As first-quarter earnings season approaches, the Federal Reservepolicy is expected to result in lower earnings at U.S. banks, according to one marketobserver.
"The performance of banks is highly dependent on interestrates and movements in [the] Fed policy. So, as the potential for interest ratehikes gets pushed up further and further by the Fed and by economists, the numbersfor the banks will continue to come down," Lindsey Bell, a senior analyst atS&P Global Market Intelligence, said in an interview. She expects financialsto report a decline of 1% in its earnings during the first quarter. "[A] 1%decline for the first-quarter earnings could be light, but we will get a good perspectiveon it when a handful of the big banks report. That will give a first look at howthe banks are doing," she added.
While commenting on banks with energy exposure, Bell noted thatthe decline in oil prices during the first quarter was lower than the decrease inoil prices during the third and fourth quarters of 2015. Even though she expectsoil prices to put pressure on banks' earnings, she believes that some of the biggerplayers are diversified enough to offset that portion of their portfolio throughother segments of their business.
Meanwhile, the bank and thrift sectors ended lowerTuesday, April 5. The SNL U.S. Bank Index slumped 1.85% to 375.27 and the SNL U.S.Thrift Index dropped 1.51% to 774.32. The broader markets were alsoin negative terrain, with the Dow Jones Industrial Average retreating 0.75% to 17,603.32,the S&P 500 decreasing 1.01% to 2,045.17 and the Nasdaq composite index slipping0.98% to 4,843.93.
Among large-caps, WellsFargo & Co. fell 2.04% to $47.51, Bank of America Corp. decreased 2.37% to $13.19 and declined 1.31% to $41.51.
JPMorgan Chase &Co.'s share price was 1.42% lower at $58.36 at the end of the day. Thecompany is selling itsU.S. Department of Agriculture Rural Development mortgage origination business toFreedom Mortgage Corp.,National Mortgage News reported April4.
In other banking news, shares of Atlanta-based slid 2.81% to$19.01 amid news that the company has agreedto acquire Athens, Ga.-based NBG BancorpInc. and unit NationalBank of Georgia in a cash-and-stock transaction valued at about $68million, or $45.45 per share.
Westfield FinancialInc. plunged 9.74% to $7.60 by market close Tuesday, April 5, a dayafter news came out about the Westfield, Mass.-based company Chicopee, Mass.-based , in a dealworth roughly $110 million. Chicopee Bancorp closed at $17.90, up 0.85% from theprevious close.
Richmond, Va.-based UnionBank & Trust, a unit of UnionBankshares Corp., agreed to acquireOld Dominion Capital Management Inc.,a Charlottesville, Va.-based registered investment adviser with about $300 millionin assets under management. Union Bankshares inched down 0.97% to $24.50.
Blairsville, Ga.-based UnitedCommunity Banks Inc. retreated 0.22% to $18.23, following news lateMonday that the company has agreedto acquire Mount Pleasant, S.C.-based TidelandsBancshares Inc. and unit TidelandsBank.
Downingtown, Pa.-based DNBFinancial Corp. agreed to purchasePhiladelphia-based East River Bankin a stock-and-cash deal valued at $49.0 million, according to an April 4 news release.DNB Financial's stock lost 2.17% to $28.79.
Among other notable movers, Atlanta-based Fidelity Southern Corp. was 4.87% lower to $15.64, Chicago-basedPrivateBancorp Inc. dropped4.52% to $37.20, and Hampton RoadsBankshares Inc. retreated 4.40% to $1.74.
In the thrift space, Westbury, N.Y.-based New York Community Bancorp Inc. fell 2.48% to $15.35; SanDiego-based BofI Holding Inc.slipped 1.99% to $21.20; Lake Success, N.Y.-based Astoria Financial Corp. receded 2.56% to $15.21; and Cleveland-basedTFS Financial Corp. (MHC)decreased 1.89% to $17.12.
In economic news, the U.S. Bureau of Labor Statistics reportedthat the number of job openingswas little changed at 5.4 million on the last business day of February. Hires increasedto 5.4 million, while separations were little changed at 5.1 million. Within separations,the quits rate was 2.1%, and the layoffs and discharges rate was 1.2%.
Home prices in the U.S., including distressed sales, rose 6.8%year over year in February, CoreLogic reportedApril 5, citing the latest reading of its home price index. Compared to January,home prices, including distressed sales, were up 1.1%.
Market prices and indexvalues are current as of the time of publication and are subject to change.