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Bank Stock Roundup: Restructuring Efforts, Lawsuits, Wells Fargo & BofA in Focus

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Performance of major bank stocks reflected a bearish stance over the last five trading sessions. New political uncertainty and continued ambiguity over trade conflict and several other geopolitical matters weighed on investor sentiments.

Also, with third-quarter 2019 coming to an end, investors are now focused on banks’ performance as the quarter witnessed two interest rate cuts by the Federal Reserve. Further, trade war-related uncertainties have lowered investment appetite among corporates, which might hamper overall loan growth.

Regarding company-specific news related to banks, several initiatives, including efforts to diversify revenue sources and divestiture of non-core businesses continued. In addition, legal matters pertaining to past business dealing ended on a positive note for major banks.

Further, Wells Fargo (WFC - Free Report) , which is embroiled in several probes and litigations since the revelation of sales scandal in 2016, was finally able to appoint a CEO. This news was taken positively by the investors as following the announcement its shares rallied 4%.

(Read: Bank Stock Roundup for the Week Ending Sep 20, 2019)

Important Developments of the Week

1. Wells Fargo has finally announced the appointment of a new CEO. Charles W. Scharf, currently the chairman and CEO of Bank of New York Mellon (BK - Free Report) , has been named the bank’s second CEO post public and political outrage concerning the sales scam in September 2016. (Read more: Wells Fargo Hands Over Turnaround Task to BNY Mellon's CEO)

2. At the time when banks are facing lower interest rates and global economic concerns, Morgan Stanley and Bank of America (BAC - Free Report) are turning toward “dull-but-reliable business of managing wealth for companies and employees.” This was reported by Reuters, citing persons familiar with the matter. Both the companies, seeking to expand market share in wealth management businesses, intend to focus on corporate clients. (Read more: MS, BAC Plan to Further Expand Wealth Management Operations)

3. Per a Reuters article, Comerica’s (CMA - Free Report) lawsuit against Bombardier Inc, under which it sought about $10.1 million was dismissed in Manhattan Court. The lawsuit was filed in January 2016, after the Canadian aircraft maker was unable to find buyers for four planes with expired leases. (Read more: Comerica Lawsuit Against Bombardier Gets Dismissed Yet Again)

In yet other legal battle, U.S. District Judge, Paul Oetken, in Manhattan dismissed a proposed class action lawsuit that was filed in 2017 against several banks, including JPMorgan (JPM - Free Report) , Bank of America, Citigroup, HSBC Holdings and Barclays. It was alleged that banks tried to rig the Mexican government bonds market, per Reuters. (Read more: Banks Win as U.S. Judge Dismisses Mexico Bond Rigging Lawsuit)

4. The PNC Financial Services Group (PNC - Free Report) has completed the sale of its franchise finance loan portfolio to MidCap Financial Services. Financial terms of the transaction were not disclosed. The divested business relates to the previously acquired platform from ECN Capital, which made PNC Financial a leading provider of senior debt financing to the U.S. franchise industry. (Read more: PNC Financial Divests Franchise Finance Business to MidCap)

5. Bank OZK (OZK - Free Report) has announced an increase in its regular quarterly cash dividend. The company has approved a dividend of 25 cents per share, representing 4.17% rise from the prior payout. This marked the 37th consecutive quarter of dividend hike by the company. (Read more: Bank OZK Announces 4.17% Hike in Quarterly Dividend)

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 months

JPM

-3.9%

8.9%

BAC

-5.2%

-2.4%

WFC

-4.4%

1.3%

C

-4.0%

4.0%

COF

-6.0%

1.5%

USB

-4.3%

8.9%

PNC

-2.6%

9.5%



Over the last five trading sessions, Capital One and Bank of America were the major losers, with their shares falling 6% and 5.2%, respectively. Also, Wells Fargo stock declined 4.4%.

In the past six months, shares of PNC Financial have rallied9.5%, and both USB Bancorp and JPMorgan have risen 8.9%. However, shares of Bank of America have declined 2.4%.

What’s Next?

Over the next five trading days, performance of bank stocks is likely to remain the same unless any unexpected event occurs.

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