2022 has gotten off to an ugly start for the stock market, but Wednesday morning, market participants seemed ready to claw back at least a little bit of the ground major market benchmarks have lost in the first few weeks of the year. As of just before 8:30 a.m. ET, Dow Jones Industrial Average (DJINDICES:^DJI) futures were up 77 points to 35,336. S&P 500 (SNPINDEX:^GSPC) futures had gained 14 points to 4,585, while Nasdaq Composite (NASDAQINDEX:^IXIC) futures had risen 59 points to 15,265.
We’ve seen a big round of bank stock earnings over the past week, and a couple more industry leaders gave investors their latest results. However, it was news from SoFi Technologies (NASDAQ:SOFI) that produced much bigger stock price moves. Read on to see how Bank of America (NYSE:BAC) and U.S. Bancorp (NYSE:USB) fared at the end of 2021, and then find out why SoFi’s on the move higher.
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Bank of America makes a move higher while U.S. Bancorp sinks
We’ve been getting bank financial reports for nearly a week now, so many investors were looking to see how Bank of America and U.S. Bancorp would fare by comparison. The results were mixed, with Bank of America stock climbing almost 3% in premarket trading while U.S. Bancorp’s stock was down nearly 5%.
Bank of America’s numbers looked strong. Net income in the fourth quarter of 2021 rose 28% to $7 billion, with earnings coming in at $0.82 per share. Net interest income benefited from strong deposit growth, while record asset management fees and investment banking revenue pushed up noninterest income. Total deposits rose to $2.1 trillion, while loan balance growth remained subdued, rising $51 billion to $979 billion.
Bank of America’s segments performed well, although the global markets business did see net income and revenue fall year over year. Even there, though, the decrease from weaker trading results was less significant than we’ve seen with big bank peers like Goldman Sachs and JPMorgan Chase.
U.S. Bancorp wasn’t as fortunate. Net income attributable to the bank rose 10% year over year, but it was down substantially from third-quarter levels, and both net interest income and noninterest income fell from where they were 12 months ago. Average total loans were flat from a year ago, while deposits rose 6% to nearly $450 billion.
U.S. Bancorp cited lower mortgage banking revenue in driving net revenue lower. Higher trust and investment management fees offset that to some extent, but investors seemed to have wanted greater growth despite the solid performance.
A charter for SoFi
SoFi was a big winner, with the stock rising 17% Wednesday morning. The company marked a major milestone that could expand its business considerably.
SoFi said late Tuesday that it had received regulatory approval from the Office of the Comptroller of the Currency and the Federal Reserve for its application to become a bank holding company. SoFi has had its acquisition of Golden Pacific Bancorp pending for some time, but with the approval, the company expects to close the deal in February and begin operating a bank subsidiary under the name SoFi Bank.
Having a national bank charter will allow SoFi to lend at more competitive rates and offer high-yield checking and savings accounts. SoFi will also be able to enhance the quality of its financial products and services, all with full regulatory oversight and assurances of compliance that will add to its reputation.
SoFi’s stock has lost a considerable amount of ground in the tech pullback over the past couple of months. Bullish investors hope this will mark a turning point to get SoFi back moving in the right direction again.
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