Following a significant sell-off of regional bank stocks that affected trading in Asia and Europe, US bank stocks continued their downward trend in pre-market trading on Friday.

As of 4:40 AM Eastern Time, shares of Bank of America Corp., Citigroup Inc., Morgan Stanley, and Wells Fargo & Co. dropped over 1.5%. Earlier on Thursday, regional bank stocks experienced a sharp decline, led by Zions Bancorp and Western Alliance Bancorp, both of which reported encountering fraud when lending to funds involving troubled commercial mortgages.

In early pre-market trading on Friday, regional bank stocks had limited trading volume, but Zions Bancorp's stock still fell by 1.8%. The S&P Regional Banking Select Industry Index fell 6.3% on Thursday, with this sell-off being likened to the sharp declines seen in April due to tariffs and the significant downturns during the banking crisis in 2023.

Market attention is swiftly shifting to the upcoming earnings reports from bank stocks, with several large regional banks set to release their performance reports before the market opens in New York.

"Investors have reason to be concerned — as is usually the case in such situations — they fear that the risks have yet to be fully identified," stated Leonard Cohen, CEO of Ginjer Asset Management.

Amid this sell-off on Thursday, the high-profile bankruptcies of Tricolor Holdings, an automotive lender, and First Brands Group, an auto parts supplier, have left traders feeling uneasy. JPMorgan Chase & Co. CEO Jamie Dimon likened these issues to "cockroaches," which has further heightened market anxieties regarding credit risks.

"We believe these losses are isolated incidents, and while lenders need to tighten their processes, there is currently no evidence to suggest the situation will worsen," said Nick Brind, a fund manager at Polar Capital Global Financials Trust. "Assuming other conditions remain unchanged, we expect this sell-off to be short-lived."

This concern has also impacted banking stocks globally. The Stoxx 600 Banks Index dropped 3%, marking its largest decline since August 1; shares of major players like Deutsche Bank AG, Barclays Plc, and Societe Generale SA all fell by over 4%. Asian banking stocks also declined.

On Friday, more US regional banks are expected to report their earnings, including Truist Financial Corp., Huntington Bancshares, Fifth Third Bancorp, Regions Financial Corp., and Comerica Inc.

"Today's regional banks have set aside ample provisions for potential losses and have increased their capital levels since 2023," wrote RBC Capital Markets analyst Jon Arfstrom in a report.