2Q26 Banks Preview: All Eyes on Funding Costs and NIM Trends

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2Q26 Banks Preview: All Eyes on Funding Costs and NIM Trends

I N D U S T R Y N O T E

J u n e 2 9 , 2 0 2 6

Bank Insights

CONCLUSION Stephen Scouten, CFA

Quick Thoughts on the Banks Into 2Q26 - Notably, we think that the group remains Managing Director, Piper Sandler & Co.

healthy overall, credit is largely benign, loan demand appears to be accelerating, and share 404 442-2882, stephen.scouten@psc.com

repurchases remain in favor with banks and investors. The KRE is up ~16% YTD, which Matthew Clark

could limit upside near-term, especially as the prospect of higher rates and an increasingly Managing Director, Piper Sandler & Co.

212 466-7805, matthew.clark@psc.comcompetitive deposit environment raise concerns of "peak NIM's" for the group as a whole.

We think that solid loan growth and relatively stable NIM's can still lead to an attractive NII Nathan Race

Managing Director, Piper Sandler & Co.

and overall EPS trend. Headed into 2Q our team has the most conviction around: OW- 312 267-5116, nathan.race@psc.com

rated:AMTB, CPF, CFBK, COLB, CWBC, CNOB, FRME, NBBK, PNFP, VLY, and WTFC, Manuel Navas

as well as Neutral-rated FBP. Managing Director, Piper Sandler & Co.

212 284-9386, manuel.navas@psc.com

• Our Estimates Are in Line With Consensus - We find our 2Q26 EPS estimates to be Justin Crowley

in line with the Street on a median and average basis. Sr. Research Analyst, Piper Sandler & Co.

212 466-7921, justin.crowley@psc.com

• NIMs Expected to Push Modestly Higher - While we expect conversations around Adam Kroll, CFA Research Analyst, Piper Sandler & Co.

"peak NIMs" to dominate the qtr calls/discussions, we are still modeling for slight 312 267-5071, adam.kroll@psc.com

expansion in 2Q26 (+2 bps median change), as well as some continued expansion into Jackson Andrew