Moody's ratings downgrades and outlook warnings on several U.S. banks indicate ongoing pressure in the industry following the collapse of Silicon Valley Bank. While concerns over the sector had lessened after stabilizing deposit levels in Q2, small and midsized banks now face the challenge of paying customers more for deposits at a faster rate than what they earn from loans. This has led to a decrease in profitability and shrinking profit margins. Moody's reassessed its ratings on banks due to falling margins, lower capital levels, and concerns about commercial real estate defaults. However, the overall strength of the U.S. banking system remains intact.

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