Quarterly Bank Report

Capital Performance Group monitors the quarterly financial performance trends of publicly traded banks and provides opinions on the implications for the industry and the strategies required to deliver top-tier performance going forward. If you have any feedback or would like to see any additional information included, please contact Claude Hanley via email or at 703-861-8623.

A few takeaways from our 3Q25 Bank Report: 

  • Median ROTCEs for all asset tiers were double-digit, and the median stock price-to-tangible book value increased in each asset tier.
  • Margins expanded for the fourth consecutive quarter, even though funding costs remained relatively stable for all asset tiers. We expect further NIM expansion in the fourth quarter as the Fed’s recent rate cuts will reduce funding costs.
  • While some banks reported significant charge-offs tied to borrower fraud or other one-time events, credit conditions overall remained benign.

A few takeaways from our 2Q25 Bank Report:

  • Net loan growth was positive across all asset tiers, but the outlook is clouded by uncertainty about economic developments and global trade tensions.
  • Deposit growth was moderately positive. Many bankers prioritized lower funding costs over loan growth and attributed the increase to improved client engagement rather than high rates.
  • Efficiency ratios improved as median revenue growth was well above median growth in noninterest expenses in all asset tiers.
  • Bank stocks significantly outperformed the broader market in 2Q25, and higher valuations will likely spur M&A activity.

A few takeaways from our 1Q25 Bank Report:

  • Overall profitability dipped. Median ROTCEs declined from the prior quarter in four of the five asset tiers.
  • Funding costs decreased for a second consecutive quarter, but loan and revenue growth were negligible.
  • The credit outlook became shakier. While the median ratio of nonaccrual loans to total assets was largely unchanged from the prior quarter, many banks increased their provision for credit losses.

A few takeaways from our 4Q24 Bank Report:

  • The industry’s financial performance in the fourth quarter generally continued the positive trends of the third quarter.
  • The median net interest margin increased in four of the five asset tiers, driven in large measure by a decline in the median cost of funds.
  • Bank stock indices outperformed the broader market in 4Q24 as investors anticipated a more benign regulatory and interest rate environment.

A few takeaways from our 3Q24 Bank Report:

  • The median cost of funds rose between 2bps and 8bps across all five asset tiers. However, many banks started to lower deposit rates following the FOMC’s September 19th rate cut, and funding costs are expected to decline as the Fed continues to lower interest rates.
  • Most banks posted lower provisions for credit losses than expected, and concerns about a broad deterioration in credit are receding.
  • Bank stock valuations rebounded in the third quarter. The KBW Nasdaq Bank Index rose by 8.88%, exceeding the broader market. The median stock price to tangible book value increased by at least 7bps in four asset tiers.

A few takeaways from our 2Q24 Bank Report:

  • The median net interest margin increased in the three asset tiers below $50B, but it decreased in the two largest asset tiers.
  • Funding costs continued to rise in the second quarter, albeit at a slightly slower pace than in prior quarters.
  • The median ratio of nonaccrual loans to total assets ticked up slightly in four of five asset tiers, yet asset quality generally remains sound. While certain sub-sectors of CRE remain a concern, there was no sign of a broader weakening in credit quality.
  • Bank stock valuations held steady in the second quarter of 2024; however, the outlook for the remainder of 2024 is unclear.

A few takeaways from our 1Q24 Bank Report:

  • Despite intense competition, most banks reported positive deposit growth in the first quarter. The median deposit growth in all five asset tiers increased in 1Q24.
  • The median cost of funds rose between 8bps and 18bps for all five asset tiers.
  • The median ratio of nonaccrual loans to total assets increased in the top three asset tiers in 1Q24. Several large regional and megabanks reported deterioration in CRE credit quality, especially in center-city office loans.

A few takeaways from our 4Q2023 Bank Report:

  • Overall profitability declined in all asset tiers in 4Q23. Median ROATCEs contracted by at least 11.8% for each of the five asset tiers.
  • While the Federal Reserve may be done raising rates, many bankers expect deposit costs will continue to increase through the first half of this year, albeit at a slower rate.
  • Banking stock indices outperformed the broader market in the quarter. The median price/tangible book value increased by at least 14bps and stood at 1.2x or higher for all asset tiers above $1.0B

A few takeaways from our 3Q2023 Bank Report:

  • Funding costs continued to increase in the third quarter. The median cost of funds rose
    by 27 bps or more in each asset tier.
  • Asset quality began to deteriorate across four of the five asset tiers. Commercial real estate charge-offs surged, especially in office portfolios. According to S&P Global, some of the banks with the largest outstanding office exposures – PNC Financial, Wells Fargo, and Zions Bancorp. – saw their levels of nonperforming office loans to total office loans double or triple in 3Q23.
  • M&A activity rebounded in the third quarter as three of the largest six deals since the beginning of 2022 were announced – PacWest Bancorp acquired Banc of California Inc. for $1.0B; Eastern Bankshares Inc. bought Cambridge Bancorp for $527.1MM; and Atlantic Union Bankshares Corp. purchased American National Bankshares Inc. for $447.6MM.
  • Investors continued to discount bank stocks, especially those facing spread income pressure, due to concerns that higher-for-longer interest rates will strain liquidity and boost funding costs.

A few takeaways from our 2Q2023 Bank Report:

  • For the second consecutive quarter, median net interest margins contracted in all asset tiers except the very largest banks. It was unchanged for the largest asset tier.
  • The cost of funds continued to increase in the quarter. The median cost of funds rose by 39 bps or more in all asset tiers except the smallest where it rose by 30 bps.
  • The median P/TBV ratio declined across all five asset tiers as investors continued to worry about the industry’s prospects in a challenging economic environment.

A few takeaways from our 1Q2023 Bank Report:

  • Slowing loan growth and rising deposit betas crimped net interest margins, and the pressure to boost deposit rates will continue.
  • Stock values tumbled across the industry, even among the most highly valued banks.
  • Credit metrics remained sound but the ABA’s April Credit Conditions Index was the weakest since the height of the pandemic in 2020.

A few takeaways from our 4Q2022 Bank Report:

  • Median net interest margins continued to expand, albeit by a smaller magnitude than in the previous quarter.
  • Despite the general expansion in net interest margins, median efficiency ratios were essentially unchanged from the previous quarter.
  • Total deposits declined, and the decline was most acute among banks with assets of under $1B

A few takeaways from our 3Q22 Bank Report:

  • The industry posted solid overall profitability due to growth in net interest income. Median ROATCEs were in the mid- to high- teens across asset tiers.
  • The median efficiency ratio of mid-sized banks was below 56.0%.
  • The cost of funds increased sharply. The largest increase was among banks with $50.0B or more in total assets.

A few takeaways from our 2Q22 Bank Report:

  • Net interest margins increased and executives at many institutions expect that net interest income will continue to grow this year.
  • Excess liquidity began to recede as loan growth surpassed deposit growth and many bank executives indicated that loan balances would continue to grow this year, even as economic growth slows.
  • Despite a generally solid 2Q22 performance, bank investors and analysts are more concerned about what lies ahead.

A few takeaways from our 1Q22 Bank Report:

  • Loan growth picked up in 1Q22 and many banks expect loan growth will be in the mid-to-upper single digits for the year.
  • Net interest margins generally remained flat or contracted, but they are forecasted to expand as interest rates rise and excess liquidity is redeployed into loans.
  • Fee income generally declined, due primarily to reductions in mortgage banking revenue.