Interest rates

Bankers during recent earnings reports predicted lower deposit costs as 2024 wears on. But with inflation still elevated and the jobs market strong, the Federal Reserve probably won't begin lowering rates — and thus easing the drag on lenders' profits — until May at the earliest.

Activity from the Bank Term Funding Program has spiked by roughly $50 billion since November, when its rate fell below the level where institutions could earn money by keeping reserves at the central bank.

Fourth-quarter net income at the Buffalo, New York, bank fell 37% because of higher funding costs and a special deposit insurance assessment. But lower interest rates and a stronger economy are expected to strengthen profits this year and into 2025, its CFO says.

The Minneapolis company's balance sheet is still feeling the weight of higher funding costs, but CEO Andrew Cecere gave several reasons why he anticipates revenue growth will begin to outpace noninterest expense growth and efficiency will improve after midyear.

The Seattle bank's stock price fell in 2023 amid concerns over rising interest rates and its concentration of multifamily loans. The buyer is FirstSun Capital Bancorp, which raised $175 million as part of the deal.

Personal spending chugged along in the fourth quarter, thanks to the resilient job market. But loan charge-offs rose, and higher interest rates suppressed loan demand, executives say.

Surging interest rates, recession threats and weaker stock valuations bogged down merger-and-acquisition activity last year. The 98 announced deals fell short of even 2020, when the pandemic briefly brought the economy to a standstill.

The megabank will report a hit to its earnings this Friday from what one analyst called an "accounting nuisance." The charge, which BofA will make up over time, is due to the bank's use of a Bloomberg-developed interest rate index that gained little traction.

The KBW Bank Index posted a strong gain after a government report showed employers added 216,000 jobs in December. The labor market strength bodes well for lenders' credit quality but may delay highly anticipated interest rate cuts that would lower banks' funding costs.

Bank investors hope they can party like it's 1995, when the U.S. economy stayed healthy even after aggressive Federal Reserve rate hikes. But a few analysts are a bit more cautious over whether banks' loan books will hold up as well this time.

Funding pressures moderated in recent months, but loan charge-offs climbed. With festering concerns about a vulnerable economy, the potential for elevated credits costs could loom large over the upcoming bank earnings season.

The Bank Term Funding Program, set up in response to this spring's run of bank failures, is poised to close down in March. With the Federal Reserve now forecasting rate cuts next year, the bar for renewing the facility's authorization could be a bit higher.

Remote work trends and high interest rates have substantially reduced the values of U.S. office buildings. A new academic paper estimates the extent of the deterioration, suggesting that there is perhaps more stress ahead for banks than is widely anticipated.

Retail customers at large banks were a bit more satisfied this year than in 2022, a new J.D. Power study finds. However, more of those same customers are moving cash to — and seeking advice from — wealth management firms and online banks.

The five banks that went under in 2023 had nearly $550 billion of assets, the largest total in a single year. Here's a look back at how they unraveled.

The Federal Reserve has allowed more than $1 trillion of assets to roll off its balance sheet. Chair Jerome Powell says he doesn't believe reserves in the banking system are nearing a level that would cause the Fed to slow down or stop.

How are banks and the financial sector likely to perform in the coming year? The Americas chief investment officer of UBS Global Wealth Management shares her insights.

Top industry executives said this week that price increases are abating, even if they haven't yet fully abated. Their remarks reflect increased confidence that the Federal Reserve will hold interest rates steady — or perhaps even cut them — in the first half of 2024.

The North Carolina-based bank is considering the idea of selling a portion of its securities portfolio as a way to build capital, CEO Bill Rogers said Tuesday. At the end of the third quarter, Truist's securities were worth about 20% less than what the company paid for them.

Los Angeles-based City National Bank recorded a $247 million loss during a tumultuous final quarter of its fiscal year. But executives at the bank's Canadian parent company say they expect a return to profitability in the first quarter.