Deposit runoff among the largest U.S. banks continued in the third quarter, with the majority of banks with between $100 billion and $1 trillion in assets reporting quarter-over-quarter declines in total deposits.
Deposit and net interest margin trends
Nine of the 13 U.S. banks with between $100 billion and $1 trillion in total assets that reported earnings through Oct. 27 saw quarter-over-quarter declines in total deposits, according to S&P Global Market Intelligence data.
SVB Financial Group reported the largest decline with total deposits down 5.9% quarter over quarter, compared to a 5.1% decline in the second quarter.
Meanwhile, Fifth Third Bancorp posted a slight increase in deposits quarter over quarter after reporting a 5.5% linked-quarter decline in the second quarter. The company expects deposit growth to continue into the fourth quarter.
"We have a strong deposit base and new relationship growth engines in both our consumer and commercial business lines, and we expect the positive production momentum that we built during the third quarter to produce growth in the fourth quarter," President and CEO Timothy Spence said during the company's third-quarter earnings call.
Just three other banks — First Republic Bank, Huntington Bancshares Inc. and U.S. Bancorp — reported deposit increases on a linked-quarter basis.
Rising interest rates continued to bolster net interest margins for most banks in the third quarter.
First Republic Bank, which saw a margin decline of 8 basis points quarter over quarter, was the only bank to report a linked-quarter NIM decline. In an attempt to retain and acquire clients, the company raised interest rates on its deposit accounts during the quarter, President and CEO Michael Roffler said on the company's third-quarter earnings call.
That strategy will continue to weigh on the company's NIM, efficiency ratio and funding costs, Roffler acknowledged on the call, and the company's stock price fell more than 15% on the day it reported third-quarter earnings.
Earnings per share trends
Year-over-year earnings were mixed in the third quarter, with seven banks with between $100 billion and $1 trillion in assets reporting an EPS increase and six reporting a linked-quarter decline.
However, quarter-over-quarter earnings were more positive, with all but one bank reporting a linked-quarter increase in EPS. Regions Financial Corp. reported both a quarter-over-quarter and year-over-year decline in EPS, making it the only bank to report a decline in both categories.
Conversely, seven banks reported both a linked-quarter and year-over-year increase in EPS in the third quarter.
