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Stephanie Link, Hightower chief investment strategist, joins ‘Squawk Box’ to break down the quarterly earnings results from JPMorgan Chase and Wells Fargo.
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Tag: Banks
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Wells Fargo shares tumble after net interest income falls short of estimates
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CNBC's Leslie Picker joins 'Squawk Box' to report on the bank's quarterly earnings results.
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Citigroup tops expectations for profit and revenue on strong Wall Street results
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Jane Fraser, CEO of Citi, speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 1, 2023.
Patrick T. Fallon | AFP | Getty Images
Citigroup on Friday posted second-quarter results that topped expectations for profit and revenue on a rebound in Wall Street activity.
Here’s what the company reported:
- Earnings: $1.52 a share vs. $1.39 a share expected, according to LSEG
- Revenue: $20.14 billion vs. $20.07 billion expected
The bank said net income jumped 10% from a year earlier to $3.22 billion, or $1.52 a share. Revenue rose 4% to $20.14 billion.
Equities trading revenue rose 37% to $1.5 billion, driven by strength in derivatives and a rise in hedge fund balances, roughly $300 million more than the StreetAccount estimate.
Fixed income revenue dipped 3% to $3.6 billion, essentially matching analysts’ expectations, on lower activity in rates and currency markets.
Investment banking revenue surged 60% to $853 million, driven by strong issuance of investment-grade bonds and a rebound in IPO and merger activity from low levels in 2023.
Shares of the bank fell nearly 2%.
“Our results show the progress we are making in executing our strategy and the benefit of our diversified business model,” Citigroup CEO Jane Fraser said in the release. “Markets had a strong finish to the quarter leading to better performance than we had anticipated.”
Citigroup was just this week rebuked for failing to fix its regulatory shortfalls.
Last year, Fraser announced plans to simplify the management structure and reduce costs at the third-biggest U.S. bank by assets. But earnings will take a backseat if Citigroup cannot appease regulators’ concerns about its data and risk management.
JPMorgan Chase announced results earlier Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.
Correction: This article has been updated to correct that Citigroup reported revenue of $20.14 billion for the second quarter. A previous version misstated the figure due to a rounding error.
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Wells Fargo shares tumble after net interest income falls short of estimates
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Wells Fargo on Friday reported a 9% decline in net interest income, even though its second-quarter earnings and revenue exceeded Wall Street expectations.
Here’s what the bank did compared with Wall Street estimates, based on a survey of analysts by LSEG:
- Earnings per share: $1.33 versus $1.29 cents expected
- Revenue: $20.69 billion versus $20.29 billion expected
The San Francisco-based lender recorded $11.92 billion in net interest income, a key measure of what a bank makes on lending, marking a 9% year-over-year decline. That was below the $12.12 billion expected by analysts, according to FactSet. The bank said the drop was due to the impact of higher interest rates on funding costs.
Shares of Wells Fargo fell nearly 7% in Friday’s trading.
“We continued to see growth in our fee-based revenue offsetting an expected decline in net interest income,” CEO Charlie Scharf said in a statement. “The investments we have been making allowed us to take advantage of the market activity in the quarter with strong performance in investment advisory, trading, and investment banking fees.”
Wells Fargo saw net income dip to $4.91 billion, or $1.33 per share, in the second quarter, from $4.94 billion, or $1.25 per share, during the same quarter a year ago. The bank set aside $1.24 billion as provision for credit losses, which included a modest decrease in the allowance for those losses. Revenue rose to $20.69 billion in the quarter.
The bank repurchased more than $12 billion of common stock during the first half of 2024 and it expects to increase the third-quarter dividend by 14%.
The stock is up more than 22% this year, outperforming the S&P 500.
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JPMorgan Chase is set to report second-quarter earnings – here’s what the Street expects
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Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., speaks during an Economic Club of New York (ECNY) event in New York, US, on Tuesday, April 23, 2024.
Victor J. Blue | Bloomberg | Getty Images
JPMorgan Chase is scheduled to report second-quarter earnings before the opening bell Friday.
Here’s what Wall Street expects:
- Earnings: $4.19 a share, according to LSEG
- Revenue: $49.9 billion, according to LSEG
- Net interest income: $22.8 billion, according to StreetAccount
- Trading Revenue: Fixed income of $4.82 billion; Equities of $2.77 billion, according to StreetAccount
Will cracks in the economy begin to reveal themselves in JPMorgan Chase results?
While JPMorgan has passed numerous stress tests lately — actual and hypothetical — it’s possible the bank’s consumers could begin showing more strain from higher interest rates.
Another open question is about succession at JPMorgan after CEO Jamie Dimon acknowledged in May that he now had less than five years remaining in his current role.
Wells Fargo and Citigroup are scheduled to post results later Friday, while Goldman Sachs, Bank of America and Morgan Stanley report next week.
This story is developing. Please check back for updates.
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Banks in Synapse mess make progress toward releasing deposits of stranded fintech customers
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Oscar Wong | Moment | Getty Images
There may be relief for the thousands of Americans whose savings have been locked in frozen fintech accounts for the past two months.
Banks involved in the mess caused by the collapse of fintech intermediary Synapse have made progress piecing together account information for stranded customers that could result in a release of funds in a matter of weeks, according to a person briefed on the matter.
Staff of Evolve Bank & Trust and Lineage Bank in particular have made headway after hiring a former Synapse engineer late last month to unlock data from the failed fintech middleman, said the person, who asked for anonymity to speak candidly about the process.
The development comes as regulators, including the Federal Reserve and the Federal Deposit Insurance Corp., pressure the banks involved to release funds after media and lawmakers have heightened awareness of the debacle.
Beginning in May, more than 100,000 customers of fintech apps like Yotta, Juno and Copper have been locked out of their accounts.
“We’re strongly encouraging Evolve to do whatever it can to help make money available to those depositors,” Federal Reserve Chair Jerome Powell told the Senate Banking Committee on Tuesday.
The sudden optimism of key players involved in the negotiations, including Evolve founder and Chairman Scot Lenoir, comes after weeks of apparent gridlock in a California bankruptcy court. Shoddy record-keeping and a dearth of funds to pay for a forensic analysis have made it difficult to piece together who is owed what, bankruptcy trustee Jelena McWilliams has said.
The episode revealed how small banks involved in the “banking-as-a-service” sector didn’t properly manage unregulated partners like Synapse, founded in 2014 by a first-time entrepreneur named Sankaet Pathak. Evolve and a string of peers have been reprimanded by bank regulators for shortcomings tied to their programs.
Missing customer funds
Evolve Bank initially planned to release $46 million it held from payment processing accounts to give fintech customers partial payments, according to the person with knowledge of the matter.
That plan changed in recent days when it became clear that something approximating a full reconciliation of customer accounts was possible, the person said.
But it remains unknown how the four main banks involved — Evolve, Lineage, AMG National Trust and American Bank — and what remains of Synapse will deal with a likely shortfall of funds, and that could hinder repayment efforts.
Up to $96 million owed to customers is missing, McWilliams has said.
The Synapse trustee didn’t respond to a request for comment. Neither did representatives for AMG, American Bank and Lineage. The FDIC declined to comment for this article.
On Wednesday Evolve filed a response to questioning from one of its regulators, FINRA, seeking to make it clear that while it holds some payment processing funds, deposits from the app Yotta migrated out of Evolve and to a network of banks in late October 2023.
“We believe there is still some confusion regarding who is in possession and control of customer funds,” Evolve told FINRA, according to documents obtained by CNBC.
The bank included an Oct. 27, 2023, email from Yotta CEO Adam Moelis to Lenoir where Moelis confirmed that funds had left Evolve as of that date.
“Synapse and Evolve are now saying contradictory things,” Moelis said this week in response to an inquiry from CNBC. “We don’t know who’s telling the truth.”
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Best HELOC lenders of July 2024
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Depending on your financial situation, a home equity line of credit (HELOC) could be the best way to close any outstanding medical bills, pay off student debt or renovate your house.
HELOCs allow you to borrow against the value of your home and tend to have lower APRs than credit cards or personal loans. With a HELOC, you’ll be able to take out cash over some time, rather than one lump sum. You’ll also usually have a longer period to pay it back — most HELOC lenders give borrowers 20 to 30 years to finish paying off their loan.
To help you choose the best option, CNBC Select reviewed the eight best HELOC lenders. To create this list, we considered dozens of lenders’ customer service, ease of applications, perks, affordability and details about their HELOC options. (See our methodology for more information on how we chose the best HELOC lenders.)
Compare offers to find the best mortgage lenders
Best for flexible needs
PNC Bank
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
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Terms
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Credit needed
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Minimum down payment
0% if moving forward with a USDA loan
Pros
- Offers a wide variety of loans to suit an array of customer needs
- Available in all 50 states
- Online and in-person service available
Cons
- Doesn’t offer home renovation loans
Who’s this for? PNC is for those seeking low rates, flexible qualification requirements and great customer service. There is a low $100 minimum draw and a maximum of $1 million. You can also switch between a variable rate and a fixed rate after withdrawing your funds — a feature that many lenders don’t offer.
Standout benefits: PNC stands out for its rate transparency and relatively large maximum. Existing PNC customers with a checking account are eligible for a 0.25% rate discount.
Best for large withdrawal
TD Bank Mortgage
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Fixed-rate, adjustable-rate mortgage, jumbo loans, construction-to-permanent loan, VA loan, FHA loan, medical professional mortgage
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Terms
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Credit needed
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Minimum down payment
Pros
- Carries loan option that allows for a slightly smaller downpayment at 3%
- Has both online and in-person service
- Online support available
- Mobile app available
- Refinance options available
Who’s this for? TD Bank is best for those with a high-value home looking to get a HELOC over $1 million. Its $6 million maximum draw is among the largest out there. But it’s also a great choice for those looking to take out a smaller loan—it does not have a minimum, a rarity among lenders.
Standout benefits: TD Bank has a large draw and a high max LTV (89.99%) for many borrowers. It has one of the largest draw ranges, meaning it is an option for most homebuyers, regardless of how much you plan to take out.
Best for long draw period
Who’s this for? Navy Federal is an excellent choice if you’re a veteran looking for a HELOC with a longer-than-average draw period. While lenders typically have a 10-year draw period, Navy Federal offers a 20-year draw period, allowing you to pull cash out for your home renovation or other expenses for longer.
Standout benefits: Navy Federal has a 95% LTV. Unlike many lenders, it does not charge customers fees at closing or an annual fee.
Best for speedy closing
CMG Financial
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Annual Percentage Rate (APR)
Fixed-rate and adjustable-rate available, apply online for rates.
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Types of loans
Conventional, FHA loans, VA loans, USDA loans, Jumbo loans, HELOC, refinancing loans, renovation loans, HomeReady loans, Home Possible loans, Reverse mortgage
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Terms
15-year and 30-year fixed-rate; 5-year, 7-year, 10-year introductory period for adjustable-rate loans
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Credit needed
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Minimum down payment
3% for conventional loans, 1% with the Community ONE Grant
Pros
- With the Community ONE Grant, qualified borrowers in eligible areas can put 1% down on their home purchase. CMG will provide another 2%, up to $6,000.
- With HomeFundIt, Family and friends can contribute to borrowers’ down payment via CMG’s website
- Offers two different types of HELOC products, including its proprietary All In One Loan™ which has a 30-year draw period, much longer than the traditional 10 year.
- Website is filled with helpful information about the homebuying process
- Low down payment options available
Cons
- Not transparent about rates and fees online
- Does not provide home equity loans
Who’s this for? CMG Financial is the best if you need cash out of your HELOC as soon as possible. With the bank’s 5-day HELOC program, borrowers can access their funds quickly, much shorter than the average three to six weeks typically required to close.
Standout benefits: Its five-day program allows customers to get their cash in less than a week, and an in-person appraisal is not required for every loan. It also has a relatively high loan-to-value ratio maximum of 90%.
Best for customer satisfaction
Fairway Independent Mortgage Corporation
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, physician loans, renovation loans, jumbo loans
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Terms
10-, 15-, 20-, 25-, 30-year terms available for fixed-rate loans; 5-, 7-, or 10-year introductory period for ARM loans
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Credit needed
580 for FHA loans, 620 for conventional loans
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Minimum down payment
3% if moving forward with conventional; 0% if moving forward with USDA
Pros
- Ranked No. 1 in Customer Satisfaction in mortgage origination by JD Power
- Its Fairway Community Access™ provides borrowers in qualifying areas with up to $7,000 to put towards down payment or closing costs. The program has no income limit and in some cases includes an appraisal credit, lender credit for a one-year home warranty, housing counseling credit, temporary buy down, and title insurance credit.
- Affordable housing loan options available
- Provides a large amount of FHA loans
- Easy-to-use website and app
Cons
- Not transparent about rates and fees online
- Does not provide home equity loans or a HELOC
Who’s this for? Fairway Independent Mortgage Corporation is best for people who plan to open a HELOC of less than $400,000 and value customer satisfaction above all else. Fairway ranked No. 1 in mortgage origination satisfaction study by JD Power in 2023, and it boasts a wide range of borrower benefits.
Standout benefits: Fairway says it will provide funding in as little as five days. It also offers services like remote online notarization in most states and promises you can complete your application virtually, without leaving your house.
Best for existing customers
Flagstar® Bank Loans
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Conventional, fixed-rate, adjustable-rate, FHA loans, VA loans, USDA loans, Jumbo loans, HELOC, refinancing loans, renovation loans, HomeReady, Home Possible, ReFi Now, Refi Possible, Community Reinvestment Act loans
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Terms
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Credit needed
620 for conventional, 600 for Destination Home Mortgage, 580 for FHA loans
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Minimum down payment
3% for conventional loans, 0% with Destination Home Mortgage
Terms apply. Flagstar® Bank is a Member FDIC.
Pros
- With the Flagstar Gift Program, eligible first-time homebuyers can get up to $15,000 to put towards a down payment and closing costs.
- With the Power Up program, first-time homebuyers who live in certain areas can receive a $10,000 grant
- Destination Home Mortgage allows eligible homebuyers to put 0% down.
- Wide variety of loans
Cons
- Only available in Michigan, Indiana, California, Wisconsin, New York, New Jersey, Florida, Arizona and Ohio.
Who’s this for? Flagstar is the best option for those with an existing checking account with the company. It offers a 0.25% rate discount if its checking account holders set up automatic payments from their accounts.
Standout benefits: Flagstar waives fees for anyone who keeps the HELOC account open for 36 months or more. It has a high maximum draw, borrowers can open a credit line of up to $1 million.
Best brick-and-mortar
Bank of America Home Mortgage Loans
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Conventional loans, FHA loans, VA loans, Affordable Loan Solution® mortgage, Doctor loans
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Terms
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Credit needed
Conventional loans typically require a 620 credit score
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Minimum down payment
3% with Bank of America’s Affordable Loan Solution® mortgage loan
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Offers first-time homebuyer assistance?
Pros
- Bank of America’s America’s Affordable Loan Solution® loan allows for a down payment of 3%.
- Offers first-time homebuyer grants for eligible applicants to use towards closing costs and down payments.
- Offers educational resources including First-Time Homebuyer Online Edu-Series® online
- Online banking available.
Who’s this for? Bank of America is a great option if you want to deal with your lender in person. As one of the biggest banks in the U.S., it has 3,800 retail locations throughout the country — more than any other lender on this list. It’s a great option for those looking to take out a line of under $1,000,000 or score a discounted intro APR.
Standout benefits: Bank of America has thousands of retail locations nationwide and an introductory rate for variable APRs over 2% lower than its typical APR as of this article’s writing.
Best for no closing fees
Third Federal Savings & Loan
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Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
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Types of loans
Conventional loan, jumbo loan, refinancing, HELOC
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Terms
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Credit needed
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Minimum down payment
Pros
- Provides up to $1,000 or a rate reduction if a borrower finds a mortgage with a lower rate.
- Offers low closing cost options.
- No closing fees for HELOC
Cons
- Doesn’t offer USDA, FHA or VA loans
- Available in only half of states nationwide
Who’s this for? Third Federal is a great option if you’re living in one of the 25 states it’s available and want to avoid fees.
Standout benefits: Third Federal does not have closing fees or prepayment fees. It also has no minimum draw, meaning you can take out as little as you want. It says its interest rates are typically 0.50% lower than other lenders.
More on our Top FHA mortgage lenders
PNC Bank
PNC caters to a variety of needs with a wide range of conventional, government-backed, community loans, professional loans and HELOC loans. It stands out in terms of customer satisfaction with an A+ rating from the Better Business Bureau (BBB). PNC has over 2,300 retail branches nationwide.
Minimum credit score for a HELOC
620
Maximum LTV for a HELOC
80% to 90%
Maximum draw
$1,000,000
Minimum draw
$100
Draw period
10 years
Repayment period
20 years
TD Bank
TD Bank is one of the biggest banks in the country, with over 1,100 branches across the East Coast. It offers conventional mortgages, jumbo loans, construction loans, government-backed loans, professional loans, and HELOC loans. It also offers low down-payment mortgage options, including Fannie Mae’s HomeReady mortgage and TD Bank’s proprietary Right Step Mortgage, both of which allow borrowers to put as little as 3% down. It received an A+ rating from the BBB.
Minimum credit score for a HELOC
660
Maximum LTV for a HELOC
89.99% up to lines up to 500,000, 80% for lines above 500,000 and 70% for homes with a value of over $2.5 million.
Maximum draw
$6 million
Minimum draw
No minimum
Draw period
10 years
Repayment period
20 years
Navy Federal Credit Union
Navy Federal Credit Union — the largest credit union in the country by asset size— provides conventional mortgages, government-backed loans, Military Choice loans and Homebuyer Choice loans. It is the largest VA loan provider in the country and it offers a slew of loan options for veterans, active servicemembers and their families.
Minimum credit score for a HELOC
Not disclosed
Maximum LTV for a HELOC
95%
Maximum draw
$500,000
Minimum draw
$10,000
Draw period
20 year
Repayment period
20 years
CMG Financial
CMG Financial provides conventional mortgages, government-backed mortgages, refinancing loans, renovation loans, jumbo loans, reverse mortgages, and HELOCs. Its HomeFundIt feature allows family and friends to donate to borrowers’ down payments through its website. The bank’s Community ONE Grant helps qualified homebuyers buy a home with 1% down by providing 2% in funding up to $6,000.
Minimum credit score for a HELOC
620
Maximum LTV for a HELOC
90% LTV in most cases
Annual Fee
$50-$150 per year.
Maximum draw
$400,000
Minimum draw
$20,000
Draw period
Varies for conventional, but 10 years is typical.
Repayment period
10 to 30 years
Fairway Independent Mortgage Corporation
Fairway Independent Mortgage Corporation is an online-only mortgage lender that offers conventional loans, federally insured loans, interest-only loans, and specialized loans. It also has a robust down payment assistance program. It was ranked No. 1 in the 2023 mortgage origination satisfaction study by JD Power.
Minimum credit score
620 (getting confirmation)
Maximum LTV for HELOC
Getting confirmation
Maximum draw
$400,000 (getting confirmation on this)
Minimum draw
No minimum (Getting confirmation on this)
Draw period
Unclear from website (Getting confirmation on this)
Repayment period
Unclear from website (Getting confirmation on this)
Flagstar
Flagstar provides various loans to meet borrower needs, including conventional mortgages, government-backed mortgages, refinancing, HELOC, and Community Reinvestment Act mortgages. First-time homebuyers can get up to $15,000 towards a down payment and closing cost with the Flagstar Gift Program and receive a $10,000 grant with its PowerUp program. It also has several low down payment options, including FHA, USDA, HomeReady, and Home Possible loans, as well as Destination Home Mortgage, which allows borrowers to put as little as 0% down.
Minimum credit score
700
Maximum rate for HELOC
21%
Maximum LTV for HELOC
85%
Maximum draw
$1 million
Minimum draw
$10,000
Draw period
10 year
Repayment period
20 year
Bank of America
Bank of America is one of the largest banks in the country, with 4,600 retail locations. It offers Conventional loans, government-backed loans, and specialized loans geared toward economic groups and professions. It also offers first-time homebuyer grants and online education.
Minimum credit score
620
Maximum LTV for HELOC
85%
Maximum draw
$1,000,000
Minimum draw
No minimum
Draw period
Can vary up to 10 years
Repayment period
Usually 20 years
Third Federal
Third Federal has an A+ rating from the BBB and offers a variety of mortgages including conventional loans, jumbo loans, refinancing and HELOCs. It has a lowest rate guarantee and will provide a rate reduction or $1,000 if a borrower finds a mortgage with a lower rate. It offers low closing costs options and has no closing fees for HELOC loans.
Minimum credit score
Not disclosed
Maximum LTV for HELOC
80%
Maximum draw
$300,000
Minimum draw
$10,000
Draw period
10 years
Repayment period
20 years
FAQs
What is a HELOC loan?
A HELOC loan — or Home Equity Loan of Credit — is a type of loan that allows homeowners to borrow against the value of their home.
Does a HELOC loan require an appraisal?
In most cases, you will need to get an appraisal to secure a HELOC loan.
Can I pay my HELOC loan off early?
Like many other types of loans, you can pay HELOCs off early. This can be a great way to save on interest charges.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best bad credit mortgages.
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Our methodology
To determine which HELOC lenders are the best, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs. When narrowing down and ranking the best HELOC loans, we focused on the following features:
- Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
- Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender can cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
- Closing timeline: The lenders on our list can offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
- Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances where a lender does charge such fees.
- Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
- No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
- Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
- Customer support: Every mortgage lender on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.
To determine best HELOC lenders, CNBC Select also considered specific terms for HELOC loans, including maximum APR, maximum and minimum draw amounts, draw period length and repayment period.
We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
Note that the rates and fee structures advertised for mortgages are subject to fluctuation in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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Piper Sandler’s Scott Siefers on state of financials ahead of earnings this week
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Scott Siefers, Piper Sandler managing director, joins ‘Squawk Box’ to discuss state of the financials sector, what to expect from bank earnings this week, and more.
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Here are 3 major reports that could drive the stock market in the week ahead
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U.S. flag is seen hanging on New York Stock Exchange building on Independence Day In New York, United States on America on July 4th, 2024.
Beata Zawrzel | Nurphoto | Getty Images
Wall Street finished higher for the holiday-shortened trading week, with tech stocks leading the way.
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One of the biggest bears in this bull market is leaving JPMorgan
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JPMorgan’s Marko Kolanovic.
Crystal Mercedes | CNBC
A top strategist at JPMorgan who was caught offside by the stock market rally is quitting the investment firm.
Marko Kolanovic, who served as chief global markets strategist and co-head of global research, is leaving the bank to explore other opportunities, according to a source familiar with the internal announcement.
In his place, Hussein Malik will become the sole head of global research, and Dubravko Lakos-Bujas will serve as chief markets strategist.
Kolanovic rose to prominence among market watchers for correctly predicting a stock market rebound in the middle of the Covid-19 pandemic. But he has been consistently bearish over the past two years as the market has reached new highs.
JPMorgan’s current year-end prediction for the S&P 500 is 4,200, while no other major firm in the CNBC Market Strategist Survey is below 5,200. JPMorgan’s prediction is officially credited to Lakos-Bujas, who worked under Kolanovic.
The S&P 500 is up more than 15% this year and closed above 5,500 on Tuesday.
News of Kolanovic’s departure was first reported by Bloomberg News.
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How thousands of Americans got caught in fintech’s false promise and lost access to bank accounts
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Natasha Craft, a 25-year-old FedEx driver from Mishawaka, Indiana. She has been locked out of her Yotta banking account since May 11.
Courtesy: Natasha Craft
When Natasha Craft first got a Yotta banking account in 2021, she loved using it so much she told her friends to sign up.
The app made saving money fun and easy, and Craft, a now 25-year-old FedEx driver from Mishawaka, Indiana, was busy getting her financial life in order and planning a wedding. Craft had her wages deposited directly into a Yotta account and used the startup’s debit card to pay for all her expenses.
The app — which gamifies personal finance with weekly sweepstakes and other flashy features — even occasionally covered some of her transactions.
“There were times I would go buy something and get that purchase for free,” Craft told CNBC.
Today, her entire life savings — $7,006 — is locked up in a complicated dispute playing out in bankruptcy court, online forums like Reddit and regulatory channels. And Yotta, an array of other startups and their banks have been caught in a moment of reckoning for the fintech industry.
For customers, fintech promised the best of both worlds: The innovation, ease of use and fun of the newest apps combined with the safety of government-backed accounts held at real banks.
The startups prominently displayed protections afforded by the Federal Deposit Insurance Corp., lending credibility to their novel offerings. After all, since its 1934 inception, no depositor “has ever lost a penny of FDIC-insured deposits,” according to the agency’s website.
But the widening fallout over the collapse of a fintech middleman called Synapse has revealed that promise of safety as a mirage.
Starting May 11, more than 100,000 Americans with $265 million in deposits were locked out of their accounts. Roughly 85,000 of those customers were at Yotta alone, according to the startup’s co-founder, Adam Moelis.
CNBC reached out to fintech customers whose lives have been upended by the Synapse debacle.
They come from all walks and stages of life, from Craft, the Indiana FedEx driver; to the owner of a chain of preschools in Oakland, California; a talent analyst for Disney living in New York City; and a computer engineer in Santa Barbara, California. A high school teacher in Maryland. A parent in Bristol, Connecticut, who opened an account for his daughter. A social worker in Seattle saving up for dental work after Adderall abuse ruined her teeth.
‘A reckoning underway’
Since Yotta, like most popular fintech apps, wasn’t itself a bank, it relied on partner institutions including Tennessee-based Evolve Bank & Trust to offer checking accounts and debit cards. In between Yotta and Evolve was a crucial middleman, Synapse, keeping track of balances and monitoring fraud.
Founded in 2014 by a first-time entrepreneur named Sankaet Pathak, Synapse was a player in the “banking-as-a-service” segment alongside companies like Unit and Synctera. Synapse helped customer-facing startups like Yotta quickly access the rails of the regulated banking industry.
It had contracts with 100 fintech companies and 10 million end users, according to an April court filing.
Until recently, the BaaS model was a growth engine that seemed to benefit everybody. Instead of spending years and millions of dollars trying to acquire or become banks, startups got quick access to essential services they needed to offer. The small banks that catered to them got a source of deposits in a time dominated by giants like JPMorgan Chase.
But in May, Synapse, in the throes of bankruptcy, turned off a critical system that Yotta’s bank used to process transactions. In doing so, it threw thousands of Americans into financial limbo, and a growing segment of the fintech industry into turmoil.
“There is a reckoning underway that involves questions about the banking-as-a-service model,” said Michele Alt, a former lawyer for the Office of the Comptroller of the Currency and a current partner at consulting firm Klaros Group. She believes the Synapse failure will prove to be an “aberration,” she added.
The most popular finance apps in the country, including Block’s Cash App, PayPal and Chime, partner with banks instead of owning them. They account for 60% of all new fintech account openings, according to data provider Curinos. Block and PayPal are publicly traded; Chime is expected to launch an IPO next year.
Block, PayPal and Chime didn’t provide comment for this article.
‘Deal directly with a bank’
While industry experts say those firms have far more robust ledgering and daily reconciliation abilities than Synapse, they may still be riskier than direct bank relationships, especially for those relying on them as a primary account.
“If it’s your spending money, you need to be dealing directly with a bank,” Scott Sanborn, CEO of LendingClub, told CNBC. “Otherwise, how do you, as a consumer, know if the conditions are met to get FDIC coverage?”
Sanborn knows both sides of the fintech divide: LendingClub started as a fintech lender that partnered with banks until it bought Boston-based Radius in early 2020 for $185 million, eventually becoming a fully regulated bank.
Scott Sanborn, LendingClub CEO
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Sanborn said acquiring Radius Bank opened his eyes to the risks of the “banking-as-a-service” space. Regulators focus not on Synapse and other middlemen, but on the banks they partner with, expecting them to monitor risks and prevent fraud and money laundering, he said.
But many of the tiny banks running BaaS businesses like Radius simply don’t have the personnel or resources to do the job properly, Sanborn said. He shuttered most of the lender’s fintech business as soon as he could, he says.
“We are one of those people who said, ‘Something bad is going to happen,’” Sanborn said.
A spokeswoman for the Financial Technology Association, a Washington, D.C.-based trade group representing large players including Block, PayPal and Chime, said in a statement that it is “inaccurate to claim that banks are the only trusted actors in financial services.”
“Consumers and small businesses trust fintech companies to better meet their needs and provide more accessible, affordable, and secure services than incumbent providers,” the spokeswoman said.
“Established fintech companies are well-regulated and work with partner banks to build strong compliance programs that protect consumer funds,” she said. Furthermore, regulators ought to take a “risk-based approach” to supervising fintech-bank partnerships, she added.
The implications of the Synapse disaster may be far-reaching. Regulators have already been moving to punish the banks that provide services to fintechs, and that will undoubtedly continue. Evolve itself was reprimanded by the Federal Reserve last month for failing to properly manage its fintech partnerships.
In a post-Synapse update, the FDIC made it clear that the failure of nonbanks won’t trigger FDIC insurance, and that even when fintechs partner with banks, customers may not have their deposits covered.
The FDIC’s exact language about whether fintech customers are eligible for coverage: “The short answer is: it depends.”
FDIC safety net
While their circumstances all differed vastly, each of the customers CNBC spoke to for this story had one thing in common: They thought the FDIC backing of Evolve meant that their funds were safe.
“For us, it just felt like they were a bank,” the Oakland preschool owner said of her fintech provider, a tuition processor called Curacubby. “You’d tell them what to bill, they bill it. They’d communicate with parents, and we get the money.”
The 62-year-old business owner, who asked CNBC to withhold her name because she didn’t want to alarm employees and parents of her schools, said she’s taken out loans and tapped credit lines after $236,287 in tuition was frozen in May.
Now, the prospect of selling her business and retiring in a few years seems much further out.
“I’m assuming I probably won’t see that money,” she said, “And if I do, how long is it going to take?”
When Rick Davies, a 46-year-old lead engineer for a men’s clothing company that owns online brands including Taylor Stitch, signed up for an account with crypto app Juno, he says he “distinctly remembers” being comforted by seeing the FDIC logo of Evolve.
“It was front and center on their website,” Davies said. “They made it clear that it was Evolve doing the banking, which I knew as a fintech provider. The whole package seemed legit to me.”
He’s now had roughly $10,000 frozen for weeks, and says he’s become enraged that the FDIC hasn’t helped customers yet.
For Davies, the situation is even more baffling after regulators swiftly took action to seize Silicon Valley Bank last year, protecting uninsured depositors including tech investors and wealthy families in the process. His employer banked with SVB, which collapsed after clients withdrew deposits en masse, so he saw how fast action by regulators can head off distress.
“The dichotomy between the FDIC stepping in extremely quickly for San Francisco-based tech companies and their impotence in the face of this similar, more consumer-oriented situation is infuriating,” Davies said.
The key difference with SVB is that none of the banks linked with Synapse have failed, and because of that, the regulator hasn’t moved to help impacted users.
Consumers can be forgiven for not understanding the nuance of FDIC protection, said Alt, the former OCC lawyer.
“What consumers understood was, ‘This is as safe as money in the bank,’” Alt said. “But the FDIC insurance isn’t a pot of money to generally make people whole, it is there to make depositors of a failed bank whole.”
Waiting for their money
For the customers involved in the Synapse mess, the worst-case scenario is playing out.
While some customers have had funds released in recent weeks, most are still waiting. Those later in line may never see a full payout: There is a shortfall of up to $96 million in funds that are owed to customers, according to the court-appointed bankruptcy trustee.
That’s because of Synapse’s shoddy ledgers and its system of pooling users’ money across a network of banks in ways that make it difficult to reconstruct who is owed what, according to court filings.
The situation is so tangled that Jelena McWilliams, a former FDIC chairman now acting as trustee over the Synapse bankruptcy, has said that finding all the customer money may be impossible.
Despite weeks of work, there appears to be little progress toward fixing the hardest part of the Synapse mess: Users whose funds were pooled in “for benefit of,” or FBO, accounts. The technique has been used by brokerages for decades to give wealth management customers FDIC coverage on their cash, but its use in fintech is more novel.
“If it’s in an FBO account, you don’t even know who the end customer is, you just have this giant account,” said LendingClub’s Sanborn. “You’re trusting the fintech to do the work.”
While McWilliams has floated a partial payment to end users weeks ago, an idea that has support from Yotta co-founder Moelis and others, that hasn’t happened yet. Getting consensus from the banks has proven difficult, and the bankruptcy judge has openly mused about which regulator or body of government can force them to act.
The case is “uncharted territory,” Judge Martin Barash said, and because depositors’ funds aren’t the property of the Synapse estate, Barash said it wasn’t clear what his court could do.
Evolve has said in filings that it has “great pause” about making any payments until a full reconciliation happens. It has further said that Synapse ledgers show that nearly all of the deposits held for Yotta were missing, while Synapse has said that Evolve holds the funds.
“I don’t know who’s right or who’s wrong,” Moelis told CNBC. “We know how much money came into the system, and we are certain that that’s the correct number. The money doesn’t just disappear; it has to be somewhere.”
In the meantime, the former Synapse CEO and Evolve have had an eventful few weeks.
Pathak, who dialed into early bankruptcy hearings while in Santorini, Greece, has since been attempting to raise funds for a new robotics startup, using marketing materials with misleading claims about its ties with automaker General Motors.
And only days after being censured by the Federal Reserve about its management of technology partners, Evolve was attacked by Russian hackers who posted user data from an array of fintech firms, including Social Security numbers, to a dark web forum for criminals.
For customers, it’s mostly been a waiting game.
Craft, the Indiana FexEx driver, said she had to borrow money from her mother and grandmother for expenses. She worries about how she’ll pay for catering at her upcoming wedding.
“We were led to believe that our money was FDIC-insured at Yotta, as it was plastered all over the website,” Craft said. “Finding out that what FDIC really means, that was the biggest punch to the gut.”
She now has an account at Chase, the largest and most profitable American bank in history.
— With contributions from CNBC’s Gabriel Cortes.
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Revolut CEO confident on UK bank license approval as fintech firm hits record $545 million profit
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Nikolay Storonsky, founder and CEO of Revolut.
Harry Murphy | Sportsfile for Web Summit via Getty Images
LONDON — The boss of British financial technology giant Revolut told CNBC he is optimistic about the company’s chances of being granted a U.K. banking license, as a jump in users saw the firm report record full-year pre-tax profits.
In an exclusive interview with CNBC, Nikolay Storonsky, Revolut’s CEO and co-founder, said that the company is feeling confident about securing its British bank license, after overcoming some key hurdles in its more than three-year-long journey toward gaining approval from regulators.
“Hopefully, sooner or later, we’ll get it,” Storonsky told CNBC via video call. Regulators are “still working on it,” he added, but so far haven’t raised any outstanding concerns with the fintech.
Storonsky noted that Revolut’s huge size has meant that it’s taken longer for the company to get its banking license approved than would have been the case for smaller companies. Several small financial institutions have been able to win approval for a banking license with few customers, he added.
“U.K. banking licenses are being approved for smaller companies,” Storonsky said. “They usually approve someone twice every year,” and they typically tend to be smaller institutions. “Of course, we are very large, so it takes extra time.”
Revolut is a licensed electronic money institution, or EMI, in the U.K. But it can’t yet offer lending products such as credit cards, personal loans, or mortgages. A bank license would enable it to offer loans in the U.K. The firm has faced lengthy delays to its application, which it filed in 2021.
One key issue the company faced was with its share structure being inconsistent with the rulebook of the Prudential Regulation Authority, which is the regulatory body for the financial services industry that sits under the Bank of England.
Revolut has multiple classes of shares and some of those share classes previously had preferential rights attached. One conditions set by the Bank of England for granting Revolut its U.K. banking license, was to collapse its six classes of shares into ordinary shares.
Revolut has since resolved this, with the company striking a deal with Japanese tech investor SoftBank to transfer its shares in the firm to a unified class, relinquishing preferential rights, according to a person familiar with the matter. News of the resolution with SoftBank was first reported by the Financial Times.
2023 a ‘breakout year’
The fintech giant on Tuesday released financial results showing full-year pre-tax profit rose to £438 million ($545 million) in 2023, swinging to the black from a pre-tax loss of £25.4 million in 2022. Group revenues rose by 95% to £1.8 billion ($2.2 billion), up from £920 million ($1.1 billion) in 2022.
Victor Stinga, Revolut’s chief financial officer, said the company’s growth stemmed from a record jump in user numbers — Revolut added 12 million customers in 2023 — as well as strong performance across all its key business lines, including card fees, foreign exchange and wealth, and subscriptions.
“We consider 2023 to be what we would call a breakout year from the point of view of growth and profitability,” Stinga said in an interview this week.
Revenue growth was driven by three main factors, Stinga said, including customer growth, strong performance across its key revenue lines, and a significant jump in interest income, which he said now accounts for about 28% of Revolut’s revenues.
He added that Revolut made exercising financial discipline a key priority in 2023, keeping a lid on operating expenses and adopting a “zero-based budgeting” philosophy, where every new expense has to be justified and accounted for before it’s considered acceptable.
This translated to administrative expenses growing far less than revenues did, Stinga said, with admin costs growing by 49% while revenues nearly doubled year-on-year.
Revolut has been investing more aggressively in advertising and marketing, he added, with the firm having deployed $300 million in advertising and marketing last year. The company’s business banking solutions are also a top priority, with Revolut devoting about 900 employees toward business-to-business sales.
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JPMorgan, BofA and other top banks shower investors with fatter dividends after easily passing the Fed’s stress tests
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The biggest US banks took turns announcing higher payouts to investors Friday after easily passing the Federal Reserve’s annual stress test earlier this week.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. were among firms that announced the increases two days after the regulator’s review showed that all 31 banks examined would maintain enough capital to withstand a hypothetical economic downturn.
Citigroup Inc., Wells Fargo & Co. and Morgan Stanley, as well as several other large lenders, also boosted their dividends. In addition, JPMorgan and Morgan Stanley approved stock repurchase programs of as much as $30 billion and $20 billion, respectively.
Many of the banks’ payouts had already accelerated this year as they gained confidence that proposed tighter capital rules, known as Basel III Endgame, would be watered down.
Bank New quarterly dividend Previous quarterly dividend Bank of America 26 cents 24 cents Citigroup 56 cents 53 cents JPMorgan $1.25 $1.15 Morgan Stanley 92.5 cents 85 cents Wells Fargo 40 cents 35 cents Goldman Sachs $3.00 $2.75 The Fed required the banks to wait until after the market closed Friday to announce any updates, allowing time for each firm, as well as investors, to digest the results.
This year’s annual exam, a product of the 2008 financial crisis, included banks with at least $100 billion of assets. For the entire group, the so-called common equity tier 1 capital ratio — deemed to be the highest-quality regulatory capital — would bottom out at 9.9% in a “severely adverse” economic scenario, well above the 4.5% minimum requirement.
Even as banks breezed through, the stress tests are still the subject of intense debate among economists and policymakers. Excess volatility in the Fed’s models means that the scenarios and exams should be subject to greater public scrutiny, according to Francisco Covas, head of research at the Bank Policy Institute.
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JPMorgan and Morgan Stanley boost buybacks and dividends, while Citigroup and BofA take smaller steps
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(L-R) Brian Moynihan, Chairman and CEO of Bank of America; Jamie Dimon, Chairman and CEO of JPMorgan Chase; and Jane Fraser, CEO of Citigroup; testify during a Senate Banking Committee hearing at the Hart Senate Office Building in Washington, D.C., on Dec. 6, 2023.
Saul Loeb | Afp | Getty Images
JPMorgan Chase and Morgan Stanley said Friday that they were boosting both dividend payouts and share repurchases, while rivals Citigroup and Bank of America made more modest announcements.
JPMorgan, the biggest U.S. bank by assets, said it was raising its quarterly dividend 8.7% to $1.25 per share and that it authorized a new $30 billion share repurchase program.
Morgan Stanley, a dominant player in wealth management, said it was boosting its dividend 8.8% to 92.5 cents per share and authorized a $20 billion repurchase plan.
Citigroup said it was raising its dividend 5.7% to 56 cents per share and that it would “continue to assess share repurchases” on a quarterly basis.
Bank of America said it was increasing its dividend 8% to 26 cents per share. Its release made no mention of share repurchases.
The big banks announced their plans to boost capital return to shareholders after passing the annual stress test administered by the Federal Reserve this week. While all 31 banks in this year’s exam showed regulators they could withstand a severe hypothetical recession, JPMorgan said Wednesday that it could have higher losses than the Fed initially found.
Still, that would not affect its capital-return plan, the New York-based bank said Friday.
“The strength of our company allows us to continually invest in building our businesses for the future, pay a sustainable dividend, and return any remaining excess capital to our shareholders as we see fit,” JPMorgan CEO Jamie Dimon said in his company’s release.
JPMorgan’s dividend increase was its second this year, Dimon noted.
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JPMorgan Chase authorizes new share repurchase program of $30 billion
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CNBC's Leslie Picker joins 'Closing Bell Overtime' with more breaking news on bank allocation plans.
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