Regional Bank Performance: Goldman Sachs Breaks Down Q2 2024 Earnings

In a recent analyst note by Goldman Sachs, the outlook for several regional banks were evaluated based on their recent second-quarter 2024 earnings reports. Among the banks examined included KeyCorp KEY, M&T Bank Corp MTB, Regions Financial Corp RF, Truist Financial Corp TFC, U.S. Bancorp USB and Zions Bancorporation NA ZION.

Lead analyst Ryan Nash and team highlighted key metrics, growth projections and credit performances, offering a comprehensive analysis of each bank’s standing and market outlook.

KeyCorp

KeyCorp’s second-quarter 2024 EPS results were mixed. The bank saw a slight beat on fees and managed lower expenses, which offset a softer Net Interest Income (NII). Credit performance was largely in line with expectations. The focus shifted to the updated FY 2024 guidance, where most items such as fees, expenses and Net Charge Offs (NCOs) were reiterated.

However, the bank lowered its loan growth expectations while increasing deposit growth projections. On the earnings call, KEY indicated that NII would likely hit the low end of its range based on the forward curve and noted that loan growth has yet to see an inflection.

Goldman Sachs’ note points out that KeyCorp’s earnings were impacted by a challenging economic environment and competitive pressures.

M&T Bank

M&T Bank reported better-than-expected second-quarter 2024 results, with NII, fees, and expenses all surpassing the mid-June update. Credit metrics improved, with non-performing loans (NPLs) and criticized assets declining after three consecutive quarters of increase.

The bank updated its NII guidance, projecting $6.85-$6.9 billion, which was viewed as conservative due to limited growth expected in the second half of 2024.

Goldman Sachs highlighted M&T’s effective integration of recent acquisitions, which contributed to improved operating leverage.

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Regions Financial

Regions Financial reported solid earnings, underpinned by steady loan and deposit growth. Goldman Sachs noted that the bank’s focus on expanding its commercial banking segment paid off, as commercial loans showed significant growth.

Regions Financial also benefited from improved efficiency ratios due to ongoing digital transformation initiatives. However, the bank faced some headwinds from higher provisions for credit losses, reflecting a cautious stance on future economic uncertainties .

Truist Financial

Truist Financial’s performance in second-quarter 2024 was marked by successful cost-saving measures and revenue synergies from its merger. Goldman Sachs emphasized Truist’s enhanced scale and scope, which have strengthened its competitive position.

The bank’s NIM remained relatively stable, and its fee income saw a boost from increased transaction volumes. Truist’s credit metrics also showed improvement, with a decline in non-performing assets and delinquency rates .

US Bancorp

US Bancorp posted strong quarterly results, driven by robust consumer and commercial lending activities. Goldman Sachs highlighted the bank’s superior efficiency ratio, which is among the best in the industry. US Bancorp’s diversified business model, including a significant contribution from payment services, provided resilience against interest rate volatility.

The bank’s credit quality metrics remained solid, with a decrease in net charge-offs and stable non-performing asset levels .

Zions Bancorp

Zions Bancorp showed strong performance with notable improvements in its loan portfolio and asset quality. Goldman Sachs pointed out that Zions’ focus on community banking and small to medium-sized business lending has paid off, resulting in robust loan growth.

The bank’s credit quality remained high, with low levels of non-performing assets and charge-offs. Zions also benefited from strategic cost management initiatives, which helped improve its efficiency ratio.

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Note: The author of this article owns KEY Stock.