Setting a Course for Recovery: Regional Banks in the Upcoming 2Q 2023 Earnings Season

Understanding Market Dynamics, Preparing for Earnings Season and Setting Course for Recovery in a Volatile Environment

Current Landscape: Navigating Through Turbulent Tides

The regional banking sector is caught in a maelstrom of uncertainty, exacerbated by high-profile bank failures, amplified regulatory scrutiny, and rapid interest rate changes. A recent S&P Global Market Intelligence report noted a steep decline in regional banks’ stocks for three straight months, a decline more precipitous than any other sector of U.S. banking.

First Republic Bank’s collapse, a Federal Reserve rate crossing the formidable 5% threshold after 16 long years, and the failed merger between First Horizon Corp. and Toronto-Dominion Bank have all contributed to this challenging environment. These incidents, combined with the share losses exceeding 20% for well-known entities like First Foundation Inc., PacWest Bancorp, and Dime Community Bancshares Inc., have signaled stormy weather ahead.

In the face of these adversities, the impending 2Q 2023 earnings season presents a significant opportunity for recovery and course correction.

Key Trends and Observations: Pivotal Areas of Focus

As regional banks chart a course for the 2Q 2023 earnings season, several key market concerns and opportunities…