Banks And Financial Stocks: Latest News And Analysis (2024)

FAQs

How many US banks are in trouble right now? ›

A report posted on the Social Science Research Network found that 186 banks in the United States are at risk of failure or collapse due to rising interest rates and a high proportion of uninsured deposits.

Many banks failed due to their dwindling cash reserves. This was in part due to the Federal Reserve lowering the limits of cash reserves that banks were traditionally required to hold in their vaults, as well as the fact that many banks invested in the stock market themselves.

Most deposits in banks are insured dollar-for-dollar by the Federal Deposit Insurance Corp. This insurance covers your principal and any interest you're owed through the date of your bank's default up to $250,000 in combined total balances. You don't have to apply for FDIC insurance.

Bank stocks have had a banner year, even if big names in artificial intelligence like Nvidia NVDA have dominated headlines. The Morningstar US Banks Index is up more than 40% over the past 12 months and 9.7% since the beginning of 2024. The US market is up 35% and 9.4% over those periods.

The lender's stocks declined after some analysts recently downgraded its target price, citing medium-term risks and a gradual recovery in net interest margins (NIMs). Investors were also cautious ahead of the release of inflation data in India and the US on Tuesday.

If you have a brokerage account through your bank, that money will be covered by the Securities Investor Protection Corporation (SIPC).

The Federal Deposit Insurance Corp. (FDIC) insures bank accounts up to $250,000 per depositor, per account category. 1 So, unless your bank is not insured by the FDIC or you have deposited more than the FDIC limit, your money is safe if your bank fails.

Do I lose all my money if the stock market crashes? ›

When the stock market declines, the market value of your stock investment can decline as well. However, because you still own your shares (if you didn't sell them), that value can move back into positive territory when the market changes direction and heads back up. So, you may lose value, but that can be temporary.

Bank stocks typically underperform heading into a recession. They act as a proxy for the health of the economy. If the market is looking 18 months into the future, they expect a slowdown in activity from the banks. However, once we're in a recession, banks typically outperform.

Berkshire Hathaway is the most expensive stock listed on U.S. exchanges.

Bank failures happen more often than you might think—there have been 568 in the U.S. since January 1, 2000. That's an average of almost 25 per year. But the back-to-back collapses of Silicon Valley Bank (SVB) and Signature Bank in early 2023, followed by First Republic Bank in May, were unique in more ways than one.

Earlier last year Silicon Valley Bank failed March 10, 2023, and then Signature Bank failed two days later, ending the unusual streak of more than 800 days without a bank failure. Before Citizens Bank failed in November 2023, Heartland Tri-State Bank failed July 28, 2023 and First Republic Bank failed May 1, 2023.

Republic First Bank's demise on April 26 was the first failure of 2024. Its collapse renewed fears that last year's financial instability is still lingering. Republic First Bank was shuttered last week by its state regulator and taken over by the Federal Deposit Insurance Corp.

Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found 282 banks face the dual threat of commercial real estate loans and potential losses tied to higher interest rates. The majority of those banks are smaller lenders with less than $10 billion in assets.