After a turbulent week in which some regional U.S. banks flagged bad loan and fraud issues, investors scrutinized lenders' earnings reports for signs of wider strain across the sector.
Zions Bancorporation (ZION.O), posted a third-quarter profit increase on Monday, helped by stronger interest income, despite the $50 million fraud-related charge-off it announced last week.
Private credit carries the highest risk of losses, given the high growth rate and light regulation, Zions CEO Harris Simmons told analysts on Monday evening, although he does not expect big bank losses from private credit exposure.
Since the 2023 banking crisis, investors have had little patience for uncertainty, analysts said. Even isolated loan or fraud troubles now trigger broad-based selloffs as traders rush to reduce exposure.
"Years of easy credit and low transparency have left investors uncertain about where risks truly lie; even small negative surprises can spark outsized repricing," said Tim Hynes, global head of Credit Research at Debtwire.
The KBW Regional Banking Index (.KRX), has dropped 4.8% this year, lagging the KBW Bank Index (.BKX), which tracks large-cap banks and is up 15.9% so far in 2025.
Last week, bank stocks seesawed sharply after Zions disclosed $50 million in losses tied to commercial and industrial loans and Western Alliance (WAL.N), initiated a lawsuit alleging fraud by Cantor Group V, LLC. Cantor has denied the allegations.
Zions' higher third-quarter profit, despite the loan losses by its California division, lifted the bank's shares 2.9% in after-market trading. The SPDR S&P Regional Banking ETF (KRE.P), rose 2.49% on Monday.
HBT Financial (HBT.O), reported $19.8 million of net income, slightly higher than in the year-ago quarter, with nonperforming assets at 0.17% of total assets, the same percentage a year earlier.
Its shares rose 4.15% after it agreed to merge with CNB Bank in a deal valued at $170.2 million.
Jefferies (JEF.N), shares rose 4.25% after sharp drops last week. The bank was caught up in the First Brands collapse, though executives have said the investment bank was "defrauded" and any losses are absorbable.
Among regional lenders, Washington Trust Bancorp's (WASH.O), net income was stable at $10.8 million compared to the year-ago period. The bank had warned that its third-quarter profit would be hit by $11.3 million in loan losses.
'ADDITIONAL COCKROACHES'
Even before problems surfaced at Zions and Western Alliance, investor confidence had taken a hit from the twin bankruptcies of auto parts maker First Brands and subprime lender Tricolor.
Fifth Third (FITB.O), booked a $178 million loss last week tied to the bankruptcy of Tricolor, while JPMorgan Chase (JPM.N), wrote off $170 million.
"Asset quality metrics across banks have been deteriorating but have held up better than we expected. Losses have been low, so these recent numerous larger loan problems have raised fears of a broader deterioration," said Michael Driscoll, credit rating officer, Global Financial Institutions Ratings at Morningstar DBRS.
"But one of the lessons from 2023 regional bank failures was that banks' funding can unravel faster than in the past if sizable issues emerge."
But many, including Fifth Third CEO Tim Spence, have downplayed comparisons to the 2023 regional banking crisis, when Silicon Valley Bank's failure sparked a broader turmoil.
(Source: Reuters)
Zions Bancorporation (ZION.O), posted a third-quarter profit increase on Monday, helped by stronger interest income, despite the $50 million fraud-related charge-off it announced last week.
Private credit carries the highest risk of losses, given the high growth rate and light regulation, Zions CEO Harris Simmons told analysts on Monday evening, although he does not expect big bank losses from private credit exposure.
Since the 2023 banking crisis, investors have had little patience for uncertainty, analysts said. Even isolated loan or fraud troubles now trigger broad-based selloffs as traders rush to reduce exposure.
"Years of easy credit and low transparency have left investors uncertain about where risks truly lie; even small negative surprises can spark outsized repricing," said Tim Hynes, global head of Credit Research at Debtwire.
The KBW Regional Banking Index (.KRX), has dropped 4.8% this year, lagging the KBW Bank Index (.BKX), which tracks large-cap banks and is up 15.9% so far in 2025.
Last week, bank stocks seesawed sharply after Zions disclosed $50 million in losses tied to commercial and industrial loans and Western Alliance (WAL.N), initiated a lawsuit alleging fraud by Cantor Group V, LLC. Cantor has denied the allegations.
Zions' higher third-quarter profit, despite the loan losses by its California division, lifted the bank's shares 2.9% in after-market trading. The SPDR S&P Regional Banking ETF (KRE.P), rose 2.49% on Monday.
HBT Financial (HBT.O), reported $19.8 million of net income, slightly higher than in the year-ago quarter, with nonperforming assets at 0.17% of total assets, the same percentage a year earlier.
Its shares rose 4.15% after it agreed to merge with CNB Bank in a deal valued at $170.2 million.
Jefferies (JEF.N), shares rose 4.25% after sharp drops last week. The bank was caught up in the First Brands collapse, though executives have said the investment bank was "defrauded" and any losses are absorbable.
Among regional lenders, Washington Trust Bancorp's (WASH.O), net income was stable at $10.8 million compared to the year-ago period. The bank had warned that its third-quarter profit would be hit by $11.3 million in loan losses.
'ADDITIONAL COCKROACHES'
Even before problems surfaced at Zions and Western Alliance, investor confidence had taken a hit from the twin bankruptcies of auto parts maker First Brands and subprime lender Tricolor.
Fifth Third (FITB.O), booked a $178 million loss last week tied to the bankruptcy of Tricolor, while JPMorgan Chase (JPM.N), wrote off $170 million.
"Asset quality metrics across banks have been deteriorating but have held up better than we expected. Losses have been low, so these recent numerous larger loan problems have raised fears of a broader deterioration," said Michael Driscoll, credit rating officer, Global Financial Institutions Ratings at Morningstar DBRS.
"But one of the lessons from 2023 regional bank failures was that banks' funding can unravel faster than in the past if sizable issues emerge."
But many, including Fifth Third CEO Tim Spence, have downplayed comparisons to the 2023 regional banking crisis, when Silicon Valley Bank's failure sparked a broader turmoil.
(Source: Reuters)
