Corporate finance

U.S. bank stocks are headed for their worst losing streak in a year, burning investors who bought shares on expectations that the Federal Reserve raising rates for the first time since 2018 would boost the sector.

A few months ago bankers were more hopeful than confident about an end to depressed demand for business credit. Now CEOs at Huntington, Fifth Third, Mercantile Bank and other companies are touting strong fourth-quarter loan growth, burgeoning pipelines and local job creation as reasons for optimism.

Loans to car sellers plummeted earlier in the pandemic due to chip shortages that hampered vehicle production. But supply improvements since last fall have fueled the start of a rebound.

The Alabama company continues to explore buyouts of add-on businesses, part of a strategy that has already helped recoup dollars lost as a result of reforms to its overdraft practices.

The Financial Services Information Sharing and Analysis Center has created a forum to let technology vendors provide security updates to their bank clients. Whether more steps need to be taken is a matter of debate.

JPMorgan Chase raised Chief Executive Jamie Dimon’s total compensation 10% to $34.5 million for his work in 2021, the firm’s most profitable year on record.

Fourth-quarter profits rose 10% at the Cleveland company as investment banking income hit a record and nonperforming loans plummeted. Executives say charge-offs will probably start rising in late 2022 but that fee income from capital markets transactions will keep growing.

The Buffalo, New York, bank is tweaking its loan mix and reducing some deposits in interest-bearing accounts. It says the moves should boost its net interest margin, which has declined in almost every quarter since the start of the pandemic.

Executives predict a 5% to 6% bump in lending this year, and they also say they'd be comfortable if up to a third of the Cincinnati company's excess cash migrates away.

The Tennessee bank reported an uptick in commercial lending during the fourth quarter. Executives pointed to the impact of a 2020 acquisition that allowed First Horizon to bulk up in in Florida, Georgia and Louisiana.

Costs climbed 11% in the fourth quarter, but the Georgia company says it remains on track to generate $175 million by the end of this year through a combination of expense cuts and revenue enhancements.

The Boston company is forecasting larger earnings growth in the first year after closing its $3.5 billion deal than it projected in September. On the flip side, the acquisition will take longer to close than initially expected.

The government has become more skeptical of mergers, but the Minneapolis company expressed confidence it can maintain its original timeline for the $8 billion acquisition. Separately, it announced substantial changes to its overdraft program that will, among other things, eliminate fees for nonsufficient funds.

The largest bank based in oil-rich Texas is building a framework for gauging the threat that climate change poses to its business and plans to disclose more information on the subject this summer. Meanwhile, its energy loan portfolio shrank 24% year over year.

Customers are ramping up borrowing just as interest rates are poised to rise. That combination “sets us up nicely for 2022,” says CEO Brian Moynihan.

The Rhode Island bank estimated that its revised overdraft practices will cost $40 million each year, but it noted that complaints to call centers are down 40% since the policy change.

The Mississippi bank’s addition of more than a dozen bankers last year helped drive a $250 million increase in new loans during the fourth quarter. To keep the momentum going, CEO John Hairston said he intends to hire aggressively in 2022.

Fourth-quarter net interest income rose 11% from a year earlier to $11.4 billion at Bank of America, though its average loan balances edged up just 1% over the same period.

The nation’s sixth-largest bank will offer a $750 line of credit to customers who need short-term liquidity, and will gradually become less reliant on older accounts that charge the controversial fees. With the plans, Truist is moving in the same direction as many large and midsize banks.

The companies originally hoped to complete the deal in late 2021. The buyer chalked up the delay to an overburdened Federal Reserve, rather than any problems with its application.