It was a mixed quarter for some of the regional and mid-sized banks. U.S. Bancorp, First Horizon, Citizen's Financial, and M&T Bank all reported their quarterly results. Yahoo Finance Reporter Alexandra Canal joins the Live show to break down the earnings and how the smaller banks stack up to their larger, institutional counterparts.
Video Transcript
DIANE KING HALL: US Bancorp released its Q2 results today, beating street expectations, but the stock falling after posting a narrow net interest margin due to higher deposit costs over debt ceiling concerns. First Horizon National missed the street expectations on revenue and adjusted EPS, but the bank posted a profit for the second quarter that increased from the year prior. First Horizon said it grew the period ended deposits by $4 billion on a quarterly basis. You're seeing the stock pop right now.
Citizens Financial Group reported a profit that beat the street expectations. Now, the bank lender saw a boost in net interest income. That's a key line item analysts have been watching for thanks to high interest rates. But the company expects net interest income to fall in Q3. And MMT bank. Beat Wall Street estimates. The bank's total deposits rose to 162.1 billion from just 159.1 billion at the end of the first quarter. So you're seeing a pop there because we know that deposit outflows.
I know it's a lot. We got a lot of banks in there just now. So we know that one of the line items that analysts have been watching for is deposit outflows. We've seen a little bit in some of these earnings reports, you know, but not worrisome when you think about some of them.
JULIE HYMAN: Yeah. And our Ale Canal is with us again today to talk us through some of these movers. So Ale, it has been interesting here that-- so it feels like there were two really areas of concern for the regionals. Are they going to hold on to the deposits? And how much is it going to cost them to do so? And by and large, I mean, at least the share price reactions have been positive.
ALEXANDRA CANAL: Yeah. And I think a lot of focus were-- it was on the banks this quarter given what we saw in the spring with the collapse of SBB, a particular focus on the regionals. And by and large, we see results that have come in mixed, right? You mentioned those higher interest rates helping to boost some of that profit there. I think the key to the banks that have done well are the ones that have diversified businesses because we're seeing those that heavily rely on deal making, heavily rely on investment banking.
Case in point, Goldman Sachs, they have struggled a bit. I'm curious, though, looking ahead to the quarters to come, Q3, Q4, how will the pullback in consumer spending, possible credit tightening, a potential recession in the back half of this year, how will that impact the banks? I think there was so much emphasis on this quarter that, you know, better than feared. So far, so good. But I wonder what this means for the back half of the year.
JULIE HYMAN: Yeah.
DIANE KING HALL: Well, we'll certainly be watching that. I mean-- go ahead.
JULIE HYMAN: I was just going to say to that point, we have seen some of the banks say that net interest income is going to not be as strong or the momentum will not be on their side in the second half of the year. It seems like at least today for these regionals that investors are saying, OK, it was worth it to spend to keep those deposits in many of these cases.
If you look at Citizens as just one example, the Wall Street journal pointing out that deposit costs in the second quarter were up 40 basis points, which is an increase. However, it helped them hang on to deposits, and in fact increased their deposits. So it seems like that's sort of the calculation here that investors--
DIANE KING HALL: That the had to make.
JULIE HYMAN: --appear to be making.
