Hedging affected earnings available for distribution, although the company is now profitable again using standard accounting.

But the government-sponsored enterprise is still concerned about the fiscal health of its lender counterparties as volumes are down considerably from last year.

The new regulations could increase the influx of non-agency mortgages the REIT has seen since the banking crisis spurred some depositories to shed residential assets.

All of the company's fair value gains in its portfolio during the quarter were wiped out by a larger loss from hedging activities.

The Hicksville, New York, company says its deposit base is stable and poised for growth four months after its acquisition of the failed Signature Bank, some of whose depositors fled to larger banks. Private bankers — including new hires from another failed bank, First Republic — are trying to win back lost deposits.

The company also has been upgrading technology to manage its large servicing portfolio, which, with pending additions, is within reach of Chairman and CEO Jay Bray's $1 trillion goal.

The Columbus, Georgia, bank is selling a $1.3 billion portfolio as part of a plan to pay off higher-cost funding. Though there are rising concerns about the office sector, Synovus said the loans it's offloading have pristine credit quality.

The recent conversion marked one of the final steps in the $8 billion acquisition, first announced in 2021. U.S. Bank still anticipates up to $900 million in cost savings and a breadth of opportunities to expand revenue from the transaction.

Several community banks noted an uptick in problem loans in second-quarter earnings reports. Small lenders should brace for more of this, industry observers noted.

The Wall Street giant has more than $14 billion of real estate investments, and it took a $1.15 billion hit during the second quarter from writedowns of those bets.