U.S. regional banks are competing harder for commercial lending and may cut more jobs after leaning on a drop in credit costs to improve earnings.

"We're getting to the point where there's not a lot left to speak of," R. Scott Siefers, an analyst at Sandler O'Neill & Partners LP, said of the lenders' ability to continue reducing provisions for soured loans to bolster profit. Headcount reductions are the most efficient way to cut costs as they account for about half of a bank's expenses, he said.

Third-quarter revenue at four of the five biggest regional lenders — Regions Financial Corp., PNC Financial Services Group Inc., BB&T Corp. and SunTrust Banks Inc. — dropped about a combined 5 percent. Revenue may hold steady or decline for the next two years if interest rates fail to rebound, said Brian Foran, an analyst at Nomura Holdings Inc. in New York.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.