Look for banks to boost dividend payouts, expand into new markets, increase their tech spending and, eventually, ramp up their C&I lending. But don't expect much in the way of M&A.
Buying Capital Bank Financial helped boost revenue by 17% in the fourth quarter, but one-time charges related to recent tax cuts dragged down the Memphis company's profits.
The Office of the Comptroller of the Currency’s semiannual report on industry risk said tougher competition between banks, leading to looser underwriting, could arise from the economic expansion.
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.
Highlights at the North Carolina bank included deposit service charges, CRE lending and wider margins, which all offset one-time costs related to tax reform.
Total loans rose 3% at the Minneapolis bank, but its net interest margin climbed 10 basis points. It also booked a one-time accounting gain of $910 million related to tax reform.
Though business owners are more optimistic about the direction of the economy since the tax law was passed, it's doubtful their borrowing will increase meaningfully until they see more signs of more robust growth, bankers say.
