PNC Financial Services Group Inc

NYSE:PNCUnited States

By Gina Heeb

Higher-for-longer interest rates are continuing to weigh on Main Street banks.

Regional banks posted steep profit declines in the first quarter and predicted more pain ahead. The results underscore the uneven toll that two years of higher interest rates have taken on regional banks, which tend to have plain-vanilla businesses taking in deposits and making loans. That model has become less profitable because of the pressure to pay up on deposits.

By Telis Demos

For another quarter, big banks saw only a smattering of losses on office loans. But lenders still remain braced for a lot more.

Seemingly every week brings fresh headlines about office towers selling at deeply discounted prices. Yet so far this reporting season, large banks that are office lenders are avoiding fresh big hits to their earnings. Partly that is because they have already set aside sizable reserves for future losses over the past few quarters. So they have taken the money out of prior earnings through credit provisions, preparing ahead of time for losses driven by vacancies or rising interest rates.