Banks will start releasing their fourth-quarter earnings reports tomorrow. But it's what bank leaders say about the next 12 months, rather than the three previous ones, that will probably garner most of the attention.
By and large, fourth-quarter trends at large and midsize banks are expected to be in line with third-quarter results, analysts say. And that's not a bad thing. Third-quarter results were solid, with loan and deposit growth meeting expectations and underlying credit quality coming in stable, despite
Banks' fee income was strong, as capital markets and mortgage activity picked up, and wealth management-related income continued to flow. And overall, expenses grew more slowly than revenues, resulting in the achievement of positive operating leverage at a number of banks.
"For the fourth quarter, I think we're really anticipating a repeat of the third quarter," John Mackerey, an analyst at the credit rating agency Morningstar DBRS, told American Banker.
Banks' fourth-quarter calls are especially important because that's when most unveil their guidance for the coming year. And this year, the biggest questions for bankers are likely to focus on loan demand expectations, credit quality forecasts, the impact of further regulatory easing, the influence of artificial intelligence tools and banks' appetite for more mergers and acquisitions.
Against the backdrop of lower interest rates, improved net interest margins and more certainty around tariffs and taxes, analysts say they're optimistic about the banking sector this year.
The biggest risk, however, is the economy, said Jason Goldberg, an analyst at Barclays.
While most economic forecasts for the coming year are positive, "that's obviously not guaranteed," said Goldberg, who covers the largest banks in the country. "At the end of the day, banks are a reflection of the economy, so we'll keep an eye on what happens on that front."
The latest quarterly earnings season will begin on Tuesday when JPMorganChase, the largest U.S. bank with $4.6 trillion of assets, and The Bank of New York Mellon, the biggest custodian bank in the world, disclose their financial results.
Citi, Wells Fargo and Bank of America are scheduled to take their turns the following day.
Here's a closer look at key areas to watch as bankers offer their year-ahead outlooks.
Loan growth
A year ago, there was a general expectation that loan growth would pick up after meager increases in 2024. But by early spring, President Trump's tariff regime had
The second half of 2025 saw some improvement, due to more clarity around tariffs as well as the passage of Trump's One Big Beautiful Bill Act, which included tax cuts. As a result, loan production levels were on the rise during the final weeks of the year.
Barring any economic-related surprises, analysts think the momentum will continue into 2026.
In a research note, RBC Capital Markets analyst Gerard Cassidy predicted that median total end-of-period loans at large and regional banks would increase 4.9% year over year, due to higher volumes of commercial-and-industrial loans and more consumer loans, including home equity credits.
Banks may also see a pickup in commercial real estate lending, which
"Regional banks in particular are starting to lean back into CRE lending," according to Manan Gosalia, an analyst at Morgan Stanley.
"In addition to seeing fewer CRE paydowns, regional banks are also starting to originate new CRE loans, and because regional banks are heavily skewed to both C&I and CRE lending, that should help loan growth," Gosalia told American Banker.
Credit quality
During the third-quarter earnings season, several bank CEOs
While a handful of banks disclosed losses in connection with
"We viewed those as one-offs, and it certainly seems like that has been correct," Mackerey said.
Looking at 2026, "we're not expecting it to be materially different than it is today," he said.
Still, in a research note, Mackerey said that uncertainties such as ongoing inflation and geopolitical risks could put pressure on some loans. "Banks with specific exposures to subprime consumer credit, as well as businesses sensitive to tariffs or inflation, will be more strained," he said.
Regulatory easing
The deregulatory agenda of the second Trump administration has reached deeply into the banking industry. The starkest example has been the
The industry has welcomed much of the regulatory easing, including faster bank M&A approval timelines and the overturning of a CFPB rule that would have
This week, Michelle Bowman, the Federal Reserve Board's top banking regulator, outlined several priorities
During upcoming earnings calls, observers will be listening for discussions about the impact of the forthcoming
Bankers' thoughts on those developments are expected to be positive, analysts said.
"Generally speaking, the regulatory and supervisory environment, after getting worse and worse and worse for 15 years, got a little better in 2025, and we expect further improvement in 2026," Goldberg said.
AI implementation
In recent quarters, bankers have been spending more time talking about how their institutions are using artificial intelligence tools to improve business operations. The discussions are expected to continue this month, as banks' AI investments roll on, and usage continues to escalate.
How much information the banks will share remains to be seen. In October, BNY was one of the banks that
In banking, AI is still largely viewed as an efficiency driver to reduce costs and streamline operations, Morningstar's Mackerey said. And there are a lot of efficiency gains left to achieve, he said.
"I think there's a fairly significant runway for banks to keep implementing it, primarily for functions they would have looked to offshore in the past," Mackerey said. "Expenses are an area we expect banks to focus on, and AI is one area that will help them meet some of their targets."
M&A appetite
One big story in banking in 2025 was
Last year was the strongest year for bank M&A since 2021, with 184 deals announced and a total deal value of $49.5 billion, Laurie Havener Hunsicker, an analyst at Seaport Research, wrote in a research note. Those numbers compare with 128 deals in 2024, with a total deal value of just $16.5 billion.
The current M&A wave could last another two years, Morgan Stanley's Gosalia predicts. In addition to a regulatory environment that's
"Banks need strong core deposit franchises, and M&A in a favorable regulatory environment is a key strategy to gain scale," he said.
Plus, according to Mackerey, M&A remains a way for banks to deploy their excess capital.
"We expect to see a steady pace of M&A announcements this year," he said.
