What does "well managed" status mean for banks?

"Well managed" is an official designation given to banks by regulators like the Federal Reserve. Banks with this status face fewer restrictions on their operations and expansion activities. Currently, banks must meet strict criteria in several operational areas to maintain this status, but the proposed changes would allow banks to have minor deficiencies in one area while still being classified as "well managed" overall. This matters because it would give banks more operational flexibility and potentially reduce their compliance costs.

What is the LFI framework mentioned in some stock descriptions?

The LFI framework stands for "Large Financial Institution" framework. It's the supervisory and regulatory system the Federal Reserve uses to oversee big banks and financial companies. This framework includes the rating system that determines whether banks are "well managed." The proposed changes to this framework would make the ratings process less strict, potentially benefiting the banks in this stock collection. Banks under this framework that achieve better ratings can operate with fewer restrictions.

How could reduced regulations affect bank stocks?

Reduced regulations typically benefit bank stocks in several ways. First, banks spend billions on compliance costs each year, so relaxed regulations can directly lower expenses and increase profitability. Second, fewer operational restrictions allow banks more flexibility in how they use their capital and expand their business. This can lead to greater growth opportunities and potentially higher revenues. For investors, these improvements often translate to higher stock valuations, increased dividends, and better overall returns over time.

What's the difference between a bank and a bank holding company?

A bank is the financial institution that provides services like checking accounts, loans, and credit cards directly to customers. A bank holding company, on the other hand, is the parent corporation that owns one or more banks. Many of the stocks in this collection are bank holding companies, which means they own banking subsidiaries but may also own other financial businesses. Bank holding companies are directly regulated by the Federal Reserve and would be the primary beneficiaries of the proposed regulatory changes to the "well managed" criteria.

15 handpicked stocks

Regulatory Relief for Big Banks

This carefully selected group of stocks focuses on banking institutions that could benefit from the Federal Reserve's proposal to ease regulatory standards. These companies are positioned to see reduced compliance costs and fewer operational restrictions, potentially boosting their profitability and stock performance.

Han Tan | Market Analyst

Published on July 14

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Wells Fargo & Co.

WFC

Current price

$80.50

As a large bank holding company, Wells Fargo stands to benefit from the proposed easing of the 'well managed' criteria, potentially reducing its regul...

As a large bank holding company, Wells Fargo stands to benefit from the proposed easing of the 'well managed' criteria, potentially reducing its regulatory and compliance burdens.

Bank of America Corp.

BAC

Current price

$50.48

Bank of America is a major financial institution that would benefit from a more lenient regulatory framework, which could lower operational restrictio...

Bank of America is a major financial institution that would benefit from a more lenient regulatory framework, which could lower operational restrictions and compliance costs.

U.S. Bancorp

USB

Current price

$47.91

U.S. Bancorp is a large bank holding company subject to the LFI framework and would likely see a positive impact from the proposed reforms.

M&T Bank Corporation

MTB

Current price

$195.63

Huntington Bancshares Incorporated

HBAN

Current price

$17.04

Webster Financial Corp.

WBS

Current price

$58.96

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+6.96%

≈

About This Group of Stocks

Our Expert Thinking

The Federal Reserve is proposing to relax how it rates large banks, making it easier for them to be classified as "well managed" even with minor issues. This could significantly reduce compliance burdens and operational restrictions, potentially improving profitability for major financial institutions.

What You Need to Know

This is a timely, event-driven investment opportunity focused on bank holding companies. These stocks may see improved financial performance as regulatory hurdles lower, giving them more operational flexibility and potentially leading to higher valuations and better returns for shareholders.

Why These Stocks

Each company in this collection was specifically selected because they're large bank holding companies under Federal Reserve oversight. These particular institutions stand to benefit directly from the proposed reforms to the supervisory rating system, creating potential growth opportunities.

Group Performance Snapshot

6.96%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 6.96% over the next year.

12 of 15

Stocks Rated Buy by Analysts

12 of 15 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

📝

Regulatory Change in Action

This is a rare opportunity to capitalize on a specific, announced policy shift by the Federal Reserve. When regulations ease, banks often see direct benefits to their bottom line.

💰

Profit Potential Unlocked

Lower compliance costs and fewer restrictions could mean higher profits and potential dividend increases for these financial institutions. This regulatory relief may directly boost shareholder returns.

🏦

Banking on Better Operations

These banks could soon operate with greater flexibility and fewer hurdles. As they become more operationally efficient under relaxed 'well managed' criteria, their stocks may see increased investor interest.

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