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Strategies & Market Trends : Value Investing

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To: Graham Osborn who wrote (60014)	10/29/2017 9:18:29 AM
From: Spekulatius	Read Replies (1) of 78699

I am Leary of regional banks right now. Regional banks make their living of from commercial real estate and business loans. My concern is that a lot of this is lower quality retail related RE from small business, since the prime retail locations are typically larger malls that are owned by large operators, which do not use regional banks as lenders. Lower quality retail RE has significant headwinds due to completion from online (nothing new here), so I think over the long run, this could cause impairments or loan defaults in the next recession, especially,y if you add the possibility of rising interest rates to the mix. Most analysts believe that rising interest rates will be a boon to regional banks and that is true for the interest rate margins, but I have yet to see an acknowledgement they loan losses may increase significantly as well. I only own FMBL right now and have no desire to add anything.

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