Regional Bank Bargains
Apparently, the world ended over the past two weeks and I missed the memo. I was discussing regional banks over the weekend with some friends and the key question on everyone's mind was what happened in the past month to justify the sharp and seemingly endless selling? Some of these stocks got absolutely slaughtered over the past few weeks. Hudson City Bancorp (HCBK), one of my favorites, is down 31% on the past month and 10% for the last week alone. One friend pointed out that First Midwest Bancorp (FMBI) saw its price fall by 37% for the month and over 12% for the week. Many of the micro-cap banks I follow had similar results during the week.
A lot of reasons for the weakness have been tossed around, The economy remains very weak, and low interest rates and soft loan demand are pressuring interest income for many banks. At least on person blamed the Tea Party and the federal debt limit negotiations for increased regulatory pressure and lower fee income from new rules and laws enacted in the aftermath of the credit crisis. All of these are true, but they are all also well-known obstacles and do not explain the recent price bomb that went off in the sector. If the world did in fact end, or the yield curve is on the verge of permanently inverting, then the price decline makes a lot of sense. If not, then it appears there are some bargains in the sector....460 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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