The majority of US banks with assets between $100 billion and $1 trillion reporting earnings from Jan. 15 to Jan. 19 posted sequential declines in either total deposits and net interest margin (NIM) during the fourth quarter of 2023.

A slightly larger share of the group reported total deposit and NIM declines on a year-over-year basis, according to an S&P Global Market Intelligence analysis.

US banks report deposit declines

Five of the nine banks in the analysis reported quarter-over-quarter decreases in total deposits. The same five banks, along with Regions Financial Corp., reported a year-over-year decline.

U.S. Bancorp reported the largest quarterly decline in total deposits at 1.2%, while Truist Financial Corp. reported the largest year-over-year decline at 4.3%.

"Average deposits declined compared with the third quarter [of 2023] as our strong funding position allowed us to be more disciplined on deposit pricing while maintaining our liquidity profile," U.S. Bancorp Chairman President and CEO Andrew Cecere said during the company's fourth-quarter 2023 earnings call.

At Truist, declines in money market and noninterest-bearing deposits drove the company's sequential decline in deposits, CFO Michael Maguire said during the company's 2023 fourth-quarter earnings presentation.

Pressure persists on US bank NIMs

Truist and KeyCorp were the only two banks in the group to report sequential NIM increases during the fourth quarter at 3 and 8 basis points, respectively. None of the banks in the group reported year-over-year NIM increases.

M&T Bank Corp. reported the largest sequential decline at 18 basis points and KeyCorp reported the largest year-over-year decline at 68 basis points.

Deposit mix shift accounted for 7 basis points of M&T's sequential NIM decline, while the net impact of higher rates on customer deposits and earnings assets contributed 5 basis points, CFO Daryl Bible said during the company's fourth-quarter 2023 earnings presentation.. The other 6 basis points of NIM decline were a result of the company carrying additional liquidity on its balance sheet, he added.

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EPS weakens again

Year-over-year earnings trends were down in the fourth quarter of 2023 as all nine banks in the group reported earnings decreases quarter over quarter. The breakdown was the same compared to the year-ago quarter, with all nine banks reporting earnings per share declines.