Big banks' reserve releases tick higher in Q2

The big banks aren't quite ready to let go of their reserve releases: The big four - JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) - released a combined $2.25B of their bad-loan reserves in Q2, up nearly 20% from the $1.88B they released in Q1.

The banks continue to see improvement in their customers’ credit quality, but their earnings continue to rely in part on freeing up some of their rainy-day cushions, rather than being able to generate strong earnings from their operating businesses.

Even with the Q2 uptick, the banks are releasing less in the way of reserves than they have for most of the past four years, and analysts see the practice ending before too much longer.

Some regional banks such as Comerica (NYSE:CMA) and Huntington Bancshares (NASDAQ:HBAN) that had been releasing reserves started building their reserves up again by small amounts during Q2.

Comments (9)
  • DeepValueLover
    , contributor
    Comments (11387) | Send Message
    When Janet boosts the overnight lending rate the TBTF banks are going to make a mint on the spreads.
    18 Jul 2014, 06:57 PM Reply Like
  • papayamon
    , contributor
    Comments (1425) | Send Message
    yep. that's when BAC knocks a home run.
    18 Jul 2014, 10:39 PM Reply Like
  • paparam
    , contributor
    Comments (27) | Send Message
    There is also the movement to have fewer employees providing direct face to face service and replacing them electronic terminals- that will impact all banks but those that can move quicker with the changes will benefit the greatest.Can BAC move quickly?
    19 Jul 2014, 08:17 AM Reply Like
  • funfundvierzig
    , contributor
    Comments (5030) | Send Message
    In a national survey published yesterday, July 18, 2014 by 24/7 Wall St, to no one's surprise, Bank of America was at the very top of the list of U. S. corporations and banks, number one in the Hall of Shame in customer service! Any bank with such an atrocious reputation for serving its customers and investors should give would-be buyers of its shares definite pause.


    19 Jul 2014, 02:42 PM Reply Like
  • femesteg
    , contributor
    Comments (3) | Send Message
    I am heavily invested in BAC. It is an insurance policy for my wife and 2 teen sons. I am an 83 year old Air Force Vet. with a medical condition that my Dr. says my life expectancy is about 2 or 3 years. I'm disgusted with the way the DOJ is extorting money from the banks. I'm not a wall street "fat cat" like the Govt. portrays investors. The banks are doing everything they can, to comply with regulations so complicated that it's easy for an army of Govt. lawyers to find little mistakes and fine private businesses billions. Politicians don't get voted if they raise taxes, so they've found another way to feed their addiction for money.
    19 Jul 2014, 09:10 AM Reply Like
  • vikramnjnjjdjnd
    , contributor
    Comments (1444) | Send Message
    Wish you luck femesteg! Unfortunately we live in a selfish world led by politicians who are bought out. I think all bank stocks will be more next year this date but the best upside is wfc and bac. Good luck.
    19 Jul 2014, 01:11 PM Reply Like
  • dictionshunary
    , contributor
    Comments (781) | Send Message
    Buy BAC at this level and don't believe anything that the poor out of work fired former BAC employee posts. BAC will be in the mid to high twenties by the end of the year. The fun guy's bitter posts are the result of him being dismissed for cause. BAC will be an easy double from here in one year then look for BAC yo be back in the 40s again. Great bank with outstanding mgmt. stay long
    22 Jul 2014, 07:16 AM Reply Like
  • Dirty Capitalist
    , contributor
    Comments (187) | Send Message
    I don't think regulators view loss reserves as a "rainy day cushion", subject to the whims (or temporary profit needs) of the banks. In my understanding, loss reserves are required and typically set to cover some future terms expected actual losses (e.g. losses forecast for the following 12 months, 15 months, etc).


    If reserves are being released, it typically means that either credit performance is expected to improve, new balance growth (requiring added reserves) has slowed, or some combination of the two.
    28 Jul 2014, 02:29 PM Reply Like
  • funfundvierzig
    , contributor
    Comments (5030) | Send Message
    Hapless investors in the sub-performing shares of this intractably corrupt Bank, may want to investigate some of the abusive criminal and civil acts breaking the laws of the land committed on behalf of the Bank by the Bank's ethically crippled executives and employees in the past decade.


    This gross misconduct of Management is what has generated the massive liabilities for $60 billion so far in settlements, fines, and litigation charges. Yet, some actually blame the "Government", federal and state regulators and prosecutors, for daring to enforce the laws protecting investors and consumers! Remarkably baffling, indeed.


    28 Jul 2014, 03:51 PM Reply Like
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