According to a previous article from Wallstreetcn, some regional banks in the United States have written off loans due to fraudulent activities, leading to the largest bank stock sell-off in six months on Thursday.
This Friday, several banks reported third-quarter earnings, with loan loss provisions lower than analysts' expectations, and executives attempted to reassure frightened investors, resulting in a rebound in regional bank stock prices.
Fifth Third Bancorp, which previously disclosed business dealings with Tricolor, stated that its credit loss provision for the last quarter was $197 million, lower than the analysts' expected $239 million.
Fifth Third's Chief Credit Officer Greg Schroeck stated regarding the loan issues with Tricolor,
<blockquote>
&#34;We have placed a significant focus on this during our comprehensive review of the loan portfolio,&#34;
&#34;Given that we have conducted a thorough review, we are very confident in the credit quality of other clients in this category.&#34;
</blockquote>
Fifth Third's CEO Tim Spence also pointed out that the bank &#34;did indeed have a business relationship with First Brands in the past, but it was terminated years ago due to issues discovered during collateral reviews.&#34;
Fifth Third's stock price rose 1.31% on Friday, while the KBW Bank Index rose 0.51%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/2ab7a6a2-66be-4aa9-9373-d54c226acc9e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/2ab7a6a2-66be-4aa9-9373-d54c226acc9e.png"/>
Additionally, regional bank Truist Financial Corp. reported a credit loss provision of $436 million for the third quarter, a decrease of 2.7% compared to the same period last year, and lower than the market expectation of $484.9 million. The net charge-offs were $385 million, significantly lower than analysts' estimate of $450.6 million.
The bank did not engage in business with Tricolor Holdings but stated that it did have some level of business dealings with First Brands. Its stock price rose 3.67% on Friday.
Truist CEO Bill Rogers stated during a conference call:
<blockquote>
&#34;Overall credit quality remains robust.&#34;
&#34;There are some events in the market that I believe are isolated and unrelated,&#34; and noted that the bank is &#34;highly vigilant&#34; regarding credit risk.
</blockquote>
Auto loan provider Ally Financial Inc. also reported earnings on Friday, with particular attention on its performance following Tricolor's high-profile bankruptcy last month. The bank's loan loss provision was $415 million, lower than analysts' expectation of $455 million. Its stock price rose 3.56% on Friday.
Regions Financial Corp.'s credit provisions were also below expectations, and net interest income fell short of forecasts, with its stock price rising 0.99% on Friday
Huntington Bancshares Inc. stated that its net charge-offs amounted to $75 million, a year-on-year decrease of 19%, lower than analysts' expectations of $87.4 million. However, the provision for credit losses was $122 million, a year-on-year increase of 15%, exceeding market expectations of $106 million. Its stock price rose 0.85% on Friday.
Last month, the subprime auto lender Tricolor Holdings collapsed due to allegations of fraud, along with the bankruptcy of auto parts manufacturer First Brands Group, raising concerns that banks could face significant loan losses if the credit market begins to deteriorate.
Even more concerning for the market is the situation with Zions Bancorp, which disclosed on Thursday that a loan issued by its wholly-owned subsidiary California Bank &amp; Trust had been charged off for $50 million, leading to a 13% drop in its stock price. Western Alliance Bancorp also saw its stock price fall nearly 11% after indicating that its loan recipients were part of the same group of borrowers mentioned above

HBAN

U.S. regional banks faced the largest bank stock sell-off in six months on Thursday due to a loan fraud incident, but on Friday, several banks reported loan provisions below expectations, and executives attempted to reassure frightened investors to ease market panic. Regional bank stocks rebounded on Friday, with the KBW Bank Index closing up 0.51%. Banks such as Truist, Fifth Third, and Ally Financial emphasized their solid credit quality and maintained a high level of vigilance against specific risks

- A recent article highlighted that some U.S. regional banks faced significant loan write-offs due to fraud, leading to a major sell-off in bank stocks.  
- Following this, several banks reported third-quarter earnings with lower-than-expected loan loss provisions, resulting in a rebound in their stock prices.  
- Notably, Fifth Third Bancorp and Truist Financial Corp. both reported credit loss provisions below analyst expectations, while concerns lingered over the impact of recent bankruptcies in the auto loan sector.

The financial report alleviates bad debt fears, regional banks in the U.S. rebound, executives say "credit quality is stable"