The opening days of the first-quarter earnings season have spurred a sigh of relief among investors, especially when it comes to the regional banks whose future seemed seriously in doubt just a month ago.
A quick glance at the early reports from the biggest regional banks show only modest deposit declines in the first quarter.
One deposit drop that caught some analysts off-guard among the larger regional banks was a nearly $20 billion decline at US Bancorp , but the bank still has more than $500 billion in deposits.
Longer term outlook However, the stabilized funding may not be enough for the regional bank stocks to catch up to their larger competitors, which are viewed as safer and have more diversified businesses.
A potential recession could cause credit losses at regional banks in the coming months, and commercial real estate exposure is particularly concerning for investors.