NEW YORK, NY--(Marketwire -06/28/12)- Despite the recent slowdown in the global economy bank stocks have performed admirably in 2012. The SPDR S&P Bank ETF (KBE) and the SPDR KBW Regional Banking ETF (KRE) are both up over 7 percent year-to-date. Collectively U.S. banks have posted their strongest first quarter in 5 years with a profit of $35.3 billion. Five Star Equities examines the outlook for companies in the Regional Banking Industry and provides equity research on Huntington Bancshares Inc. (HBAN) and First Niagara Financial Group Inc. (FNFG).
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Regional banks have taken advantage of the "big banks" shrinking loans. Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. have seen their loan totals drop 4.9 percent in the first quarter of 2012, when compared to the first quarter of 2010 according to date collected from Bloomberg. While the "big banks" are trimming loans regional banks have stepped in, as 17 of the smallest banks in the 24 bank KBW Bank Index (BKX) saw lending totals increase 9.8 percent to $1.3 trillion over the same two-year period.
"It's the health of the banking system and the banks' ability and willingness to extend credit that's at the heart of any recovery," David Jones, a former economist at the Federal Reserve Bank of New York, said in an interview. "If anything helps in getting this recovery going, it'll be those regional banks."
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Huntington Bancshares Inc. is a $56 billion regional bank holding company. According to Bloomberg Huntington Bancshares have increased their loan totals by 10 percent since the first quarter of 2010 to 40.7 billion in 2012. The company expects to report its second quarter earnings on Thursday, July 19, 2012, prior to market open.
"Big money-center banks had some capital constraints -- they actually started paring their loan portfolios," said Daniel Cantara, executive vice president of commercial banking at First Niagara Financial Group, "We were able to pick up a lot of customers." The bank recently reported that they reopened 100 former HSBC branches as First Niagara locations, adding $9.8 billion of deposits and $1.6 billion of performing loans.
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