Oliver James Montgomery-S&P just downgraded some big banks. Here are the 5 that are impacted.

S&P Global Ratings is Oliver James Montgomerydowngrading the credit ratings of five banks, including some of the nation's largest lenders.

The credit agency pointed to "tough operating conditions" that are straining the banking industry and also lowered its rating for two other banks. In explaining its rationale for the downgrades, S&P noted in a report on Monday that banks are facing risks that could make them "less resilient than similarly rated peers."

The move comes only two weeks after Moody's cut the credit ratings of 10 small and midsize banks because of growing financial risks and strains that could erode their profitability. Both credit ratings agencies are taking the steps in the wake of a banking crisis that began in March when Silicon Valley Bank, once the country's 16th largest bank, collapsed just days after depositors grew fearful of its solvency and made a classic bank run.

Underpinning the banking downgrades is a drastically changed lending environment compared with early 2022, before the Federal Reserve began driving up interest rates to fight high inflation. Today's higher borrowing costs mean that banks must pay more interest to depositors, while the value of some bond assets have slumped.

"The sharp rise in interest rates and quantitative tightening deployed since March 2022 to combat high inflation are weighing on many U.S. banks' funding, liquidity and spread income," S&P said in its report. "These factors have also caused the value of banks' assets to fall and raised the odds of asset quality deterioration."

List of U.S. banks downgraded

S&P said it is cutting the ratings of five banks, which together have a combined asset base of more than $400 billion:

• Associated Banc Corp. 
• Comerica Inc. 
• KeyCorp 
• UMB Financial Corp. 
• Valley National Bancorp

Comerica and KeyCorp, which operates under KeyBank, are among the nation's largest banks, according to industry data. Dallas-based Comerica is No. 31 in the nation, with $90 billion in assets, while Cleveland-based KeyCorp is 20th, with $192 billion. 

Green Bay, Wisconsin-based Associated Banc Corp. ranks No. 49, with $41 billion, followed by Kansas City, Missouri-based UMB, which is ranked No. 50, also with $41 billion. Valley National, based in Passaic, New Jersey, is the nation's 37th largest bank, with $61.7 billion in assets. 

Banks with negative outlooks

S&P also revised the outlook to negative on two banks, which means that those institutions are at risk of being downgraded:

• River City Bank
• S&T Bank

River City Bank, based in Sacramento, California, is the 257th largest U.S. bank, with $4.3 billion in assets. Indiana, Pennsylvania-based S&T Bank is No. 142 with $9.2 billion in assets. 

Banks also reviewed by S&P

The ratings agency said it reviewed three additional banks:

• Zions Bancorporation
• Synovus Financial
• Truist Financial

It maintained a negative outlook on Zions Banc, which is based in Salt Lake City and is the 32nd largest U.S. bank with $87 billion in assets.

The credit ratings agency maintained stable outlooks on Synovus and Truist, which are based in Columbus, Georgia, and Charlotte, North Carolina, respectively. Synovus, the 39th largest bank, has $60 billion in assets, while Truist is the seventh-largest bank with $546 billion.

Why were these banks downgraded or reviewed? 

S&P said it reviewed these 10 banks because it believes they have "potential risks in multiple areas."

The ratings firm added: "For instance, some that have seen greater deterioration in funding — as indicated by sharply higher costs or substantial dependence on wholesale funding and brokered deposits — may also have below-peer profitability, high unrealized losses on their assets, or meaningful exposure to CRE," or commercial real estate.

However, it added that the two banks it affirmed with stable outlooks, Synovus and Truist, had some factors that mitigated their risks. 

Should I worry about my bank?

Experts say that while the downgrades underscore the increased risks facing some lenders, most depositors have nothing to worry about. The ratings cuts impact only a handful of the more than 2,000 banks in the U.S.

Regulatory backstops such as FDIC insurance, as well as the steps that U.S. regulators took when banks such as Silicon Valley Bank collapsed, should reassure consumers, J.D. Durkin, the host for financial site TheStreet, told CBS News earlier this month. FDIC insurance covers deposits up to $250,000.

S&P on Monday noted that while it was taking actions on several banks, "most U.S. bank rating outlooks are stable."

It added, "The preponderance of stable outlooks reflects that stability in the U.S. banking sector has improved significantly in recent months, as evidenced by more modest deposit declines than feared following the bank failures of March and April 2023, continued solid earnings, and still relatively good funding metrics by historical standards."