Alamy By Jeff Cox American bank accounts have gotten noticeably smaller this year as mom-and-pop investors have begun to embrace risk. Deposit balances in insured banks have fallen by $51 billion-a small amount relatively speaking, to be sure, but notable in that it reverses a six-year pattern, according to Market Rates Insight. The drop in deposit balances poses a vexing problem to banks, which are under regulatory pressure to cut leverage and increase their percentage of cash on hand. "The overall decline in deposits balances in the second quarter of 2013 is an indication that interest rates on deposits are likely to start climbing up in the near future" Dan Geller, executive vice president at Market Rates Insight, said in a statement. "Financial institutions will need to start increasing interest rates on deposits in order to maintain current deposits levels and to increase liquidity ratio as mandated by Basel III," he added, referring to the international guidelines for bank capital requirements. But the surge in balances over the past six years had been completely counter-intuitive from a return standpoint, in that deposit rates tumbled from 3.28 percent in July 2007 all the way down to 0.28 percent. From the early stages of the financial crisis in mid-2007, deposit balances increased some 40 percent, from $6.7 trillion to $9.4 trillion. That trend had come, though, as jittery investors yanked money from riskier mutual funds and poured their savings into plain-vanilla checking and savings accounts as well as money market funds. And money markets continue to attract cash. After seeing net redemptions in the first quarter, money markets drew $50 billion, or 1.1 percent of total assets, in the second quarter, Market Rates Insight said. The year has featured an overall change in where retail investors have moved money. Bond mutual funds have seen dramatic outflows, with the biggest beneficiary nondomestic mutual funds-European equity funds have taken in $12 billion over just the last two months-and blended funds that offer exposure to stocks and bonds. U.S.-based funds, meanwhile, have been only modest beneficiaries of what some experts predicted would be a "Great Rotation" from bonds to stocks. If the trend out of deposit accounts continues, it could pose a further dilemma for the Federal Reserve, which has been repressing interest rates in hopes of stimulating economic development and investor risk-taking. Rates have surged since the central bank began indicating that it likely will curtail its $85 billion a month bond-buying program. While the Fed itself has not raised its targeted policy rate, the market has pushed yields higher on its own, and could continue to do so if banks have to raise deposit rates. That would make its hopes to begin pulling back on quantitative easing more complicated, and pose a whole new set of dynamics for financial markets.
Top 5 Financial Companies To Watch In Right Now: PICO Holdings Inc.(PICO)
PICO Holdings, Inc., together with its subsidiaries, engages in the water resource and water storage, real estate, insurance, and agribusiness businesses. Its water resource and water storage business acquires and develops water resources and water storage operations in the southwestern United States. The company?s real estate business acquires and develops partially-developed and finished residential housing lots in selected markets primarily in California. It also owns, leases, and sells properties in northern Nevada, which include sub?surface rights, such as mineral rights, water rights, and geothermal rights. As of December 31, 2010, this business owned or controlled a total of 490 finished lots, which included 21 completed homes and 10 partially completed homes; and 4,711 potential lots in various stages of entitlement. It also owned approximately 440,000 acres of land in northern Nevada. The company?s insurance business handles and resolves claims on expired polic ies comprising medical professional liability, property and casualty, and workers? compensation insurance policies. PICO Holdings, Inc. also involves in cash and fixed-income securities business, as well as acquires businesses and interests in businesses through the acquisition of private companies and the purchase of shares in public companies. The company was founded in 1981 and is based in La Jolla, California.
Top 5 Financial Companies To Watch In Right Now: F.B.D.HLDGS ORD EUR0.60(FBH.L)
FBD Holdings plc, through its subsidiaries, primarily engages in general insurance underwriting business in Ireland and other countries in European Union. It offers various business insurance products, including shop insurance; pub insurance; office based professional insurance; manufacturers, distribution, and wholesale insurance; and restaurant, cafe, and takeaway insurance. The company also offers other business insurance products for property, business interruption, employer?s liability, public liability, products liability, money, and deterioration of food to small and medium enterprises; property insurance for commercial and private lets; medical surgery insurance; insurance for hotels, guest houses, and B&B?s; and self build insurance, as well as commercial vehicle insurance, motor fleet insurance, personal car insurance, farm insurance, and home insurance. In addition, it provides various personal finance solutions, including general insurance broking, life assur ance/pension products, broking/investment advice, installment finance, mortgage protection quotes, life and serious illness cover products, mortgage advices, and income protection solutions, as well as other financial solutions for businesses. Further, the company holds interests in various hotel and leisure properties comprising the La Cala and Sunset Beach Resorts in Spain, as well as in the FBD Hotels in Ireland. FBD Holdings plc was incorporated in 1988 and is based in Dublin, Ireland.
Hot Energy Companies To Buy Right Now: Commonwealth Bank of Australia (CBA)
Commonwealth Bank of Australia (the Bank) is engaged in the provision of a range of banking and financial products and services to retail, small business, corporate and institutional clients. The Bank is a provider of integrated financial services, including retail, business and institutional banking, superannuation, life insurance, general insurance, funds management, broking services and finance company activities. Its operating segments include Retail Banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, New Zealand, Bankwest and Other. Its retail banking services include home loans, consumer finance, retail deposits and distribution. Its business and private banking include corporate financial services, regional and agribusiness banking, local business banking, private bank and equities and margin lending. The Bank and its subsidiaries ceased to be a substantial holder in Ten Network Holdings Limited, as of September 12, 2012. Advisors' Opinion:- [By Toshiro Hasegawa]
Commonwealth Bank of Australia (CBA) fell 1.1 percent to A$73.73. Singapore Telecommunications Ltd. (ST) retreated 1.1 percent to S$3.78 today after posting earnings.
Top 5 Financial Companies To Watch In Right Now: U.S. Bancorp(USB)
U.S. Bancorp, a financial services holding company, provides various banking and financial services in the United States. It generates various deposit products, including checking accounts, savings accounts, money market savings, and time certificates of deposit accounts. The company originates a portfolio of loans comprising commercial loans and lease financing; commercial real estate; residential mortgage; and retail loans consisting of credit cards, retail leasing, home equity and second mortgages, and other retail loans. It also offers wholesale lending, equipment finance, small-ticket leasing, depository, treasury management, capital markets, foreign exchange, and international trade services to middle market, large corporate, commercial real estate, and public sector clients. In addition, U.S. Bancorp provides telebanking and automated teller machine (ATM) services, as well as cash management services. The company, through other subsidiaries, provides trust, private banking, financial advisory, investment management, retail brokerage services, insurance, and custody and fund services; and payment services, including consumer and business credit cards, stored-value cards, debit cards, corporate and purchasing card services, consumer lines of credit, and merchant processing. U.S. Bancorp primarily serves individuals, estates, foundations, business corporations, and charitable organizations. It operates a network of approximately 3,031 banking offices and 5,310 ATMs. The company was founded in 1863 and is headquartered in Minneapolis, Minnesota.
Advisors' Opinion:- [By Laura Brodbeck]
Wednesday
Earnings Expected From: Bank of New York Mellon Corporation (NYSE: BK), Stanley Black & Decker, Inc. (NYSE: SWK), US Bancorp (NYSE: USB), Bank of America Corp (NYSE: BAC), Pepsico, Inc. (NYSE: PEP), American Express Company (NYSE: AXP), eBay Inc. (NASDAQ: EBAY) Economic Releases Expected: US Beige Book, Canadian manufacturing sales, US CPIThursday
- [By Jane Edmondson]
In addition, there are multiple competitive offerings at nearly all Green Dot retail partner locations. There have also been aggressively promoted new prepaid offerings from big banks such as JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), US Bancorp (USB) and Wells Fargo (WFC). The big banks hope to leverage their existing customer base in order to gain market share.
- [By Amanda Alix]
Good news may buoy Wells a bit today
Wells put a nagging mortgage-related issue behind it this week, which think will help send some positive vibrations its way today. While denying culpability, Wells settled a complaint�by the National Fair Housing Alliance regarding a claim that the bank let foreclosed homes in minority areas go to rack and ruin, even as it maintained those in predominately white neighborhoods. Wells has committed a total of $42 million to rectifying the problem, while Bank of America and U.S. Bancorp (NYSE: USB ) , which face similar complaints, have yet to settle their own issues with the NFHA. - [By John Maxfield]
Are mortgages being underwritten? Absolutely. Since the second quarter of 2011, they've shot up by 43% at the nation's five largest lenders. Wells Fargo (NYSE: WFC ) and US Bancorp (NYSE: USB ) provide prescient examples of this. In the first quarter of 2011, Wells Fargo originated $84 billion in mortgages; by the first quarter of this year, that figure grew to $109 billion. Over the same time period, US Bancorp's numbers grew from $12 billion to $22 billion.
Top 5 Financial Companies To Watch In Right Now: HIGHCROFT INVESTMENTS ORD GBP0.25(HCFT.L)
Highcroft Investments PLC operates as a real estate investment trust that has a portfolio of property and equity investments in the United Kingdom. The company?s portfolio includes commercial property comprising retail outlets, offices, and warehouses; and residential property consisting of single-let houses. Its financial assets include exchange-traded equity investments. The company is based in Kidlington, the United Kingdom.
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