How Charlotte’s big banks are facing up to pandemic problems

CHARLOTTE, N.C. — The COVID-19 pandemic is hitting the bottom line of banks from every direction. 

The economy’s virus-induced slowdown has led to a decline in traditional loan demand, tighter margins as interest rates cave, and a dropoff in bank stock prices. Banks are also facing rising costs, with the pandemic presenting operating challenges at every turn.

The pandemic’s impact on banks showed up to some degree in first-quarter earnings reports. This month’s second-quarter results are giving a broader indication of where the industry is headed.

But much is still to be determined as analysts predict industrywide earnings will drop up to 60% this year compared to pre-Covid-19 estimates.

Banks, recalling the last recession, acted fast to protect their balance sheets in the first half of 2020. They set aside billions of dollars for reserves and doubled down on customer-relief programs. 

Those tactics were temporary solutions.

“What they’re going to do or what the effect of the pandemic will be on them will really depend on how the pandemic will unfold itself,” said Yongqiang Chu, a professor at the UNC Charlotte Belk College of Business.

Read the full story here to learn about four major ways banks have been hit, how they are reacting and what the long-term implications are for Charlotte’s top three banks — Bank of America Corp., Wells Fargo & Co. and Truist Financial Corp.

Wells Fargo signals substantial layoffs ahead Wells Fargo signals substantial layoffs ahead

Cox Media Group