NEW YORK, NY -- (Marketwire) -- 02/17/12 -- Regional Banking stocks have been on fire this year -- outperforming the S&P 500 by a large margin. The SPDR S&P Regional Banking ETF (KRE) -- which is designed to provide portfolios with low portfolio turnover, tracking, and lower costs -- is up more than 9 percent in 2012 as the nation's regional banks begin to post improving credit quality. The Paragon Report examines investing opportunities in the Regional Banking Sector and provides equity research on Synovus Financial Corporation (NYSE: SNV) and U.S. Bancorp (NYSE: USB). Access to the full company reports can be found at:
According to a recent report from Reuters, fourth quarter earnings results highlight how smaller, regional U.S. banks "are moving closer to conquering the real estate-related credit problems that have dogged them since the housing crisis began in 2007."
In a separate article, Reuters says regional banks showed signs of growing loan demand in their quarterly results, "pointing to an improving U.S. economy." While consumer and industrial lending have been bright spots for U.S. regional banks, demand for new mortgages has remained relatively lackluster, Aman Shah of Reuters notes.
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The controversial Volker Rule that that bans banks' proprietary trading and limits their investments in hedge funds and private equity could crimp banking revenues going forward, however. A large group of U.S. regionals sent a letter this week to the Federal Reserve and other regulators arguing that the rule, part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, would hurt the banks' ability to do business.
Executives at the larger U.S. bank, Morgan Stanley also wrote a letter posted to the Commodity Futures Trading Commission's website arguing that reduced liquidity resulting from the Volcker rule would lead to "price uncertainty, market volatility, higher transaction costs, and a reduced ability for corporations and other market participants to raise capital and hedge their risks."
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