While we were hearing about the drowning big-name financial institutions, regional banks, along with related exchange traded funds (ETFs), were coasting along if not just afloat.
The fact is that thousands of banks in the United States are doing fine, and analytic indicators like capital-to-asset ratio or liabilities-to-asset ratio paint a healthier picture for such banks, writes Martha C. White for The Big Money. Banks that held their ground were usually those that stuck to good ol’ fashioned lending.
It is the smaller regional or community banks that are showing good results since they never got entangled with derivatives trading that brought on this whole mortgage debacle.
According to The Big Money, several banks were noted for their survival through the current financial ordeal.
- BB&T (BBT) profited enough to shell out 47 cents per share. The $3.1 billion TARP money it received may also put it in a position to buy up its weaker and smaller competitor banks.
- Beal Bank ignored the credit boom and halted loans in the secondary market. As a result, it showed a 8.1% on return to assets ration in 2008.
- Hudson City Bancorp’s (HCBK) percentage of nonperforming loans only edged up less than 1% as of last month, quite below the industry standard. This bank also steered away from derivatives such as credit-default swaps.
- Signature Bank (SBNY) raised $148 million in a public offering. Now, it is showing strength and has also given back its $120 million in TARP money.
- US Bancorp (USB) is known for its conservative lending and was in an area with less speculative real estate bubbles. Back in November, the Office of Thrift Supervision sold the deposits and assets of Downey Savings & Loans to US Bancorp in a show of confidence.
- SPDR KBW Regional Banking (KRE): down 21.1% year-to-date; Signature Bank is 3.9%
- iShares Dow Jones U.S. Regional Banks (IAT): down 23.6% year-to-date; BB&T is 6.7%, Hudson City Bancorp is 4.1%; US Bancorp is 18%
- Regional Bank HOLDRs (RKH): down 19% year-to-date; BB&T is 3.7%, US Bancorp is 18.4%
Max Chen contrtibuted to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.