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Bank Earnings Review: 1Q24

Companies and Markets

By Sean Ryan  |  April 30, 2024

A Look at the Coming Month

What We’re Watching. Bank earnings season hasn’t completely ended, but conference season kicked off this week with the Gulf South conference in New Orleans. The bank conference calendar is crowded in May, but other highlights include the SLOOS release next week, Congressional hearings featuring prudential regulators on May 15-16, and the JP Morgan Chase Investor Day on May 20.

Figure 1: As Earnings Season Winds Down, Conference Season Has Already Begun


1Q24 Bank Earnings: Broad Strength in the Face of Sustained Headwinds

A Timex earnings season. Like the old Timex ad slogan, banks took a licking and kept on ticking in 1Q24. The higher-longer expectations continued to drift yet higher and yet longer and noninterest-bearing deposits continued to drift down. As shown in Figure 2, they could continue to do so at this pace for several more quarters before reaching the range that prevailed before ZIRP. Yet while NIMs declined overall, a growing cohort of banks—one quarter of those in the superregional universe used in Figure 3—are already seeing their NIMs bottom out and begin to rise, and that number looks set to rise as we move through 2024.      

Figure 2: Noninterest-bearing deposits remain well above pre-GFC norms


Figure 3: NIMs remain under pressure but are beginning to turn up at more banks


Rising capital, mean-reversion in credit.  As Figures 4 and 5 show, while CRE and credit cards have been driving credit metrics back toward historical norms from the unsustainable low COVID-era levels, Figure 6 shows that capital levels are high and rising. If we do wind up seeing a full credit cycle (rather than mere mean reversion), then banks will enter it with much a much better ability to absorb write-offs than in prior cycles.

Figure 4: Net Charge-Offs 


Figure 5: Nonperforming asset levels rising from unsustainably low levels


Figure 6: Bank capital levels are high and rising


Branch Closures Decelerating

Branch closures slowing for many large banks. Branch totals disclosed by the largest banks suggest that for many, branch closures are decelerating. How long that deceleration lasts is anyone’s guess, of course, and if M&A were to pick up then, as illustrated in Figure 8, that would tend to reaccelerate closures. At the same time, we can’t shake the feeling that the contra-trend of more banks announcing de novo branch plans may be more strategically significant than is generally acknowledged.

Figure 7: Total Retail Branches


Figure 8: The lone and level sands stretch far away (NYC, 2024)


Bank Trade Up

Banks trade up. The KBW Bank Index (BKX) and the KBW Regional Bank Index (KRX) both rose last week, with the BKX up 2.6% and the KRX up 1.4%, though both underperformed the S&P 500 (the BKX by just 7bps but the KRX by 123 bps).  

Figure 9: The KBW Bank Index 


Figure 10: The KBW Regional Bank Index 


Interest Rates

Bear steepener remains stubbornly in place. Last week the 10 year yield rose 6bps to 4.70%. The 2 year – 10 year spread narrowed by 3bps to -33bps.

Figure 11: The bear steepener remains in place


Figure 12: The 2-10 inversion narrowed by 3bps last week to -33bps


Fed cuts continue to drift into the future. The implied timing of the first rate cut, which until very recently was June, has now moved out to the September 18 FOMC meeting. As shown in Figure 14, futures now imply a bottoming of rates around 4.25%, versus 3% a year ago; 125bps of once-anticipated easing has simply vanished.

Figure 13: Fed Funds Futures imply the only cut in 2024 will be at the September 18 FOMC meeting


Figure 14: Fed Funds Futures imply a 4Q25 average daily rate of 4.45%, up 147bps in the past year


Figure 15: Large Cap Bank Performance and Valuation



This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.


Sean Ryan, CFA


Mr. Sean Ryan is the VP/Director for the banking and specialty finance sectors at FactSet. In this role, he guides the development of FactSet’s deep sector offering in these areas. He joined FactSet in 2019 and prior to that, he covered bank and specialty finance stocks for brokers including Lehman Brothers and Bear Stearns and for sector-focused hedge funds FSI and SaLaurMor Capital. Mr. Ryan earned a Bachelor of Science in industrial and labor relations from Cornell University. He is a CFA charterholder.


The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.