic Moon developed the game for BB&T.

The game puts players in the role of a fledgling settler who aspires to become the new ruler of a medieval province. The game, designed for all ages, gives players opportunities "to help other characters realize their potential," the bank said.

“We believe leadership is a learned skill, and that’s why everyone can become a good leader,” BB&T CEO Kelly King said in a statement. “We hope this game can help unlock the next generation of leaders and make a positive, meaningful difference in the lives of as many people as possible.”

It's not uncommon for banks to provide free multimedia tools to help consumers manage their finances. For example, in April, Bank of America and Khan Academy announced that they had joined forces to offer the general public free tips on developing better money habits.

But it's rare to hear about a bank creating an app that has nothing to do with finance.

Some Wells Fargo brokers worry about their new boss

Starting next year, Wells Fargo Advisors will have a new boss at the top, Mary Mack -- a Wachovia alum with deep roots in Charlotte. But some brokers are worried she'll bring too much of an emphasis on selling banking products, since she's viewed as coming from more of a banking division instead of having a broker background, the Wall Street Journal says.

Sure, Wells Fargo is already known as heavily promoting "cross-selling," or trying to get as many of their products as they can into the hands of their customers. But the previous head of Wells Fargo Advisors, and another former Charlottean, Danny Ludeman, had started his career at the bank as an adviser.

This whole issue is also something that's been going on at Merrill Lynch since its takeover by Bank of America.

INVESTMENT BANKERS MOVING SOUTH: Charlotte has a decent number of investment bankers outside of Wall Street by virtue of Wells Fargo's operations, but the Wall Street Journal says some former New York bankers have their sights set even farther south. Deutsche Bank is moving hundreds of bankers to an office park in Jacksonville, Fla.

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Tuesday, October 8, 2013

FDIC objects to $500M Bank of America settlement

The U.S. government is objecting to a $500 million Bank of America settlement announced in April over mortgages originated by Countrywide Financial Corp., The Wall Street Journal reported Tuesday.

The mortgages were bundled into securities sold to investors, who later claimed they were misled about the quality of the mortgages. Pension funds, including the Maine State Retirement System, that invested in the bonds sued. The bank announced the settlement in its first-quarter earnings report.

A federal judge in California granted preliminary approval to the settlement in August. A hearing on final approval has been set for later this month.

According to the Journal, the Federal Deposit Insurance Corp. filed an objection late Monday, on the grounds that the group of plaintiffs it was negotiated by "had a conflict of interest in negotiating and accepting the proposed settlement because, under the settlement, they would receive substantial payments at the expense of the rest of the class."

Lawsuits in the case go back to November 2007, the bank said in April. The class-action suits involve securities issued from 2005 to 2007 and disclosures made about the mortgages.

The bank has said the settlement would resolve about 80 percent of the unpaid principal balance of Countrywide mortgage-backed securities over which investors have made claims about disclosures -- or threatened to make claims.

A bank spokesman declined to comment Tuesday. The FDIC also declined to comment.

Aquesta Bank taps retired bank CEO for advisory board

Cornelius-based Aquesta Bank has tapped a retired bank CEO to join its board of advisers, the bank said Tuesday.

Jerry Talbot Sims spent three decades at the First National Bank of Arkansas, including 18 as its CEO. While he was there, Sims served on a multitude of boards for charities, business groups and government entities.

He and his wife moved to Cornelius three years ago.

Aquesta Bank primarily serves businesses in the Lake Norman area.

Bank of America intern died of epilepsy

The Bank of America investment banking intern in London who died after pulling several all-nighters was killed by epilepsy, a British examiner found, according to Bloomberg. The August death of 21-year-old Moritz Erhardt had prompted the Charlotte bank to put together a working group to examine working conditions for interns and junior employees. It also sparked worldwide conversation on the at-times unhealthy lifestyle of an investment banker.

PLEXUS INVESTS IN CHARLOTTE COMPANY: The mezzanine finance company said Monday it's putting $9.5 million of subordinated debt in Charlotte litigation support firm Huseby Inc. to fund its acquisition plan. The company puts together transcripts and court reports for businesses, law firms and government agencies.

WELLS WANTS TO START ISSUING PRIVATE MORTGAGE BONDS AGAIN: But first, executives want to have more clarity on what regulations will look like, Housing Wire reports. The bank had been one of the country's largets players in that market before the financial crisis.

MERRILL LYNCH NAMED 'MOST INNOVATIVE': The Banker magazine picked the Bank of America subsidiary as the most innovative investment bank this year.

PREPARE FOR COMPUTER SYSTEM SWITCHES: Windows XP is beloved by corporate IT companies the world over. But Microsoft is ending its support for the operating system next year, and federal financial industry regulators came out with a warning about it Monday.

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Monday, October 7, 2013

Wells Fargo to open social media operation in Charlotte

Wells Fargo says it plans to open in Charlotte an operation dedicated to monitoring comments being made about the bank on social media.

The other social media center will be in San Francisco, where the lender is headquartered. Charlotte is the base for the bank's Eastern U.S. operations.

Wells Fargo is not disclosing the location for the center in Charlotte or how many people it will employ.

Bank of America already has staff members who respond to customer comments on social media, such as

Babson Capital Management renews UNC Charlotte economic forecast sponsorship

Babson Capital Management will sponsor UNC Charlotte's quarterly economic forecast reports for another three years, the university said Monday.

Babson, a global company that has roughly $182 billion in assets under management, has been the sponsor of the Babson Capital/UNC Charlotte Economic Forecast since 2010.

Professor John Connaughton will continue to hold the title of Babson Capital professor of financial economics in Belk College of Business at the university, UNC Charlotte said.

“We’re pleased to continue our relationship with UNC Charlotte and the Belk College of Business through our sponsorship of the Economic Forecast,” Babson Chairman and CEO Thomas Finke said in a statement. “The university is a vital intellectual resource for the Charlotte region and the state, and Dr. Connaughton’s reports provide valuable information for business and community leaders.”

Finke is a member of Belk College's Board of Advisors.

Connaughton began producing the economic forecasts in 1981. The reports are unveiled at a luncheon and press conference. The most recent report was released in September.

Belk College and Babson are seeing to expand the forecast program by sponsoring an annual business outlook conference. The first such conference is tentatively scheduled for January.

Former 'Canes coach Laviolette sues Bank of America

Former Carolina Hurricanes head coach Peter Laviolette has sued Bank of America alleging the Charlotte bank gave fraudulent advice, the Philadelphia Daily News reports

The suit says the bank approached the Laviolettes soon after the Hurricanes won the Stanley Cup in 2006, telling him he should take out high-interest loans off the equity of his three homes in Raleigh and Florida, and put the money into high-risk investments. The bank allegedly told him this would be a way to make a bunch of money with low risk. Obviously this didn't work out, and now he wants $3 million and the loans rescinded.

We sent this news out in this morning's Bank Watch Morning Report newsletter. Since then, more bad news for Laviolette -- he's been fired as head coach of the Flyers.

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Friday, October 4, 2013

SunTrust agrees to $65M settlement with Freddie Mac

SunTrust Banks has agreed to a $65 million settlement with Freddie Mac to resolve claims on faulty mortgages.

SunTrust announced the agreement Tuesday involving roughly 312,000 loans made from 2000 to 2008. Freddie gave SunTrust credit for $25 million in prior mortgage repurchases, resulting in a $40 million payment.

Atlanta-based SunTrust, like other banks, sells home loans to Freddie Mac and Fannie Mae, which then package them into securities bought by investors. Since the housing crisis, banks have settled with the government-sponsored enterprises to end disputes over loans that soured in the downturn.

Last month, for instance, Wells Fargo agreed to an $869 million settlement with Freddie over home loans. Bank of America has reached similar agreements with Freddie and Fannie.

SunTrust said it expects to record a charge of about $15 million in the third quarter as a result of the settlement.

SunTrust cuts most branches in North Carolina

SunTrust Banks cut more branches in North Carolina than any other lender over the past year, according to data provided to the Observer by SNL Financial.

The Atlanta-based lender, which is building a regional headquarters in SouthPark, closed 28 branches across the state as of June 30. The bank, which has had a presence in North Carolina since 2004, has been looking this year to shed branches.

In March, the bank's CEO, William Rogers, told analysts it planned to close roughly 40 U.S. branches in the first quarter of this year. Additional closures were planned for 2013, he said. Many of the branches the bank is closing are inside stores, such as Kroger and Publix.

The SunTrust closures have helped North Carolina lose the largest percentage of branches in the past year than any other state. The number of branches in the state dropped from 2,720 to 2,634, or 3 percent. Only 15 of the closures were in the Charlotte region.

Over the past year, Bank of America closed 10 branches in North Carolina, while Wells Fargo closed two. But both banks, as well as others, have also been opening branches in the state during the same period.

Harry Davis, economist for the Raleigh-based N.C. Bankers Association, a trade group, said North Carolina can stand to lose branches.

"We have a very large number of branches per person," he said. "It's a very highly branched state."

Historically, while other states had laws that limited the growth of branches, North Carolina gave banks more freedom to open locations where they wanted, he said.

"That's why we ended up with some fairly large banks and a lot of branches. There's too much brick and mortar," he said.

Nationwide, banks are closing branches in a cost-saving move as more of their customers migrate to online and mobile banking. Across the U.S., the number of branches decreased 1 percent in the past 12 months. Meanwhile, banks, including Bank of America and Wells Fargo, are experimenting with smaller layouts staffed with fewer tellers.

NewDominion Bank has $50 million burning a hole in its pocket

NewDominion Bank CEO John Hipp sent out a note this morning predicting where he thinks interest rates will go over the next two years -- and it's not very far. He doesn't see the prime rate budging into May 2015, and the 10-year Treasury note won't get higher than 3.18.

But he also adds a pitch at the end. He says NewDominion is trying to lend $50 million in the next six months and encourages his connections to send business their way.

The Charlotte-based community bank has been heavily marketing its 36-hour commitment to potential loan customers. Basically, if a company sends in a completed loan package, NewDominion has three days to respond or they'll pay up $3,000 toward closing costs.

The bank's been much more aggressive over the past few months in lending, since completing a $10 million capital raise that took a great deal of pressure off its finances.

"If you or your friends need any funding, please call me and I will personally be involved and see the process is very quick," Hipp writes. "No one in town can respond quicker than we can."

Charlotte bankers help raise $300,000 for local organizations

A fundraising event attended by Charlotte’s financial services community Thursday night generated roughly $300,000 for area organizations, about $100,000 more than last year and $50,000 over goal, officials said.

The Banking On Our Community event, which is in its second year, was held at the Mint Museum in uptown. Through sponsoring companies and ticket sales to people who work in the area’s financial services sector, money was raised for five organizations: Autism Foundation of the Carolinas, Charlotte Bridge Home, the Mint Museum, John Crosland School and United Way of Central Carolinas.

A paddle raise and live auction during the event also generated funds.

Wells Fargo and U.S. Bancorp were the presenting sponsors for the event.

Carlos Evans, a Charlotte-based Wells Fargo executive who heads commercial banking for its Eastern operation, was honored at the event. Evans sits on the board of Queens University of Charlotte and is chairman of the boards of the Spoleto Festival USA and Medical University of South Carolina Foundation.

N.C. bankers dislike 'one-size-fits-all' regulation

If you ask them, North Carolina bankers have plenty to say on the state of the industry right now. State banking commissioner Ray Grace did just that to help put together a national report taking a look at the community banking landscape. Bankers in the state don't like the "one-size-fits-all approach to banking regulation" coming out of Washington D.C., Grace said. But the smaller banks are looking at the current environment as a way to find a niche amid their bigger peers.

The state's bankers also feel industry consolidation means it's easier to gain market share and keep talent on board. Still, the economy at the local level is still sluggish, and banks are finding that spread lending alone isn't enough to keep the banks running.

WELLS WORKERS IN LA FIRED FOR CHEATING ON SALES GOALS: About 30 Wells Fargo branch workers in the Los Angeles area were fired for opening accounts for people that were never used to try to hit quotas, and messing with customer satisfaction surveys, the bank told the LA Times. Some accounts were opened without the customer's knowledge.

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Thursday, October 3, 2013

Charlotte economy to outperform U.S.; statewide outlook more uncertain

Charlotte's economy will keep its "solid pace of growth" through next year, outperforming the country as a whole -- but the statewide outlook is a little more uncertain, according to two economic reports from banks released Thursday.

Office jobs are still providing most of the growth in Charlotte's labor market -- both in employment and wages, a new report from PNC Bank economists says. But other sectors, particularly manufacturing, continue to lag. The finance industry is still "a weak spot" and years away from making back the losses from the financial crisis.

Housing prices in the city should accelerate through the end of the year, PNC writes, and continued population growth will drive construction, retail and health care.

Statewide, signs of life in housing and manufacturing activity show the economy could be on the mend, a report from Wells Fargo economists says. But there still seems to be a "disconnect" between what the labor market demands and what skills workers have, the bank economists write. As a whole, the North Carolina market is still highly cyclical and dependent on the national economy.

"The state’s economy appears to have the momentum needed to perpetuate growth," the Wells economists write, but the state needs to focus on workforce development to make sure it happens.

The Wells economists also take a stab at the burning political question: What is the state's business climate? They write that the lower taxes in the McCrory administration put the state more in line with its neighbors, but say subsidies and tax incentives still pose a problem and say worries about political instability can mess with business owners' long-term planning.

Wednesday, October 2, 2013

Wells Fargo offers $5.5 million in downpayment help

Wells Fargo on Wednesday said it will award grants of $15,000 apiece to Charlotte homebuyers in need of down-payment assistance, under a program the lender created to help markets hit hard by the housing downturn.

The program, Neighborhood Lift, launched in February of last year to target markets with large inventories of unsold homes. Since then, the San Francisco-based bank has made the grants available in other cities, including Atlanta, Los Angeles and Phoenix.

In Charlotte, Wells will offer $5.5 million in the downpayment aid.

In a press release, Kendall Alley, head of Wells Fargo's community banking operation for the Charlotte region, said Charlotte was "deeply affected by the housing crisis." While mortgage rates are at historically low levels, he said, many people are still struggling to come up with a downpayment.

Those applying for the program must meet certain criteria. For one, borrowers can't earn more than 120 percent of the Charlotte-area median income. For a family of four, for example, 120 percent is $78,100, according to Wells.

The homes can only be purchased by those who plan to occupy them. Every year, 20 percent of the grant will be forgiven, to ensure borrowers will remain in the homes for at least five years. Borrowers can use the funding to buy new or existing homes.

The program is restricted to homes within the city limits of Charlotte, which is similar to how the program has been structured in many other markets, according to Wells officials.

Borrowers are free to pick their mortgage lender and are not required to get their loan through Wells Fargo. Rather, borrowers can use any of the lenders approved by the Charlotte-Mecklenburg Housing Partnership, which will qualify borrowers applying to the program.

Once borrowers are qualified, they have 60 days to find a home to buy or they'll lose the funding.

The Charlotte-Mecklenburg Housing Partnership will also administer the downpayment funding and provide the homebuyer education the program requires applicants to take, according to Wells officials. CMHP is affiliated with NeighborWorks America, a Washington, D.C.-based nonprofit that has been working with Wells Fargo on Neighborhood Lift since its creation.

Rod Banks, who oversees community development in Charlotte for Wells Fargo, told the Observer the program's aim is to "stabilize" cities where there have been many foreclosures.

In the wake of the housing downturn, Wells Fargo has "spent a lot of time" helping its struggling borrowers to not lose their homes, he said. Those efforts include modifying loans, he said.

Through Neighborhood Lift, Wells Fargo is promoting homeownership in major U.S. markets where it has helped people avoid losing their properties to foreclosure, he said.

"Now our focus is shifting more toward homeownership, first-time homebuyer programs, to help folks who want to get into housing," he said. "We think that a program like this will just strengthen the market even further."

A free event for those applying for the program will be held 10 a.m. to 7 p.m. Oct. 25 and 26 at the Charlotte Convention Center, 501 S. College St. Prospective homebuyers can register at Preregistration is encouraged, but walk-ins are welcome. For more information, call (866) 802-0456.

Wells said the Charlotte Neighborhood Lift program is a $6.6 million initiative, which includes $500,000 that will be used to help low-income renters, such as by subsidizing rents.