This week’s Bespoke Report newsletter is now available for members.  (Log in here if you’re already a subscriber.)

A month ago, financial markets were focused on how badly the Federal Reserve had broken the banking system. This week, the initial earnings from a few very large banks suggest that the quick work of the FDIC and Federal Reserve in the wake of Silicon Valley Bank’s failure have prevented broader damage. Lenders including PNC Financial (PNC), JPMorgan (JPM), Wells Fargo (WFC), and Citi (C) reported Friday,, and the sigh of relief from markets was palpable. JPM delivered beats on strong investment and commercial banking performance and raised guidance for net interest income this year by some 11%. That drove the stock to its biggest gains since 2020 and its second best earnings reaction day in at least 20 years. It’s hard to view the US banking system as faulty when its largest lender is finding such firm ground beneath its feet. Other lenders delivered less spectacular results, but reassured investors that among big banks there isn’t much reason to be concerned. In the charts at right, we show the aggregate results from banks reported Friday in the form of loan loss reserves as a percentage of the total loan book and loan book-weighted average interest margin. Credit quality didn’t deteriorate much on the quarter, and there are plenty of reserves relative to recent history. At the same time, the core bank business of borrowing short and lending long appears to be doing just fine with net interest margins nearing 3%.Terra firma beneath the feet for financials may be just the platform this market needs to push higher.

Continue reading this week’s Bespoke Report newsletter by starting a one-month trial, or click the image below to view our membership options page.