Just when the market's nervousness over New York Community Bancorp has started to die down, S&P Global Ratings lowered its outlook on five lenders to negative from stable, citing their exposure to the commercial real estate sector. At the same time, it affirmed its ratings on these five banks, "reflecting some mitigating factors, including solid underwriting track records and limited deterioration in asset quality."
The five are First Commonwealth Financial, M&T Bank, Synovus Financial, Trustmark and Valley National Bancorp, which have "some of the highest exposures" to commercial real estate loans among the banks it rates, the rating agency said.
CRE loans made up between roughly 25% and 55% of the loans of each these banks at year-end 2023, and well exceeded their Tier 1 capital, in some cases by several multiples, it said, also noting that most of these banks have higher-than-peer exposures to loans on office properties as well as sizable multifamily or construction exposures, which could be affected by the price pressures that higher interest rates have put on many property types.
FAQs
It has lowered its outlook on five lenders with high CRE exposures. Just when the market's nervousness over New York Community Bancorp has started to die down, S&P Global Ratings lowered its outlook on five lenders to negative from stable, citing their exposure to the commercial real estate sector.
Which S&P issues negative outlook on five US regional banks due to risky office space exposure? ›
S&P Global has issued a negative outlook on five U.S. regional banks facing an increased challenge from higher office vacancies as well as an increasing number of loan maturities on the horizon. First Commonwealth Financial Corp. (FCF), M&T Bank Corp., (MTB), Synovus Financial Corp. (SNV), Trustmark Corp.
What regional banks challenged by commercial property S&P says? ›
S&P said it lowered its outlook on First Commonwealth Financial Corp., M&T Bank Corp., Synovus Financial Corp., Trustmark Corp. and Valley National Bancorp as the five lenders have “some of the highest exposures” to commercial real estate loans among the banks it rates.
Did S&P had negative outlooks on nine US banks? ›
As of Tuesday, S&P had negative outlooks on nine U.S. banks, or 18% of those it rates, it said, adding most of those ratings "relate, at least in part to sizable CRE exposures." The company rates a range of banks of varying sizes.
How do banks make profits? ›
Commercial banks make money by providing and earning interest from loans [...]. Customer deposits provide banks with the capital to make these loans. Traditionally, money earned in the form of interest from loans often accounts for up to 65% of a banks' revenue model.
What is a negative outlook in S&P? ›
A negative outlook refers to the long-term rating the issuer currently is assigned. It indicates Standard & Poor's view that the rating could be downgraded if the scenario upon which the rating is based does not transpire.
What is the biggest risk the bank is exposed to currently? ›
Credit risk is the biggest risk for banks. It occurs when borrowers or counterparties fail to meet contractual obligations. An example is when borrowers default on a principal or interest payment of a loan.
What are the three failed regional banks? ›
The unexpected collapses of three banks - Silicon Valley and Signature in March 2023 and First Republic in May - put a spotlight on how lenders managed risks to assets and liquidity as the Federal Reserve raised interest rates aggressively to bring surging inflation under control.
Which banks have the most commercial real estate exposure? ›
Top 20 U.S. Banks by Assets: Commercial Property Exposure
| Bank | Total Assets | Share of Total Loans |
|---|
| Wells Fargo & Company | $1.9T | 21.2% |
| U.S. Bancorp | $668B | 14.9% |
| PNC Financial Services Group, Inc. | $557B | 15.5% |
| Truist Financial Corporation | $543B | 13.3% |
16 more rowsMar 11, 2024
(Reuters) -U.S. regional banks are expected to set aside more money to cover potential commercial real estate (CRE) losses and sell more property loans as the sector remains under pressure a year after the collapse of Silicon Valley Bank and...
S&P Global downgraded five regional banks Tuesday to a “negative” outlook from “stable” because of their exposure to CRE loans. The banks include First Commonwealth Financial, M&T Bank, Synovus Financial, Trustmark and Valley National Bancorp.
Has Warren Buffett outperformed the S&P? ›
A big cash pile protects the above-average core operations of this stellar company. Warren Buffett has an incredible track record of outperforming the S&P 500. At the start of every Berkshire Hathaway (BRK. A -0.97%) (BRK.
Which S&PGR revises outlooks on five US regional banks to negative? ›
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S&P Global downgraded its outlooks on five regional U.S. banks to "negative" from "stable" due to their commercial real estate (CRE) exposures, the ratings agency said on Tuesday. It downgraded First Commonwealth Financial, M&T Bank , Synovus Financial, Trustmark and Valley National Bancorp.
What is the most profitable part of a bank? ›
Generally, the investment banking and wealth management sectors tend to be some of the most profitable for banks. These areas involve providing services such as underwriting and issuing securities, providing advice on mergers and acquisitions, and managing assets for high-net-worth individuals.
What is the biggest money maker for banks? ›
Interest income is the primary way that most commercial banks make money. As mentioned earlier, it is completed by taking money from depositors who do not need their money now.
Which other US banks are at risk? ›
About the FDIC:
| Bank NameBank | CityCity | Closing DateClosing |
|---|
| Heartland Tri-State Bank | Elkhart | July 28, 2023 |
| First Republic Bank | San Francisco | May 1, 2023 |
| Signature Bank | New York | March 12, 2023 |
| Silicon Valley Bank | Santa Clara | March 10, 2023 |
55 more rowsApr 26, 2024
this month has talked up corporate profits. While companies certainly have done well this earnings season, there's a disconnect between those results and stock market gains. The S&P 500 has raced far too ahead of earnings expectations for this year, according to Rosenberg Research's David Rosenberg.
What were some of the major reasons that many US banks failed following the stock market crash of 1929? ›
Many smaller banks, such as this one in Haverhill, Iowa, lacked sufficient reserves to stay in business and became no more than convenient billboards. Many of the small banks had lent large portions of their assets for stock market speculation and were virtually put out of business overnight when the market crashed.
What is the risk of the sp500 ETF? ›
Market risk
The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.
