NEW YORK, NY--(Marketwire - Oct 29, 2012) - Regional banks have lagged behind their larger counterparts in recent weeks as most have reported slowing demand for business loans. The SPDR KBW Regional Banking ETF (KRE) has fallen 4 percent in the last month, while the broader Financial Select Sector SPDR ETF (XLF) has remained flat. The Paragon Report examines investing opportunities in the Regional Banking Industry and provides equity research on Fifth Third Bancorp (NASDAQ: FITB) and New York Community Bancorp, Inc. (NYSE: NYB).
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Analysts at Credit Suisse earlier this week stated that slowing demand for commercial and industrial loans are expected to reduce the outlook for regional banks over the next year. Additionally, efforts by the Federal Reserve to lower interest rates to help boost the economy have had a negative impact on banks' net interest margin, which are the profits they make from lending and investing. According to Keefe, Bruyette & Woods of all the banks tracked by the firm, 79 percent saw a decline in their net interest rate margin.
"Growing earnings will become more difficult over time unless interest rates move up," said Fred Cannon of Keefe, Bruyette & Woods.
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Fifth Third Bancorp has $117 billion in assets and operates 15 affiliates with 1,322 full-service Banking Centers. Fifth Third reported net income available to common shareholders of $354 million, compared to $376 million in the second quarter of 2012 and $373 million in the third quarter of 2011. Net interest margin of 3.56 percent remained consistent with the previous quarter.
With assets of $44.1 billion at September 30, 2012, New York Community Bancorp, Inc. is the 21st largest bank holding company in the nation. For the third quarter of 2012 the company posted an income of $128.8 million, an increase of 7 percent over the year ago period. The bank's net interest margin for the quarter was 3.17 percent, a decrease of 13 basis points from the second quarter.
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