Every Rose Has Its Thorn ...A Look at NII Guides & Deposit Risks

Research evidence excerpt

Every Rose Has Its Thorn ...A Look at NII Guides & Deposit Risks

Financials | Regional Banks

June 08, 2026

John Pancari Every Rose Has Its Thorn ...A Look at NII

212 497 0861 Guides & Deposit Risks john.pancari@evercoreisi.com

Girard Sweeney Are deposit costs poised to be the thorn in the side of bank

646 551 8503 expectations? Following our May loan growth report that evaluated

girard.sweeney@evercoreisi.com

banks best positioned to achieve FY26 loan guidance based on 1Q

Russ Anderson trajectories, we are back with our second step. In this installment, we

212-497-0887

Russ.Anderson@evercoreisi.com focus on the NIM and funding side of the equation - including banks'

reliance on NIM expansion to achieve NII guidance and the risk posed

by deposit pricing pressures. Bottom line: Most of our coverage

requires moderate NIM expansion off of 1Q26 levels to achieve FY26

NII expectations – assuming loan growth falls in line with guidance and

no material negative surprises in deposit costs. It is this area that has

been garnering attention – particularly amid strengthening loan growth,

but also industry deposit pricing pressures, cash sorting/agentic cash

developments, and pending stablecoin legislation. As we detail on page

3, the degree of required NIM expansion through the remainder of 2026

to hit FY26 NII guides spans 1-9 bps for our coverage, with TFC, ZION,

KEY and CFG requiring the greatest expansion. Conversely, MTB and

USB could actually see modest NIM compression and still hit NII

guides. We acknowledge that select banks (i.e. CFG and KEY) have

more material structural NIM tailwinds from swap maturities, securities

repricing, and loan runoff – which should lower the risk of negative NIM

surprises despite relying on noteworthy NIM expansion to hit NII

expectations.