Big US Regional Banks Report Stable Deposits. For Investors, That's Great News
Many investors entered the second-quarter earnings season expecting the worst for regional banks. But that didn’t materialize in the results released this week—at least not for the bigger players. Many banks, includingKeyCorp, Western Alliance Bancorp and Zions Bancorp, posted sharp profit declines.
But their deposits were stable or higher compared with the first quarter, a relief after customers yanked their money earlier this year across the industry. Other regional lenders including Citizens Financial Group and M&T also posted higher deposits over the quarter. For many investors, that was enough to count as great news.
Citizens, U.S. Bancorp and KeyCorp are all up 10% or more this week. Zions is up more than 20%.
The KBW Nasdaq Bank Index is nearly 8% higher this week, and the KBW Nasdaq Regional Banking Index has climbed by even more. The upward momentum slowed as more regional-bank results came out toward the end of the week, but both indexes are still on pace for their best weekly performance in more than a year. Investors are feeling good overall, embracing risk-on investments such as meme stocks and bitcoin.
This year’s surprising stock market rally gives midsize lenders more cushion to ride out the year’s ups and downs. And quick action from regulators and bankers in March has, so far, helped prevent the failure of several midsize banks from morphing into the full-blown systemic crisis some initially feared. But the results also pointed to a tough road ahead.
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