Tax reform

Profits fell 42% at the Birmingham, Ala., bank because of a $121 million tax charge in the fourth quarter, but net interest income and noninterest income each rose 14%, softening the blow of the one-time tax hit.

Credit union groups were scrambling Wednesday to respond to a letter from Senate Finance Committee Chairman Orrin Hatch questioning whether the industry had outgrown its income-tax exemption.

In the wake of President Trump’s tax cut, banks would be wise to take the time to explore investment opportunities before returning increased profits to shareholders.

Swelling capital levels, tax cuts and changing attitudes about post-crisis regulation could encourage bigger banks to issue the one-time payouts to reward shareholders and better manage their returns.

The busy legislative agenda laid out by President Trump in the State of the Union speech Tuesday night casts doubt on how quickly Congress can move on financial services legislation, particularly a housing finance reform package.

The Texas bank also capitalized on rising rates and a positive adjustment to deferred taxes tied to tax reform in reporting a double-digit gain to profits in the fourth quarter.

A plan by the largest U.S. bank to use part of its tax windfall to enter new markets (including Washington and Boston) could become a serious threat for banks of all sizes in those cities — or looked backed upon someday as a pricey overexpansion.

Consumer lending was a bright spot, but a series of one-time charges, capped by a writedown on its deferred tax assets, led to a nearly $1 billion loss.

Flagstar Bancorp swung to a fourth-quarter loss as the company took an $80 million noncash charge to earnings because of the tax reform bill.

The Los Angeles company said earnings fell 2% in the quarter as strong loan growth was offset by costs tied to its acquisition of CU Bancorp as well as a loss on the sale of a securities portfolio.