Investors closely watched a round of earnings from US regional banks and saw a mixed bag of results, although some smaller banks beat Wall Street estimates handily and even fared surprisingly well on overall deposits.
Clearly, uninsured deposits have shrunk at regional banks in the wake of last month’s bank collapses, but it hasn’t completely destroyed overall deposits.
Still, as expected uninsured deposits now make up a smaller fraction of total deposits at US Bancorp, Western Alliance, Citizens Bank and PNC Financial Services (NYSE:PNC) Group, compared with the end of last year.
Earlier this week, Western Alliance Bancorporation, headquartered in Phoenix, Arizona, triggered a small rally in US regional bank stocks after it said that its deposit base had “stabilized,” sending shares surging. Western revealed that its deposits rose by $2 billion since the end of the first quarter, helping to lift First Republic and other regional lenders.
"Deposit trends were better than expected,” Wedbush managing director David Chiaverini told Yahoo Finance.
Wedbush raised its rating on Western Alliance Bank to Outperform from Neutral and added the regional bank to its "Best Ideas List.”
Meanwhile, Metropolitan Bank Holding Corp shares also rose after the lender reported strong earnings and a smaller than expected decline in its deposits. The bank reported first quarter earnings of $2.25 per share on revenue of $65.5 million. The consensus earnings estimate was $1.65 per share on revenue of $65 million.
“I am pleased with our first quarter results, which demonstrated that we were well prepared for the challenges that the banking industry has faced,” Metropolitan Bank CEO Mark DeFazio said in a statement.
DeFazio also noted that US regional banks have the support of a “very loyal commercial client base.”
“Business and economic disruptions cut both ways. When the dust settles, disruptions highlight business models like ours with sustainable growth,” DeFazio added.
Meanwhile, Minneapolis, Minnesota-based US Bancorp shares rose after the bank reported first quarter earnings of $1.16 per share, which topped analyst forecasts. Total deposits, however, fell by $20 billion in the first quarter to $505 billion.
Citizens Financial Group (NYSE:CFG), however, was beaten down by investors after it reported $1.10 per share in earnings, which fell short of Wall Street expectations.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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