Earnings Summary: Citigroup’s OCC Plan, First Guaranty Layoffs

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This The Federal Reserve’s long-awaited interest rate cut can’t come soon enough for bankers, as high interest rates — combined with regulatory scrutiny, layoffs and dissolved partnerships — weighed on the second-quarter financial results of several major U.S. banks

Net interest income was a particularly significant area of impact, as seen in Comerica Bank’s second-quarter earnings report. Shares of the Dallas-based bank fell last month on a 14% drop in net interest income forecast for 2024, which Citigroup analyst Ben Gerlinger said was more severe than previous forecasts.

Truist Financial was another institution that saw its net interest income decline, down $77 million, or 2.1%, year over year, “primarily due to higher funding costs and lower earning assets,” according to the bank’s press release.

Not everyone has been deterred by persistent inflation, with some institutions still seeing record levels of growth since before interest rates were raised.

Through strategic acquisitions CIT Group and failed Silicon Valley Bank In the past two years, the family-owned First Citizens BancShares company in Raleigh, North Carolina, has ballooned to more than $220 billion in assets. The stock has reflected that progress, closing Tuesday at just over $2,000 a share.

“It’s a completely different bank,” Jefferies analyst Casey Haire told Catherine Leffert of American Banker. “(But) the conservative approach of the Holding family hasn’t changed at all. There’s been no change in the conservative balance sheet culture at the top of the company. They just have a different business model now and they’re in the innovation market.”

Other notable results included New York Community Bancorp’s proposed sale of its residential mortgage servicing business to Mr. Cooper and the layoff of 15 percent of its employees by First Guaranty Bancshares and others.

Read on for second-quarter earnings highlights that show how many of the largest U.S. banks fared and what market factors drove their results.