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Tag: US Bancorp

  • Earnings will drive the stock market in the week ahead. That’s a good thing

    Earnings will drive the stock market in the week ahead. That’s a good thing

    A view of the New York Stock Exchange building in the Financial District in New York City on Aug. 5, 2024.

    Charly Triballeau | Afp | Getty Images

    The good times are still rolling on Wall Street. An intensifying earnings season will put that momentum to the test.

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  • Morningstar’s Dave Sekera shares his top value stock picks

    Morningstar’s Dave Sekera shares his top value stock picks

    Dave Sekera, Morningstar's Chief U.S. Market Strategist says the best value is in the small cap category.

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  • Berkshire Hathaway’s big mystery stock wager could be revealed soon

    Berkshire Hathaway’s big mystery stock wager could be revealed soon

    Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.

    David A. Grogan | CNBC

    Berkshire Hathaway, led by legendary investor Warren Buffett, has been making a confidential wager on the financial industry since the third quarter of last year.

    The identity of the stock — or stocks — that Berkshire has been snapping up could be revealed Saturday at the company’s annual shareholder meeting in Omaha, Nebraska.

    That’s because unless Berkshire has been granted confidential treatment on the investment for a third quarter in a row, the stake will be disclosed in filings later this month. So the 93-year-old Berkshire CEO may decide to explain his rationale to the thousands of investors flocking to the gathering.

    The bet, shrouded in mystery, has captivated Berkshire investors since it first appeared in disclosures late last year. At a time when Buffett has been a net seller of stocks and lamented a dearth of opportunities capable of “truly moving the needle at Berkshire,” he has apparently found something he likes — and in the financial realm no less.

    That’s an area he has dialed back on in recent years over concerns about rising loan defaults. High interest rates have taken a toll on some financial players like regional U.S. banks, while making the yield on Berkshire’s cash pile in instruments like T-bills suddenly attractive.

    “When you are the GOAT of investing, people are interested in what you think is good,” said Glenview Trust Co. Chief Investment Officer Bill Stone, using an acronym for greatest of all time. “What makes it even more exciting is that banks are in his circle of competence.”

    Under Buffett, Berkshire has trounced the S&P 500 over nearly six decades with a 19.8% compounded annual gain, compared with the 10.2% yearly rise of the index.

    Coverage note: The annual meeting will be exclusively broadcast on CNBC and livestreamed on CNBC.com. Our special coverage will begin Saturday at 9:30 a.m. ET.

    Veiled bets

    Berkshire requested anonymity for the trades because if the stock was known before the conglomerate finished building its position, others would plow into the stock as well, driving up the price, according to David Kass, a finance professor at the University of Maryland.

    Buffett is said to control roughly 90% of Berkshire’s massive stock portfolio, leaving his deputies Todd Combs and Ted Weschler the rest, Kass said.

    While investment disclosures give no clue as to what the stock could be, Stone, Kass and other Buffett watchers believe it is a multibillion-dollar wager on a financial name.

    That’s because the cost basis of banks, insurers and finance stocks owned by the company jumped by $3.59 billion in the second half of last year, the only category to increase, according to separate Berkshire filings.

    At the same time, Berkshire exited financial names by dumping insurers Markel and Globe Life, leading investors to estimate that the wager could be as large as $4 billion or $5 billion through the end of 2023. It’s unknown whether that bet was on one company or spread over multiple firms in an industry.

    Schwab or Morgan Stanley?

    If it were a classic Buffett bet — a big stake in a single company —  that stock would have to be a large one, with perhaps a $100 billion market capitalization. Holdings of at least 5% in publicly traded American companies trigger disclosure requirements.

    Investors have been speculating for months about what the stock could be. Finance covers all manner of companies, from retail lenders to Wall Street brokers, payments companies and various sectors of insurance.

    Charles Schwab or Morgan Stanley could fit the bill, according to James Shanahan, an Edward Jones analyst who covers banks and Berkshire Hathaway.

    “Schwab was beaten down during the regional banking crisis last year, they had an issue where retail investors were trading out of cash into higher-yielding investments,” Shanahan said. “Nobody wanted to own that name last year, so Buffett could’ve bought as much as he wanted.”

    Other names that have been circulated — JPMorgan Chase or BlackRock, for example, are possible, but may make less sense given valuations or business mix. Truist and other higher-quality regional banks might also fit Buffett’s parameters, as well as insurer AIG, Shanahan said, though their market capitalizations are smaller.

    Buffett & banks

    Berkshire has owned financial names for decades, and Buffett has stepped in to inject capital — and confidence — into the industry on multiple occasions.

    Buffett served as CEO of a scandal-stricken Salomon Brothers in the early 1990s to help turn the company around. He pumped $5 billion into Goldman Sachs in 2008 and another $5 billion into Bank of America in 2011, ultimately becoming the latter’s largest shareholder.

    But after loading up on lenders in 2018, from universal banks like JPMorgan to regional lenders like PNC Financial and U.S. Bank, he deeply pared his exposure to the sector in 2020 on concerns that the coronavirus pandemic would punish the industry.

    Since then, he and his deputies have mostly avoided adding to his finance stakes, besides modest positions in Citigroup and Capital One.

    ‘Fear is contagious’

    Last May, Buffett told shareholders to expect more turbulence in banking. He said Berkshire could deploy more capital in the industry, if needed.

    “The situation in banking is very similar to what it’s always been in banking, which is that fear is contagious,” Buffett said. “Historically, sometimes the fear was justified, sometimes it wasn’t.”

    Wherever he placed his bet, the move will be seen as a boost to the company, perhaps even the sector, given Buffett’s track record of identifying value.

    It’s unclear how long regulators will allow Berkshire to shield its moves.

    “I’m hopeful he’ll reveal the name and talk about the strategy behind it,” Shanahan said. “The SEC’s patience can wear out, at some point it’ll look like Berkshire’s getting favorable treatment.”

    — CNBC’s Yun Li contributed to this report.

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  • Regional banks will dominate rest of earnings season this week. Here’s what analysts expect

    Regional banks will dominate rest of earnings season this week. Here’s what analysts expect

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  • Oppenheimer says bank stocks are ‘significantly undervalued’ and gives its top picks

    Oppenheimer says bank stocks are ‘significantly undervalued’ and gives its top picks




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  • Bank branches inside supermarkets are closing 7 times faster than other locations

    Bank branches inside supermarkets are closing 7 times faster than other locations

    Customers at a Safeway store in San Francisco.

    Getty Images

    American banks have been shuttering branches located within supermarket chains at a rate seven times faster than other locations amid the industry’s profit squeeze and customers’ migration to digital channels.

    Banks closed 10.7% of their in-store branches in the year ended June 30, according to Federal Deposit Insurance Corp. data. The closure rate for other branches was 1.4% in that period.

    Most branches within grocery stores are operated by regional banks, which have been under pressure since the March collapse of Silicon Valley Bank. PNC, Citizens Financial and U.S. Bank shut the most in-store locations during the 12-month period at chains including Safeway and Stop & Shop. Among retailers, Walmart houses the most bank branches with 1,179, according to an S&P Global report released this week.

    While the financial industry has been closing branches for years, the pace accelerated sharply in 2021 after the pandemic turbocharged the adoption of mobile and online banking. That year, banks closed nearly 18% of their in-store branches and 3.1% of other locations, S&P Global said.

    “In-store branches have fallen out of favor at many banks,” said Nathan Stovall, head of financial institutions research at S&P Global Market Intelligence. “We’ve seen banks look to shrink their branch networks, with a focus on cutting less-profitable branches that generate less customer traffic and fewer loans and high net worth accounts.”

    Banks began building branches inside supermarkets in the 1990s because the scaled-down locations were far cheaper to set up than regular locations. But the industry now views branches as a place to entice customers with wealth management accounts, credit cards and loans rather than just a place to withdraw money, and that favors full-sized branches.

    The pace of closures has slowed since the 2021 peak, but are still at an elevated level compared to before the pandemic. For instance, in 2019, banks shut 4.2% of in-store locations and 1.7% of other locations.

    The moves come as the industry is adjusting to higher funding costs as customers have moved balances into higher-yielding options like money market funds. U.S. banks registered a 15% decline in deposits from in-store branches, while deposits at other branches fell 4.7% in the year ended June 30, according to the FDIC.

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  • House Republicans subpoena Citibank over info shared with FBI after Jan. 6

    House Republicans subpoena Citibank over info shared with FBI after Jan. 6

    Chairman Jim Jordan, R-Ohio, conducts the House Judiciary Committee hearing on the “Report of Special Counsel John Durham,” in Rayburn Building on Wednesday, June 21, 2023.

    Tom Williams | CQ-Roll Call, Inc. | Getty Images

    WASHINGTON — House Judiciary Committee Chairman Jim Jordan issued a subpoena to Citibank on Thursday, demanding information about whether the bank gave law enforcement information about customer transactions in the days surrounding the attack on the U.S. Capitol on Jan. 6, 2021.

    The subpoena, obtained exclusively by CNBC, came after Jordan previously requested that several financial institutions, including Citibank, provide the information voluntarily. They include Bank of America, J.P. Morgan, PNC, Truist, U.S. Bank and Wells Fargo.

    Citibank was the only bank that had not voluntarily complied with the committee’s request, according to a source familiar with the investigation.

    The bank’s lawyers told the committee it would only do under a subpoena, according to Jordan. A Citibank spokesperson did not immediately respond to a request for comment from CNBC.

    The wider probe into whether banks turned over data to the government to assist in the investigation and prosecution of Jan. 6 rioters was sparked by an FBI whistleblower, who disclosed that Bank of America had voluntarily provided a list of people who made transactions with a BofA credit or debit card in the Washington area between Jan. 5 and Jan. 7, 2021.

    BofA did not deny the whistleblower’s allegation, telling Fox News earlier this year that that the bank “follows all applicable laws” to “narrowly respond to law enforcement requests.”

    Now the committee wants to know if other banks did the same.

    Subscribe to CNBC on YouTube.

    WATCH: House committee investigating Jan. 6 riots release never-before-seen footage of insurrection

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  • Fitch warns it may be forced to downgrade dozens of banks, including JPMorgan Chase

    Fitch warns it may be forced to downgrade dozens of banks, including JPMorgan Chase

    A sign for the financial agency Fitch Ratings on a building at the Canary Wharf business and shopping district in London, U.K., on Thursday, March 1, 2012.

    Matt Lloyd | Bloomberg | Getty Images

    A Fitch Ratings analyst warned that the U.S. banking industry has inched closer to another source of turbulence — the risk of sweeping rating downgrades on dozens of U.S. banks that could even include the likes of JPMorgan Chase.

    The ratings agency cut its assessment of the industry’s health in June, a move that analyst Chris Wolfe said went largely unnoticed because it didn’t trigger downgrades on banks.

    But another one-notch downgrade of the industry’s score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, Wolfe told CNBC in an exclusive interview at the firm’s New York headquarters.

    “If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions,” Wolfe said.

    The credit rating firms relied upon by bond investors have roiled markets lately with their actions. Last week, Moody’s downgraded 10 small and midsized banks and warned that cuts could come for another 17 lenders, including larger institutions like Truist and U.S. Bank. Earlier this month, Fitch downgraded the U.S. long-term credit rating because of political dysfunction and growing debt loads, a move that was derided by business leaders including JPMorgan CEO Jamie Dimon.

    This time, Fitch is intent on signaling to the market that bank downgrades, while not a foregone conclusion, are a real risk, said Wolfe.

    The firm’s June action took the industry’s “operating environment” score to AA- from AA because of pressure on the country’s credit rating, regulatory gaps exposed by the March regional bank failures and uncertainty around interest rates.

    The problem created by another downgrade to A+ is that the industry’s score would then be lower than some of its top-rated lenders. The country’s two largest banks by assets, JPMorgan and Bank of America, would likely be cut to A+ from AA- in this scenario, since banks can’t be rated higher than the environment in which they operate.

    And if top institutions like JPMorgan are cut, then Fitch would be forced to at least consider downgrades on all their peers’ ratings, according to Wolfe. That could potentially push some weaker lenders closer to non-investment grade status.

    Hard decisions

    For instance, Miami Lakes, Florida-based BankUnited, at BBB, is already at the lower bounds of what investors consider investment grade. If the firm, which has a negative outlook, falls another notch, it would be perilously close to a non-investment grade rating.

    Wolfe said he didn’t want to speculate on the timing of this potential move or its impact to lower-rated firms.

    “We’d have some decisions to make, both on an absolute and relative basis,” Wolfe said. “On an absolute basis, there might be some BBB- banks where we’ve already discounted a lot of things and maybe they could hold onto their rating.”

    JPMorgan declined to comment for this article, while Bank of America and BankUnited didn’t immediately respond to messages seeking comment.

    Rates, defaults

    In terms of what could push Fitch to downgrade the industry, the biggest factor is the path of interest rates determined by the Federal Reserve. Some market forecasters have said the Fed may already be done raising rates and could cut them next year, but that isn’t a foregone conclusion. Higher rates for longer than expected would pressure the industry’s profit margins.

    “What we don’t know is, where does the Fed stop? Because that is going to be a very important input into what it means for the banking system,” he said.

    A related issue is if the industry’s loan defaults rise beyond what Fitch considers a historically normal level of losses, said Wolfe. Defaults tend to rise in a rate-hiking environment, and Fitch has expressed concern on the impact of office loan defaults on smaller banks.

    “That shouldn’t be shocking or alarming,” he said. “But if we’re exceeding [normalized losses], that’s what maybe tips us over.”

    The impact of such broad downgrades is hard to predict.

    In the wake of the recent Moody’s cuts, Morgan Stanley analysts said that downgraded banks would have to pay investors more to buy their bonds, which further compresses profit margins. They even expressed concerns some banks could get locked out of debt markets entirely. Downgrades could also trigger unwelcome provisions in lending agreements or other complex contracts.

    “It’s not inevitable that it goes down,” Wolfe said. “We could be at AA- for the next 10 years. But if it goes down, there will be consequences.”

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  • These charts show what has Moody’s worried about regional banks including U.S. Bank and Fifth Third

    These charts show what has Moody’s worried about regional banks including U.S. Bank and Fifth Third

    The Moody’s ratings downgrades and outlook warnings on a swath of U.S. banks this week show that the industry still faces pressure after the collapse of Silicon Valley Bank.

    Concern over the sector had waned after second-quarter results showed most banks stabilized deposit levels following steeper losses during the March regional banking crisis. But a new issue may cast a pall over small and midsized banks: They’ve been forced to pay customers more for deposits at a pace that outstrips growth in what they earn from loans.

    “Banks kept their deposits, but they did so at a cost,” said Ana Arsov, global co-head of banking for Moody’s Investors Service and a co-author of the downgrade report. “They’ve had to replace it with funding that’s more expensive. It’s a profitability concern as deposits continue to leave the system.”

    Banks are usually expected to thrive when interest rates rise. While they immediately charge higher rates for credit-card loans and other products, they typically move more slowly in increasing how much they pay depositors. That boosts their lending margins, making their core activity more profitable.

    This time around, the boost from higher rates was especially fleeting. It evaporated in the first quarter of this year, when bank failures jolted depositors out of their complacency and growth in net interest margin turned negative.

    “Bank profitability has peaked for the time being,” Arsov said. “One of the strongest factors for U.S. banks, which is above-average profitability to other systems, won’t be there because of weak loan growth and less of an ability to make the spread.”

    Shrinking profit margins, along with relatively lower capital levels compared to peers at some regional banks and concern about commercial real estate defaults, were key reasons Moody’s reassessed its ratings on banks after earlier actions.

    In March, Moody’s placed six banks, including First Republic, under review for downgrades and cut its outlook for the industry to negative from stable.

    Falling margins affected several banks’ credit considerations. In company-specific reports this week, Moody’s said it had placed U.S. Bank under review for a downgrade for reasons including its “rising deposit costs and increased use of wholesale funding.”

    It also lowered its outlook on Fifth Third to negative from stable for similar reasons, citing higher deposit costs.

    The analyst stressed that the U.S. banking system was still strong overall and that even the banks it cut were rated investment grade, indicating a low risk of default.

    “We aren’t warning that the banking system is broken, we are saying that in the next 12 months to 2 years, profitability is under pressure, regulation is rising, credit costs are rising,” Arsov said.

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  • Moody’s cuts ratings of 10 U.S. banks and puts some big names on downgrade watch

    Moody’s cuts ratings of 10 U.S. banks and puts some big names on downgrade watch

    A general view of the New York Stock Exchange (NYSE) on Wall Street in New York City on May 12, 2023.

    Angela Weiss | AFP | Getty Images

    Moody’s cut the credit ratings of a host of small and mid-sized U.S. banks late Monday and placed several big Wall Street names on negative review.

    The firm lowered the ratings of 10 banks by one rung, while major lenders Bank of New York Mellon, U.S. Bancorp, State Street, Truist Financial, Cullen/Frost Bankers and Northern Trust are now under review for a potential downgrade.

    Moody’s also changed its outlook to negative for 11 banks, including Capital One, Citizens Financial and Fifth Third Bancorp.

    Among the smaller lenders receiving an official ratings downgrade were M&T Bank, Pinnacle Financial, BOK Financial and Webster Financial.

    “U.S. banks continue to contend with interest rate and asset-liability management (ALM) risks with implications for liquidity and capital, as the wind-down of unconventional monetary policy drains systemwide deposits and higher interest rates depress the value of fixed-rate assets,” Moody’s analysts Jill Cetina and Ana Arsov said in the accompanying research note.

    “Meanwhile, many banks’ Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital. This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline from solid but unsustainable levels, with particular risks in some banks’ commercial real estate (CRE) portfolios.”

    Regional U.S. banks were thrust into the spotlight earlier this year after the collapse of Silicon Valley Bank and Signature Bank triggered a run on deposits across the sector. The panic eventually spread to Europe and resulted in the emergency rescue of Swiss giant Credit Suisse by domestic rival UBS.

    Though authorities went to great lengths to restore confidence, Moody’s warned that banks with substantial unrealized losses that are not captured by their regulatory capital ratios may still be susceptible to sudden losses of market or consumer confidence in a high interest rate environment.

    The Federal Reserve in July lifted its benchmark borrowing rate to a 5.25%-5.5% range, having tightened monetary policy aggressively over the past year and a half in a bid to rein in sky-high inflation.

    “We expect banks’ ALM risks to be exacerbated by the significant increase in the Federal Reserve’s policy rate as well as the ongoing reduction in banking system reserves at the Fed and, relatedly, deposits because of ongoing QT,” Moody’s said in the report.

    “Interest rates are likely to remain higher for longer until inflation returns to within the Fed’s target range and, as noted earlier, longer-term U.S. interest rates also are moving higher because of multiple factors, which will put further pressure on banks’ fixed-rate assets.”

    Regional banks are at a greater risk since they have comparatively low regulatory capital, Moody’s noted, adding that institutions with a higher share of fixed-rate assets on the balance sheet are more constrained in terms of profitability and ability to grow capital and continue lending.

    “Risks may be more pronounced if the U.S. enters a recession – which we expect will happen in early 2024 – because asset quality will worsen and increase the potential for capital erosion,” the analysts added.

    Though the stress on U.S. banks has mostly been concentrated in funding and interest rate risk resulting from monetary policy tightening, Moody’s warned that a worsening in asset quality is on the horizon.

    “We continue to expect a mild recession in early 2024, and given the funding strains on the U.S. banking sector, there will likely be a tightening of credit conditions and rising loan losses for U.S. banks,” the agency said.

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  • Bank of America fined $150 million for consumer abuses including fake accounts, bogus fees

    Bank of America fined $150 million for consumer abuses including fake accounts, bogus fees

    A man walks past an ATM outside Bank of America Corp. headquarters in Charlotte, North Carolina, May 2, 2016.

    Chris Keane | Bloomberg | Getty Images

    Bank of America, the second-largest U.S. bank by assets, engaged in deceptive practices that hurt hundreds of thousands of its customers in recent years, the Consumer Financial Protection Bureau said Tuesday.

    The bank charged multiple $35 overdraft fees for the same transaction, failed to properly issue rewards to credit card users and signed up customers for card accounts without their consent, the CFPB said in a statement.

    Charlotte, North Carolina-based Bank of America was ordered to pay a total of $150 million in penalties to the CFPB and another regulator, the Office of the Comptroller of the Currency. It also has to pay about $80.4 million to customers who were unfairly charged bogus fees, on top of the $23 million it already paid to customers who were improperly denied card awards.

    “These practices are illegal and undermine customer trust,” CFPB Director Rohit Chopra said in the release. “The CFPB will be putting an end to these practices across the banking system.”

    Bank of America spokesman Bill Halldin said in a response the lender “voluntarily reduced overdraft fees and eliminated all non-sufficient fund fees in the first half of 2022,” resulting in a 90% drop in revenue from those fees.

    The announcement Tuesday is the latest sign that some of the practices exposed by the Wells Fargo fake accounts scandal in 2016 weren’t confined to that bank.

    Regulators have punished Wells Fargo for a sales culture that led to the creation of 3.5 million fake accounts. But other lenders have had similar lapses, including U.S. Bank, which paid a $37.5 million fine last year for putting customers into unauthorized accounts.

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  • Federal Reserve says 23 biggest banks weathered severe recession scenario in stress test

    Federal Reserve says 23 biggest banks weathered severe recession scenario in stress test

    Michael Barr, Vice Chair for Supervision at the Federal Reserve, testifies about recent bank failures during a US Senate Committee on Banking, House and Urban Affairs hearing on Capitol Hill in Washington, DC, May 18, 2023.

    Saul Loeb | AFP | Getty Images

    All 23 of the U.S. banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations, the regulator said Wednesday.

    The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group, while continuing to provide credit to the economy in the hypothetical recession, the Fed said in a release.

    Begun in the aftermath of the 2008 financial crisis, which was caused in part by irresponsible banks, the Fed’s annual stress test dictates how much capital the industry can return to shareholders via buybacks and dividends. In this year’s exam, the banks underwent a “severe global recession” with unemployment surging to 10%, a 40% decline in commercial real estate values and a 38% drop in housing prices.

    Banks are the focus of heightened scrutiny in the weeks following the collapse of three midsized banks earlier this year. But smaller banks avoid the Fed’s test entirely. The test examines giants including JPMorgan Chase and Wells Fargo, international banks with large U.S. operations, and the biggest regional players including PNC and Truist.

    As a result, clearing the stress test hurdle isn’t the “all clear” signal its been in previous years. Still expected in coming months are increased regulations on regional banks because of the recent failures, as well as tighter international standards likely to boost capital requirements for the country’s largest banks.  

    “Today’s results confirm that the banking system remains strong and resilient,” Michael Barr, vice chair for supervision at the Fed, said in the release. “At the same time, this stress test is only one way to measure that strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses.”

    Goldman’s credit card losses

    Losses on loans made up 78% of the $541 billion in projected losses, with most of the rest coming from trading losses at Wall Street firms, the Fed said. The rate of total loan losses varied considerably across the banks, from a low of 1.3% at Charles Schwab to 14.7% at Capital One.

    Credit cards were easily the most problematic loan product in the exam. The average loss rate for cards in the group was 17.4%; the next-worst average loss rate was for commercial real estate loans at 8.8%.

    Among card lenders, Goldman Sachs‘ portfolio posted a nearly 25% loss rate in the hypothetical downturn — the highest for any single loan category across the 23 banks— followed by Capital One’s 22% rate. Mounting losses in Goldman’s consumer division in recent years, driven by provisioning for credit-card loans, forced CEO David Solomon to pivot away from his retail banking strategy.

    Regional banks pinched?

    The group saw their total capital levels drop from 12.4% to 10.1% during the hypothetical recession. But that average obscured larger hits to capital — which provides a cushion for loan losses — seen at banks that have greater exposure to commercial real estate and credit-card loans.

    Regional banks including U.S. Bank, Truist, Citizens, M&T and card-centric Capital One had the lowest stressed capital levels in the exam, hovering between 6% and 8%. While still above current standards, those relatively low levels could be a factor if coming regulation forces the industry to hold higher levels of capital.

    Big banks generally performed better than regional and card-centric firms, Jefferies analyst Ken Usdin wrote Wednesday in a research note. Capital One, Citigroup, Citizens and Truist could see the biggest increases in required capital buffers after the exam, he wrote.

    Banks are expected to disclose updated plans for buybacks and dividends Friday after the close of regular trading. Given uncertainties about upcoming regulation and the risks of an actual recession arriving in the next year, analysts have said banks are likely to be relatively conservative with their capital plans.

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  • This regional bank is a ‘compelling value’ amid tough time for sector, Piper Sandler says

    This regional bank is a ‘compelling value’ amid tough time for sector, Piper Sandler says

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  • Regional bank reports so far show deposits are stabilizing. What’s next for the stocks

    Regional bank reports so far show deposits are stabilizing. What’s next for the stocks

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  • Wall Street is confident high-yielding banks won’t cut their dividends

    Wall Street is confident high-yielding banks won’t cut their dividends

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  • Sens. Booker, Warnock press big bank CEOs to pause overdraft fees after SVB failure

    Sens. Booker, Warnock press big bank CEOs to pause overdraft fees after SVB failure

    Sen. Cory Booker (D-NJ) speaks during Attorney General nominee Merrick Garland’s confirmation hearing before the Senate Judiciary Committee, Washington, DC, February 22, 2021.

    Al Drago | Pool | Reuters

    WASHINGTON — Sens. Cory Booker and Raphael Warnock have urged the CEOs of 10 major banks to waive overdraft and nonsufficient fund fees that could cost some Americans more than $100 a day in the wake of the failures of Silicon Valley Bank and Signature Bank.

    In letters dated Tuesday, the New Jersey and Georgia Democrats asked banks to help customers whose payments were delayed or missing due to the collapse of SVB and Signature earlier this month. The letters went to the CEOs of Wells Fargo, U.S. Bank, Truist Financial Corporation, TD Bank, Regions Financial Corporation, PNC Bank, JP Morgan Chase, Huntington National Bank, Citizens Bank and Bank of America.

    “Disruptions across the banking industry this month rattled consumers and threw into jeopardy the paychecks of millions of American workers,” wrote Booker, who is a member of the Senate Committee on Small Business and Entrepreneurship, and Warnock.

    The fees, which can reach up to $111 a day for low account balances or up to $175 on low account fees, “compound the difficult financial situation customers find themselves in, particularly when their lack of funds is due to an unprecedented, unexpected delay,” the senators added.

    JPMorgan declined to comment. The other banks that received the letters did not immediately respond to requests for comment.

    The Federal Deposit Insurance Corporation closed SVB on March 10 after the bank announced a nearly $2 billion loss in asset sales. The agency said SVB’s official checks would continue to clear and assets would be accessible the following day.

    Regulators shuttered New York-based Signature Bank days later in an effort to stall a potential banking crisis. Many of its assets have since been sold to Flagstar Bank, a subsidiary of New York Community Bankcorp.

    Booker and Warnock said banking customers whose paydays fell between March 10 and March 13 were unable to receive or deposit checks from payroll providers banking with SVB and Signature Bank. They also noted that online merchant Etsy notified customers of payment delays because it used SVB payment processing.

    The senators also cited an unrelated, nationwide technical glitch on the 10th that caused missing payments and incorrect balances for Wells Fargo customers.

    “These delays will disproportionately harm the impacted customers who are part of the sixty-four percent of Americans living paycheck-to-paycheck, who are often ‘minutes to hours away from having the money necessary to cover’ expenses that lead to overdraft nonsufficient fund fees,” Booker and Warnock wrote.

    They praised steps taken by the Treasury and the FDIC to stem a possible economic catastrophe by ensuring access to depositor funds over the $250,000 FDIC-guarantee threshold and creating a new, one-year loan to financial institutions to safeguard deposits in times of stress.

    Treasury Secretary Janet Yellen on Tuesday said the Treasury is prepared to guarantee all deposits for financial institutions beyond SVB and Signature Bank if the crisis worsens.

    “In line with quick, decisive government response to assist the businesses and individuals who were helped immediately in order to contain the broader fallout of these bank failures, we urge you to act with similar urgency to backstop American families from unexpected and undeserved charges,” the senators wrote.

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  • Stocks making the biggest moves midday: Tesla, First Republic, KeyCorp, UBS and more

    Stocks making the biggest moves midday: Tesla, First Republic, KeyCorp, UBS and more

    Image taken with a drone) A Tesla collision center is seen in this aerial view in Orlando.

    Paul Hennessy | Lightrocket | Getty Images

    Check out the companies making headlines in midday trading Tuesday.

    Tesla — Shares popped 5% after Moody’s upgraded Tesla to Baa3 rating from its junk-rated credit. Moody’s called the electric-vehicle maker the “foremost manufacturers of battery electric vehicles” and said the upgrade reflects Tesla’s prudent financial policy and management’s operational track record.

    First Republic, KeyCorp, U.S. Bancorp — Regional bank stocks rebounded on Tuesday as Treasury Secretary Janet Yellen said the government would consider backstopping deposits at more banks in order to protect the financial system. Shares of First Republic jumped more than 41%, while KeyCorp added 9%. U.S. Bancorp rose nearly 8%.

    JPMorgan, Bank of America — Shares of larger U.S. banks rose on Tuesday as investors showed increased optimism after Yellen’s remarks. JPMorgan gained about 3% and Bank of America rose by 3.5%. 

    Foot Locker — Foot Locker gained 6% after Citi upgraded the retail stock to a buy from neutral after its investor day on Monday. The firm said the company’s move away from malls and toward digital, kids and loyalty projects is a step in the right direction.

    Harley-Davidson — Shares of Harley-Davidson rose more than 5% after Morgan Stanley upgraded the motorcycle maker and said its focus on its core business can lift the stock by more than 30%. Jefferies also upgraded the stock, saying the company’s risk and reward are more balanced after a recent decline.

    UBS — U.S.-listed shares of the Swiss-based bank gained 12% during midday trading following its agreement over the weekend to buy Credit Suisse for $3.2 billion. Credit Suisse rose 5% after taking a nearly 53% plunge on Monday.

    Roblox — Shares rose more than 3% after D.A. Davidson said the online game platform has an “underappreciated” opportunity in artificial intelligence.

    Emerson Electric — Shares added nearly 2% after Morgan Stanley said shares of the multinational tech company are too attractive to ignore. The firm upgraded the stock to overweight from equal weight.

    Exxon Mobil — The oil and gas giant’s stock price gained 3% after Morgan Stanley said it likes the company’s robust “competitive positioning.”

    — CNBC’s Alex Harring, Jesse Pound, Tanaya Macheel and Michelle Fox Theobald contributed reporting.

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  • First Republic shares slid almost 33% after deposit infusion, dragging down other regional banks

    First Republic shares slid almost 33% after deposit infusion, dragging down other regional banks

    People are seen inside the First Republic Bank branch in Midtown Manhattan in New York City, New York, U.S., March 13, 2023. REUTERS/Mike Segar

    Mike Segar | Reuters

    Shares of First Republic were under severe pressure Friday despite the beaten-down regional bank receiving aid from other financial institutions the day before.

    At the market close, the stock was down 32.8%, the worst performer in the SPDR S&P Regional Banking ETF (KRE) — which dropped 6.0%. PacWest lost 19% and Western Alliance dropped 15%, while US Bancorp declined more than 9%.

    Those losses came even after 11 other banks pledged to deposit $30 billion in First Republic as a vote of confidence in the company.

    “This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities,” the group, which included Goldman Sachs, Morgan Stanley and Citigroup, said in a statement.

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    First Republic Bank continued to crater on Friday.

    There were concerns that Thursday’s deposit infusion may still not be enough to shore up First Republic in the future.

    Atlantic Equities downgraded First Republic to neutral, noting the bank may need an additional $5 billion in capital. 

    “Management is exploring different strategic options which may include a full sale or divestments of parts of the loan portfolio. The limited information provided implies that the balance sheet has increased substantially, which may well necessitate a capital raise,” analyst John Heagerty wrote.

    Meanwhile, Wedbush analysts put a $5 price target on First Republic, saying that a takeover could wipe out most of its equity value.

    “A distressed M&A sale could result in minimal, if any, residual value to common equity holders owing to FRC’s significant negative tangible book value after taking into account fair value marks on its loans and securities.”

    Late Friday, after the stock market closed, the New York Times reported that First Republic was in talks to raise capital by selling shares to other unnamed banks or private equity firms in a private sale. Terms of the deal, as to the price of the shares, how many and to whom, were still under discussion, and it was also possible that the entire bank might be sold, the Times said.

    — CNBC’s Michael Bloom and Scott Schnipper contributed to this report.

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  • Here are Wednesday’s biggest analyst calls: Apple, Tesla, Amazon, SoFi, Target, Goldman Sachs & more

    Here are Wednesday’s biggest analyst calls: Apple, Tesla, Amazon, SoFi, Target, Goldman Sachs & more

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  • How Zelle is different from Venmo, PayPal and CashApp

    How Zelle is different from Venmo, PayPal and CashApp

    More than half of smartphone users in the U.S. are sending money via some sort of peer-to-peer payment service to send money to friends, family and businesses.

    Stocks of payment services like PayPal, which owns Venmo, and Block, which owns Cash App, boomed in 2020 as more people began sending money digitally.

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    Zelle, which launched in 2017, stands out from the pack in a few ways. It’s owned and operated by Early Warning Services, LLC, which is co-owned by seven of the big banks and it’s not publicly traded. The platform serves the banks beyond generating an independent revenue stream.

    “Zelle is not really a revenue-generating enterprise on a stand-alone basis,” said Mike Cashman, a partner at Bain & Co. “You should think of this really as a little bit of an accommodation, but also as an engagement tool versus a revenue-generating machine.”

    “If you’re already transacting with your bank and you trust your bank, then the fact that your bank offers Zelle as a means of payment is attractive to you,” said Terri Bradford, a payment specialist at the Federal Reserve Bank of Kansas City.

    One limitation of PayPal, Venmo and Cash App is that users must all be using the same service. Zelle, on the other hand, appeals to users because anyone with a bank account at one of the seven participating firms can make payments.

    “For banks, it’s a no-brainer to try to compete in that space,” said Jaime Toplin, senior analyst at Insider Intelligence. “Customers use their mobile-banking apps all the time, and no one wants to cede the opportunity from a space that people are already really active in to third-party competitors.”

    Watch the video above to learn more about why the banks created Zelle and where the service may be headed.

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