Some of the country’s largest regional banks said on Thursday they attracted more deposits in the second quarter but paid more for them, denting a key measure of profitability.
Truist stock (TFC) fell 7% after the Charlotte, North Carolina-based bank released its numbers. It also lowered its full-year revenue forecast by 1% to 2%, citing lower net interest income, slower loan growth and lower investment banking revenue.
“We are clearly at an inflection point in the growth rate, so growth rates have changed significantly,” CEO Bill Rodgers told analysts.
Truist’s filings rose slightly from the first quarter and beat analysts’ expectations, but the cost he paid on those filings rose 39 basis points.
Read more: The best high yield savings account rates for July 2023
This resulted in a 6% drop in net interest income from the first quarter, which was worse than expected. Net interest income measures the difference between what banks earn on their loans and what they pay for their deposits.
Truist is the nation’s sixth-largest bank by assets, according to Federal Reserve data, but it’s still significantly smaller than industry giants from coast to coast such as JPMorgan Chase (JPM) or Bank of America (BAC).
Mid-sized financial institutions have come under intense scrutiny from investors following the turmoil last spring that destroyed three major banks and caused outflows across the banking system.
The rush sent deposit rates soaring across the sector as banks rushed to secure funding. Many regional banks have warned that this will dampen results while reducing estimates for the rest of the year.
At Cincinnati-based Fifth Third (FITB), the nation’s 17th-largest bank, deposits increased from the prior quarter and year-over-year period. Its earnings per share, however, exceeded expectations. Its net interest income rose, but the bank reduced its guidance range for the full year.
“We’ll always plan around a more conservative bottom line because if we’re wrong everyone is fine and if we’re right we’re better positioned to deliver stable earnings,” CEO Tim Spence said.
Its stock was up 2.7% on Thursday.
Key (KEY), a Cleveland-based bank that is the 21st largest in the United States, reported net income of $287 million, down 46% from a year ago and 8% from last quarter, but slightly better than analysts feared.
Total deposits increased slightly from the prior quarter and decreased slightly from a year ago. Revenue and net interest income fell 11% from a year ago to $1.6 billion and $986 million, respectively.
Its stock rose 4% on Thursday.
Another regional bank announced its results after the market closed. Capital One (COF), based in McLean, Va., said its profit of $1.4 billion was down 30% from a year ago. This exceeded consensus expectations.
Its net interest income fell 1% from last quarter, while deposits fell 2%.
Click here for the latest stock market news and in-depth analysis, including events moving stocks
Read the latest financial and business news from Yahoo Finance