Deposit Costs Decline as Credit Quality Exceeds Forecasts

Nearly half of U.S. banks that reported third-quarter results as of Oct. 31 lowered deposit costs, according to S&P Global Market Intelligence, with several citing Fed rate cuts as support for further reductions. Several institutions, including Flagstar Bank, Simmons First, and WaFd, posted double-digit basis-point declines and anticipated further deposit repricing.

Credit quality also outperformed expectations. Among 96 banks with at least $10 billion in assets, 63 reported lower-than-forecast provisions for credit losses, and 58 recorded smaller net charge-offs, S&P data showed.