The year 2013 marked another period of rapid change for Charlotte bankers and financiers. Here’s a look at the five biggest stories that shaped the local financial scene during the year.
1. Mortgage rates spur hundreds of layoffs. For two years, mortgage rates had been at rock-bottom, leading homeowners to refinance by the thousands. But in the spring, those interest rates began to climb. Lenders big and small who had brought on workers to deal with the flood of loan applications found themselves with too many people and too little work – sparking round after round of layoffs.
Wells Fargo let go more than 400 mortgage processors in Charlotte and 5,000 around the country. Charlotte-based Bank of America laid off at least 3,000, with an unknown number in its headquarters city. Fifth Third and SunTrust cut staff. Smaller mortgage companies weren’t spared, either.
2. Private equity buys Charlotte homes by the thousands. Lured by low housing prices in a weakened market, Wall Street firms began to buy up single-family homes to turn them into rentals – and made Charlotte a prime location. By the summer, one in every five homes sold in the Charlotte area was bought by an investor, the second-highest rate in the country, an Observer investigation found. But their entry also proved jarring for tenants. As they took over ownership, the companies began evicting people at a disproportionately high rate.
3. Bank of America, Wells Fargo settle more than $18 billion in lawsuits. The legal morass that has consumed the last few years at Charlotte’s big banks continued through 2013 in a steady stream of settlements both big and small. The biggest came in January, when Bank of America agreed to a $10 billion settlement with Fannie Mae over bad mortgages sold to the government-sponsored entity. And it’s not over yet. Bank of America has several major legal issues still to be resolved.
4. Consolidation comes to Charlotte in a big way. Bankers have been talking about it for years, but the long-predicted wave of mergers and acquisitions seemed to finally come to pass in 2013. North Carolina shed banks at the fastest rate in two decades as banks big and small made deals.
To name a few: First Citizens Bancshares Inc. acquired Mountain 1st Bank and Trust, Bank of the Ozarks bought First National Bank of Shelby, NewBridge Bancorp bought CapStone Bank, and Bank of North Carolina bought at least two more. Bank executives say more is yet to come.
5. Boutique investment banking scene shifts. Charlotte has become a hot spot for middle-market investment banking, and the local scene brought in two big buyers in 2013. Deloitte Capital Finance said in June it would buy McColl Partners, the investment bank co-founded by former Bank of America CEO Hugh McColl that had about 70 professionals. Later that same month, Minneapolis-based Piper Jaffray acquired Charlotte’s Edgeview Partners.
This article is adapted from the Observer’s Bank Watch blog, updated every business day at charlotteobserver.com/business.
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