- U.S. Bancorp (USB +1%) is among those making significant accounting changes - moving bonds from the "available-for-sale" bin into "held-to-maturity." The move gives lenders near-term capital relief, but forces them to hold onto the paper no matter what.
- U.S. Bancorp's held-to-maturity portfolio ballooned to $34.7B or 46% of its investment portfolio in Q2, up from just $1.5B in 2010. The bank did it to cope with new capital regulations, but is now stuck with billions in low-yielding assets as rates begin to rise - the weighted-average yield on the held-to-maturity portfolio is just 1.89% compared to 2.72% in the available-for-sale portfolio.
- Texas bank Cullen Frost (CFR +0.2%) was forced to do likewise as regulators seemed "incapable" of removing a requirement to subtract paper losses on securities from capital ratios, according to the bank finance chief. "That was absolutely ridiculous for a bank like ours," which never had any funding issues, says CIO Bill Sirakos.
- The bottom line: The banks made their arrangements with the federales a long time ago. They're just going to have to deal with it.
- Financial ETFs: XLF, IYF, PFI, VFH, RYF, RWW, FAS, UYG, FAZ, SKF, SEF, IAI, FXO, PSCF, KBWD, KBWB, IYG, FINU, FINZ, KBE.
Future bank profits at risk from near-term capital relief
From other sites
at 4-traders.com (Mon, 9:06AM)
at Nasdaq.com (Mar 25, 2015)
U S Bancorp : Greenwich Associates Recognizes U.S. Bank’s Small Business and Middle Market Capabilities and Serviceat 4-traders.com (Mar 24, 2015)
at Benzinga.com (Jan 15, 2015)
at Benzinga.com (Jan 14, 2015)
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