PNC Financial (PNC) and Charles Schwab (SCHW) are out with their second quarter earnings results. PNC beat its top and bottom line estimates but reported deposits to be declining, while Schwab shares are falling in response to pullbacks in new brokerage accounts.

Janney Montgomery Scott director of research Christopher Marinac and UBS US Brokers and Asset Managers analyst Brennan Hawken join Catalysts to have a conversation about financial institutions' earnings results and what this may all mean for the regional banking sector (KRE).

Marinac starts with defending how strong the banking sector has been: "I think that there is a belief that credit quality is not as bad as feared. I think the deposits have been stable in the industry. Deposit costs seem to be slowing down their ascent. I think we're at a point where deposit costs are going to peak and back off ever so slightly in the next few quarters, pending whatever the Fed [Federal Reserve] decides to do. I think overall, the banks are making money and the capital retention has been very strong so far."

Hawken weighs in on Charles Schwab's earnings specifically: "I think what we're seeing here today is some disappointment around the balance sheet trends, they also flagged on their earnings call that they would be shifting the strategy around the balance sheet, that they would be managing the bank subsidiary to become smaller and use third-party banks as a place in which to place deposits going forward. This would be a not revolutionary change, but an evolutionary one that will take several years."

Marinac and Hawken both comment on what the election and another Trump presidency could mean for regional banks.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino