Interest Income Boosts Shares of Regional Banks in the U.S.


After the first-quarter failure of Silicon Valley Bank created industry turbulence and sent their shares rocketing on Wednesday, major regional banks in the United States reported that their deposits had largely steadied and that net interest income had increased. 

Since rising interest rates permitted them to charge more for loans, three significant regional banks in the United States met or exceeded profit predictions. At the conclusion of the first quarter, M&T Bank’s deposits were $159.1 billion, up to $162.1 billion, however they were down 4.9% year over year.

On a conference call with analysts on Wednesday, M&T Chief Financial Officer Daryl N. Bible stated that he anticipated a slight increase in deposits as commercial activity picked up in the second half of the year. 

According to US Bancorp, average deposits reached $497.27 billion, up 9% for the year but down 2.6% from the end of the first quarter. At Citizens, deposits decreased by less than 1% to $173.2 billion during the same time frame. Deposits at First Horizon climbed by 6% from one quarter to the next. 

Read Also: U.S regional bank shares rise on interest income, deposits stabilizing

Silicon Valley Bank Collapses

Due to the collapse of Silicon Valley Bank and two other lenders in the first quarter due to deposit runs, terrified customers transferred their funds from smaller banks to larger organizations. 

Some banks have had to raise their returns as a result of the flight. Even though the first quarter’s heavy withdrawals appear to have subsided, some executives noticed that the increase in deposits was partially seasonal and were forewarned of potential withdrawals. 

But overall, things looked good. Bruce Van Saun, CEO of Citizens Financial Group, stated in an interview that there haven’t been any failures in a while and that none are forthcoming. The Fed appears to have completed raising interest rates and is close to coming to an end, both of which, in my opinion, have been favorable for the deposit picture.

Shares of Discover Financial fell almost 12% in after-market trading after the company said that it was halting share repurchases while conducting an internal examination of compliance, risk management, and corporate governance. 

M&T’s stock ended the day up 2.48%, Citizens and US Bank both closed up about 6.4%, and Zions Bancorp gained 8% in after-hours trading. The price of First Horizon stock remained unchanged.

Read Also: Marsh McLennan Beats Q2 Profit Estimates on Interest Income Boost

Source: Yahoo


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