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Pennsylvania's First CornerStone Bank fails; Wells Fargo facing suit from former employee


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Pennsylvania's First CornerStone Bank fails; Wells Fargo facing suit from former employee

ThePennsylvania Department of Banking and Securities King of Prussia, Pa.-basedFirst CornerStoneBank — the third FDIC-insured institution in the U.S. to fail so farthis year and the first in the state. Raleigh, N.C.-based has agreed to acquire the deposits and assets of the failed bank.

Inmore banking news, Fifth Third Bancorp disclosed that nearly half of itsoutstanding energy portfolio, excluding power, was marked as in the first quarter. It had$699 million of criticized loans in its non-power producing energy portfolio,out of overall outstanding balances of $1.57 billion, as of March 31. Most ofthe impaired loans were in the bank's reserve-based lending portfolio.

Duke Tran is suinghis former employer Wells Fargo& Co. for asking call center workers not to tell customersabout lost deeds or other missing documents, Reuters reports. A former customerservice specialist, Tran claims the bank fired him in November 2014 for callingthe policy unethical, according to a June 2015 lawsuit made public May 5. WellsFargo representatives have declined to comment on the matter, according to theReuters report.

In a complaint filed May 6 in federal court in Manhattan,the SEC accusedPittsburgh-based financial adviserLouis Martin Blazer III, founder of Blazer Capital Management, of withdrawingabout $2.4 million from the accounts of several professional athletes withouttheir authorization in order to invest in movie projects and make Ponzi-likepayments. When examiners at the agency discovered and questioned theunauthorized withdrawals, Blazer resorted to false statements and falsedocuments in a failed attempt to hide his misconduct, according to the SEC'scomplaint.

Blazer agreed to settle the charges without admitting ordenying the allegations. The settlement is subject to court approval with determinationof disgorgement and financial penalties to be decided by the court at a laterdate.

Tim Segerson, deputy director of examination at the NCUA,told the FinancialTimes that the regulator was "closely monitoring" thefinances of co-operative lenders that finance the cab trade in New York and afew other cities in the country. Increasing competition from rideshareservices, such as Uber and Lyft, is making it difficult for taxi borrowers tokeep up with their medallion loanrepayments. Apart from facing mounting losses from defaults, lenders are beingpressed by a significant drop in the value of medallions, which are now up forsale for as little as $500,000.

Areport from the Government Accountability Office indicates that the CapitalPurchase Program under TARP has largely wound down. The Treasury expects most of theremaining banks to exit TARP by restructuring their agreement instead ofrepaying in full.

Investment company entered intoexclusive negotiations with assetmanager NorthStar AssetManagement Inc. and NorthStar Realty Finance Corp. based on a jointproposal from Colony and NorthStar Realty for a tri-party, all-stock "atthe market" business combination based on historical trading prices.

At RealtyFinance Trust Inc., meanwhile, the board created a specialcommittee consisting of independent directors that will potential strategic transactions.

Online lenderssuch as Social FinanceInc. are apparently turninginto victims of their own business model of targeting Ivy League studentborrowers. The Wall Street Journalnotes these customers "are proving savvier and more anti-debt thananticipated." Such customers are prepaying student loans faster than somecompanies anticipated, which sources say is bad news for lenders and investors(that buy these loans in bulk or through securities backed by the loans) hopingto accumulate higher interest payments over time.

In other parts of the world

RizalCommercial Banking Corp. President Lorenzo Tan has from his position, Reutersreports. The move comes even after the company determined he is not liable fora money laundering scandal stemming from the cyber theft of $81 million fromBangladesh Bank's account at the Federal Reserve Bank of New York.

The day ahead

Early morning futures indicators pointed to a higheropening for the U.S. market. In Asia, the Hang Seng rose 0.23% to 20,156.81,while the Nikkei 225 was up 0.68% to 16,216.03. In Europe, as of midday, theFTSE 100 was up 0.50% to 6,156.27, and the Euronext 100 rose 1.24% to 860.99.

On the macro front

No notable reports are due out today.

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