Takeaways from Money-Center Banks and Read-Throughs to the Regionals & Mid-Caps: USA | Large-Cap & Mid-Cap Banks

Research evidence excerpt

Takeaways from Money-Center Banks and Read-Throughs to the Regionals & Mid-Caps: USA | Large-Cap & Mid-Cap Banks

e income remained constructive, benefiting from strength

. CET1 (bp) 8in payments, treasury services, securities services, wealth management, and transaction banking, Source: Jefferies, FactSet, S&P Capital IQ, Company

while capital markets was a standout performer, driven by robust trading activity, improving Documents

investment banking fees, and healthy client engagement. Expense trends were mixed as several

banks generated meaningful positive operating leverage while others elected to reinvest revenue

upside into technology, AI, marketing, and growth initiatives. Credit quality remained favorable,

and strong capital levels continued to support sizable buybacks, dividend increases, and ongoing

balance sheet growth.

Read-throughs should be positive for the regional & mid-cap banks. The money-center prints

skewed positive for the regional and mid-cap banks reporting over the coming days. Commercial

loan growth was strong across the board, a key driver for banks more reliant on NII for revenue

growth, particularly the more commercial-levered regionals. Credit remained benign, with improving

NCO, NPA, and criticized loan trends. The key watch-item is deposit cost and mix: money-center

banks posted strong overall deposit growth, but underlying cost and mix trends were mixed, with

several banks seeing modest Q/Q increases in interest-bearing deposit costs, a potential signal of

incremental deposit cost pressure, and by extension NIM pressure, for smaller banks.

Positive Outliers: While all four banks delivered solid results and beat EPS and PPNR expectations,

we believe BAC had the cleanest print of the group, followed by JPM.