When Giants Expand: Mapping Deposit Risk in a More Competitive Landscape

Research evidence excerpt

When Giants Expand: Mapping Deposit Risk in a More Competitive Landscape

North America Insight

July 6, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMUS Large Cap and Midcap Banks Manan Gosalia

Equity Analyst

When Giants Expand: Mapping Manan.Gosalia@morganstanley.comRyan Kenny, CFA +1 212 761-4092

Ryan.Kenny@morganstanley.com +1 212 761-1664

Deposit Risk in a More Alexander L Ward

Research Associate

Alex.Ward@morganstanley.com +1 212 296-3096

Competitive Landscape Brian Wilczynski, CFA

Brian.Wilczynski@morganstanley.com +1 212 761-1084

Deposit competition is likely to accelerate given a mix of cyclical Connell J Schmitz

and secular factors, gaining investor attention in 2H. Accelerating ResearchConnell.Schmitz@morganstanley.comAssociate +1 212 761-6252

loan growth positive for NII, but we see downside risk to Ben Bayanfar

numbers beyond '26. In this note, we focus on mapping the ResearchBen.Bayanfar@morganstanley.comAssociate +1 212 761-0649

secular impact of increasing branch competition

Midcap Banks

North America

Key Takeaways Industry View Attractive

Large Cap Banks

Deposit competition is likely to accelerate given a mix of cyclical (rate outlook / North America

Industry View Attractive

loan growth) and secular (branch competition / AI) factors.

What’s Changed

We are taking our 2027 EPS down ~1% for the regional/super regional bank Prosperity Bancshares Inc

group from a mix of higher deposit costs and higher expenses. (PB.N) From To

Rating Overweight Equal-weight

Accelerating loan growth still keeps us positive on NII trajectory, particularly for

Truist Financial Corp (TFC.N) From To

2026, but we see growing risks for 2027. Rating Overweight Equal-weight

As several large banks focus on expanding their branch footprint, we look at