Banking takes the stage…

• Another regional bank is on the verge of collapse

• CFPB caps credit card fees as delinquencies rise

• Amazon goes nuclear

• Apple faces more challenges abroad

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Banking
NYCB closes on a $1.05B rescue deal

New York Community Bancorp (NYSE: NYCB) closed on a ~$1.05B rescue plan from former Treasury Secretary Steven Mnuchin's Liberty Strategic Capital, Hudson Bay Capital Management, and Reverence Capital Partners.

Although NYCB was a winner among regional bank stocks last year, the stock declined nearly 70% this year after the bank disclosed it has identified “material weaknesses” in its loan portfolio thanks to bad risk tracking measures.

NYCB has the highest concentration of commercial real estate loans relative to other banks, with CRE loans making up 52% of total assets.

The rescue package will be funded with 525 million shares priced at $2, with new investors owning ~40% of the company. Another 315 million shares can be exercised with warrants down the road.

The 3 other largest banks listed with CRE loans of more than 25% of total loans are M&T Bank with 40%, Huntington Bankcorp with 33%, and Zions Bank with 29%.

Consumer Credit
CFPB caps late fees as delinquencies rise

The Consumer Financial Protection Bureau finalized a rule that would cap the late fees that banks charge customers after finding that cardholders paid a record $130 billion in interest and fees, as of their latest tally.

As of October 2023, the average credit card utilization was 35%, up from 33% a year earlier, and the share of borrowers with a 30-day past-due missed payment against their credit accounts was 18%.

To help the more than 45 million people charged a late fee on their credit card payments every month, the new rule would cap late fees at $8.

Since interest rates went up in 2022, per capita consumer credit card debt has increased by 10% to a record $6,360. And, according to a new report by FICO, the average credit score across the country has fallen to 717.

Average nationwide credit scores bottomed out at 686 during the housing crisis more than a decade ago, when there was a sharp increase in foreclosures. According to TransUnion’s research, “serious delinquencies,” or those 90 days or more past due, reached the highest level since 2009.

Tech
Amazon goes nuclear

Amazon Web Services is going nuclear. In an effort to find more sustainable and consistent power, Amazon will build a number of facilities next to a nuclear power plant in Pennsylvania.

The first facility will cost approximablte $650 million. Amazon has already paid $350 million upfront to Talen Energy Corporation for the site. Last year, Microsoft also committed to a power purchase deal from reactor startup Helion, which will provide the company power for its datacenters in approximately five years.

"To supplement our wind and solar energy projects, which depend on weather conditions to generate energy, we're also exploring new innovations and technologies, and investing in other sources of clean, carbon-free energy. This agreement with Talen Energy for carbon-free energy is one project in that effort," an Amazon spokesperson said in a statement.

Tech
Apple fined in Europe, China sales decline 24%

According to independent research firm Counterpoint, sales for the iPhone dropped dramatically (by 24%) over the first six weeks of 2024. At the same time, the broader Chinese mobile market itself shrank by 7% during this period.

Apple did make an effort to encourage sales by offering rare discounts on its online store in January. Some online resellers even have been cutting iPhone prices by as much as $180. Regardless, Apple’s market share still ended up falling below 16%, down from 19%.

To make matters worse, the European Union fined Apple about $2 billion, saying it set unfair rules for developers of music-streaming apps.

“Apple’s conduct, which lasted for almost 10 years, may have led many iOS users to pay significantly higher prices for music streaming subscriptions,” the commission said Monday.

The Commission’s probe into Apple stemmed from a complaint filed by Spotify, which competes with Apple’s music-streaming service, Apple Music.

Spotify said Apple’s rules prevented it from communicating with users directly in the Spotify app about how to upgrade, the price of subscriptions and its promotions.

The EU’s guidance for calculating an antitrust fine allows it to increase the baseline calculation for what the fine should be to deter a company from its behavior.