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Rated U.S. Banks Haven't Seen Widespread Deposit Outflows But Uncertainty Continues

NEW YORK (S&P Global Ratings) March 14, 2023--Substantial volatility in bank equity prices this week has reflected heightened uncertainty about many institutions. However, S&P Global Ratings has not seen evidence that the unmanageable deposit outflows experienced at a few banks have widely spread across rated banks.

We believe the emergency measures the Federal Reserve announced on March 12 have equipped banks with additional liquidity sources if needed and probably also lowered the odds that confidence-sensitivity issues become relevant for a large number of banks.

Still, we believe banks that need to replace some level of deposits with secured funding from the Fed, the Federal Home Loan Banks, or other sources will also experience profitability pressure and could see their franchise strength erode. In addition, deposit rates could increase more rapidly than we previously anticipated (see "The Fed's Plan For U.S. Banks Should Reduce Contagion Risk").

Also, in our view, conditions remain fluid, real-time disclosure is limited, and some banks are showing greater signs of stress than others. For instance, today we placed our ratings on First Republic Bank on CreditWatch with negative implications largely because of potential deposit volatility (see "First Republic Bank 'A-' Rating Placed On CreditWatch Negative On Funding Profile Risk"). We believe this risk is heightened by First Republic's already modest profitability due in part to its heavily long-duration loan portfolio.

We have not taken similar actions on other rated banks because we have not seen significant indications of unmanageable deposit outflows, as informed by our ongoing surveillance activities.

As we continue to monitor the sector, we are gauging which banks may be more prone to near- and medium-term pressures, focusing on both broad market conditions and bank-specific characteristics. Among other factors, we are looking at:

  • The composition of deposits, and
  • Differentiating deposit outflows that have resulted from the Fed's tightening of monetary policy versus those caused by confidence-sensitivity issues.

We are also considering interest-rate sensitivity, the asset quality of loan portfolios, and capital, among other factors.

Banks And Bank Holding Companies By Select Metrics (Fourth-Quarter 2022)
In alphabetical order
(%) Uninsured deposits/domestic deposits Cash/assets Deposit growth 2021 Deposit growth June 2022-December 2022 Tangible common equity (TCE)/tangible assets (TA) (TCE - unrealized loss on HTM securities)/TA Tangible equity/tangible assets CET1 ratio Q/Q NIM change 4Q 22 Return on equity 4Q 22
Median 48 5 10 (1) 6.6 5.7 7.1 10.8 0.15 13.1

Ally Financial Inc.

12 3 3 8 5.0 4.9 6.3 9.3 (0.18) 8.7

American Express Co.

18 15 (3) 14 8.6 8.6 9.3 10.3 (0.09) 24.4

Associated Banc Corp.

53 2 7 4 7.0 5.5 7.5 9.4 0.17 10.9

Bank of America Corp.

47 8 15 (3) 5.8 2.2 6.8 11.2 0.15 10.5

BOK Financial Corp.

61 3 14 (11) 7.6 7.3 7.6 11.7 0.32 12.3

Cadence Bank

50 4 103 (3) 5.4 5.4 5.8 10.2 (0.03) 9.2

Capital One Financial Corp.

24 7 2 8 7.5 7.4 8.5 12.5 0.04 9.4

Citigroup Inc.

77 14 4 3 6.6 5.6 7.4 12.2 0.08 5.0

Citizens Financial Group Inc.

49 5 5 1 6.1 5.7 7.0 10.0 0.06 11.2

Columbia Banking System Inc.

39 4 8 4 7.8 7.8 7.8 11.0 0.13 13.6

Comerica Inc.

62 8 13 (6) 4.9 4.9 5.3 10.0 0.24 26.5

Commerce Bancshares Inc.

42 3 11 (7) 7.3 7.3 7.3 14.1 0.18 22.2

Cullen/Frost Bankers Inc.

54 22 22 (4) 4.5 4.1 4.7 12.9 0.30 25.8

Discover Financial Services

9 7 (6) 20 10.1 10.1 10.9 13.3 0.04 28.2

East West Bancorp Inc.

66 6 19 3 8.7 7.8 8.7 12.7 0.28 23.1

F.N.B. Corp.

46 4 9 4 7.2 6.2 7.5 9.8 0.33 9.6

Fifth Third Bancorp

52 6 6 2 5.0 5.0 6.1 9.3 0.14 17.5

First BanCorp

48 3 16 (6) 6.8 6.8 6.8 16.5 0.06 22.6

First Citizens BancShares Inc.

33 5 18 0 7.6 6.3 8.4 10.1 (0.04) 10.7

First Commonwealth Financial Corp.

26 2 7 (1) 7.8 7.0 7.8 11.1 0.21 13.7

First Horizon Corp.*

47 3 7 (10) 7.1 6.9 8.4 10.2 0.38 13.1

First Republic Bank

68 2 36 7 6.4 4.2 8.1 9.2 (0.26) 8.9

Hancock Whitney Corp.

50 2 10 (3) 7.1 6.4 7.1 11.4 0.15 17.8

Huntington Bancshares Inc.

31 4 45 2 5.5 4.2 6.7 9.4 0.08 14.8

JPMorgan Chase & Co.

53 16 15 (5) 5.9 4.9 6.6 13.2 0.34 15.3

KeyCorp

52 2 13 (2) 4.4 4.0 5.7 9.1 0.01 12.0

M&T Bank Corp.

48 13 10 (4) 7.6 7.0 8.7 10.4 0.39 12.1

Morgan Stanley

30 9 12 3 5.8 4.9 6.6 15.3 (0.08) 8.9

Northern Trust Corp.

83 30 11 (7) 6.2 4.8 6.8 10.8 0.05 5.7

OFG Bancorp

41 5 2 (5) 9.6 8.9 9.6 13.6 0.43 18.1

Popular Inc.

51 9 18 (6) 4.8 4.7 4.9 16.4 0.00 16.7

Regions Financial Corp.

37 8 14 (4) 5.6 5.5 6.7 9.6 0.46 17.7

River City Bank

59 4 10 6 8.7 8.7 8.7 11.2 0.25 13.3

S&T Bancorp Inc.

34 2 8 (5) 9.2 9.2 9.2 12.8 0.28 13.8

Sallie Mae Bank

4 17 (8) 7 8.1 8.1 8.1 12.9 0.08 (0.8)

State Street Corp.

91 35 6 (3) 4.9 2.5 5.5 13.6 0.18 11.5

Synchrony Financial

11 10 (1) 11 9.5 9.5 10.3 12.8 0.27 17.7

Synovus Financial Corp.

51 3 6 0 5.8 5.8 6.7 9.6 0.10 19.2

Texas Capital Bancshares Inc.

59 18 (9) (10) 9.7 9.3 10.7 13.0 0.29 28.4

The Bank of New York Mellon Corp.

93 28 (6) (14) 4.4 2.8 5.6 11.2 0.14 5.4

The Charles Schwab Corp.

21 6 24 (17) 1.2 (1.5) 3.0 21.9 0.31 21.8

The Goldman Sachs Group Inc.

48 17 40 (1) 6.8 6.7 7.6 14.4 0.04 4.5

The PNC Financial Services Group Inc.

45 6 25 (1) 5.2 4.3 6.3 9.1 0.07 13.4

Truist Financial Corp.

45 4 9 (3) 4.4 2.5 5.7 9.0 0.13 10.9

Trustmark Corp.

40 4 7 (2) 6.3 5.8 6.3 9.7 0.16 (9.1)

U.S. Bancorp

52 8 6 12 4.3 2.6 5.3 8.4 0.18 7.5

UMB Financial Corp.

57 4 32 4 6.2 4.7 6.2 10.6 0.05 15.3

Valley National Bancorp

33 2 12 9 7.5 6.6 7.9 9.0 (0.02) 11.2

Webster Financial Corp.

41 1 9 2 7.4 6.2 7.8 10.7 0.20 12.3

Wells Fargo & Co.

52 8 6 (3) 7.2 4.9 8.2 10.6 0.32 6.4

Zions Bancorporation N.A.

53 2 19 (9) 3.8 4.0 4.3 9.7 0.28 23.7
Note: For bank holding companies, uninsured deposits are sourced from the call reports of their subsidiary banks and compared to the domestic deposits of those subsidiaries. Because of intercompany and collateralized deposits, our metric in some cases may overstate the percentage that is uninsured at the consolidated company, though disclosures vary. For Capital One, Huntington, and UMB, we have based the ratios on disclosures from their SEC filings. *The rating on First Horizon Corp. is unsolicited. HTM--Held-to-maturity. CET1--Common equity Tier 1. Q/Q--Quarter over quarter. NIM--Net interest margin. Source: S&P Global Ratings based on regulatory data collected by S&P Global Market Intelligence.

Related Research

The Fed's Plan For U.S. Banks Should Reduce Contagion Risk, March 13, 2023

This report does not constitute a rating action.

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