Raymond James reports banking sector earnings trends for 2Q26

Investing.com -- Raymond James released an analysis of second quarter 2026 earnings for banks with more than $750 million in assets. As of Friday, July 31, 378 out of 429 publicly traded banks, or 88%, had reported results.

About 66% of reporting banks exceeded consensus forecasts, slightly below the 67% beat rate in the first quarter but still strong. Revenue grew 3.9% at the median, compared to 0.1% in the first quarter and 5.2% in the second quarter of 2025.

The median net interest margin expanded 5 basis points from the first quarter to 3.70%. Earning asset yields rose 5 basis points at the median, while the median cost of funds increased 2 basis points from the first quarter. This drove median sequential net interest income growth of 3.2% quarter-over-quarter.

Loan growth accelerated to 1.7% quarter-over-quarter, up from 0.8% in the first quarter and 1.5% in last year's second quarter. Fee revenues grew 5.7%, compared to a decline of 0.7% in the first quarter.

The median efficiency ratio declined to 57.7% from 58.4% in the first quarter. Asset quality remained stable, with the median non-performing assets to loans ratio falling 2 basis points to 0.64%. Net charge-offs to loans ticked higher to 0.08% from 0.07% in the first quarter.

Allowances decreased 1 basis point to 1.15%, while median provision remained flat from the prior quarter. Consensus estimates showed an upward bias, with a net 32% of 2026 estimates raised and a net 21% of 2027 estimates raised.

Funding costs moved higher in the second quarter as deposit competition increased. The median cost of deposits remained flat at 1.79%. The median cost of certificates of deposit fell 7 basis points, while core deposit costs rose 3 basis points.

Loan yields increased 5 basis points at the median, while investment securities yields rose 11 basis points.

Profitability metrics improved, with median return on assets rising to 1.22% from 1.14% in the first quarter. Median return on tangible common equity grew to 14.1% from 12.9% in the first quarter.

Tangible common equity levels improved 13 basis points at the median to 9.04%. The median Tier 1 ratio grew 16 basis points from the first quarter to 12.80%, and the median leverage ratio increased 4 basis points to 10.18%.

By region, banks in the Northeast saw net interest margins increase 10 basis points, while Southeast and Midwest banks saw gains of 9 and 8 basis points respectively. West coast banks saw the smallest benefit at 1 basis point.

For loan growth, Southeast banks led with 2.2% growth, followed by Mid-Atlantic banks at 2.0%. Northeast banks saw the softest growth at 0.8% quarter-over-quarter.

Analysts raised a net 47% of 2026 estimates for Midwest banks and 45% for Southwest banks. For 2027, Mid-Atlantic banks saw a net 42% of estimates raised, while West coast banks saw a net 18% of estimates lowered.

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