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Investing.com - The 2026 outlook for mid-sized U.S. banks was optimistic, with loan growth still seen as a few quarters away before starting to push estimates higher, according to analysts at Barclays.
In a note to clients, the strategists said comments from the lenders’ executives at a recent financial services conference left them feeling more upbeat about the sector’s prospects heading into next year.
"Banks seem to check all the boxes, citing optimism from borrowers, good deposit trends, and benign credit. An improving regulatory backdrop and increased M&A round out tailwinds that we think will garner more appreciation from investors," the analysts wrote.
They added that commentary around consumer sentiment was "almost universally positive across the banks," in a sign of "resiliency" in the face of sweeping U.S. tariffs.
Pipelines are also continuing to build, especially in commercial and industrial lending, the Barclays analysts said. These loans are provided directly to businesses for a range of purposes, including buying equipment or bolstering working capital.
Commercial real estate lending, however, remains a "slower growth area," the brokerage flagged, adding that "this is mostly due to banks allowing non-core relationships or credits under more pressure to exit."
In general, loan growth in the mid-cap banking segment seems likely to vary between companies over the next few quarter depending on a "variety of factors," although the "overall backdrop remains supportive," they said.
"Deposit trends appear slated to surprise to the upside in the third quarter but loan growth may still be a few quarters away before helping to driving estimates higher," the analysts said.
In individual names, they highlighted Associated Banc-Corp (NYSE:ASB), saying it stood out as "sounding optimistic for 2026 loan growth that could come in above expectations." Management at East West Bancorp (NASDAQ:EWBC), meanwhile, was seen as having "a good hit rate in terms of beating its guidance and should be positioned well for 2026."
Valley National Bancorp (NASDAQ:VLY) also offered a positive assessment of its net interest margins and deposit trends into the end of 2025, while Popular, Inc. (NASDAQ:BPOP) and Wintrust Financial Corporation (NASDAQ:WTFC) are "dominating in their markets and should continue to post results better than peer averages."