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Smaller U.S. Banks Say the Crisis Is Contained, but Fears Persist Smaller U.S. Banks Say the Crisis Is Contained, but Fears Persist
(2 days later)
The abrupt collapse of Silicon Valley Bank and Signature Bank threw the entire industry into turmoil and exposed fissures in the financial foundations of some smaller banks.The abrupt collapse of Silicon Valley Bank and Signature Bank threw the entire industry into turmoil and exposed fissures in the financial foundations of some smaller banks.
A month later, the nation’s biggest banks are raking in billions and are likely to keep doing so even if the economy softens. But regional lenders are seen as more at risk. Deposits are falling, and the cost of keeping customers is rising, eating into profits. And fears remain about the value of investments and loans, especially ones backed by real estate.A month later, the nation’s biggest banks are raking in billions and are likely to keep doing so even if the economy softens. But regional lenders are seen as more at risk. Deposits are falling, and the cost of keeping customers is rising, eating into profits. And fears remain about the value of investments and loans, especially ones backed by real estate.
On Friday, Moody’s downgraded the ratings of 11 regional banks, citing “a deterioration in the operating environment and funding conditions.”On Friday, Moody’s downgraded the ratings of 11 regional banks, citing “a deterioration in the operating environment and funding conditions.”
In calls with investors about their latest financial results last week, regional bank leaders tried to cast the crisis as a moment that had passed. The banks also distanced themselves from rivals still caught in the storm, like First Republic, which reported on Monday that it had lost $102 billion in customer deposits.In calls with investors about their latest financial results last week, regional bank leaders tried to cast the crisis as a moment that had passed. The banks also distanced themselves from rivals still caught in the storm, like First Republic, which reported on Monday that it had lost $102 billion in customer deposits.
The runs on deposits that brought about the sudden demise of Silicon Valley Bank and Signature Bank did not spread as widely as some feared. Still, savers seeking the perceived safety of larger institutions took their money out of many smaller banks in recent weeks.
Deposits fell roughly 1 percent, on average, at a selection of about 20 small and midsize banks that reported first-quarter earnings last week, according to analysts at UBS, who described it as “solid” given the circumstances.