Bank capital offerings fall in May after historic high 1 year ago

U.S. banks raised less capital in May after hitting a year-to-date high in April and a year after raising the most capital since the Great Financial Crisis.

Banks raised $10.18 billion in capital in May, a nearly 53% drop from May 2020 and a 47% drop from the $19.26 billion raised in April. That month, senior debt raises from JPMorgan Chase & Co. and Citigroup Inc. accounted for the lion's share of capital raised, with JPMorgan alone issuing $13 billion in senior debt. Citigroup issued another $2.5 billion in senior debt.

In May, financial institutions turned to preferred equity alongside senior debt raises, raising a total of $4.90 billion in preferred equity and $4.54 billion in senior debt, which together accounted for almost 93% of capital raised during the month.

Continuing the trend seen in previous months, larger public banks turned to preferred stock and senior debt, while smaller banks turned to subordinated debt amid the current low interest rate environment.

JPMorgan issued the bulk of preferred securities in May via two issuances, including depositary shares, worth a combined $3.85 billion. JPMorgan also led senior debt raises in May, issuing nearly 90% of the $4.52 billion offered by public banks that month.

Meanwhile, public banks issued $181.9 million in common equity and $384.0 million in subordinated debt in May. Five Star Bancorp's initial public offering was the largest common equity issuance last month, raising $121.1 million in capital. In the subordinated debt space, Valley National Bancorp's $300 million offering was the largest among public banks.