SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 29, 2012 08:20 ET

Regional Banks Battle Falling Net Interest Margins as Measures From the Federal Reserve Pressures Yields

The Paragon Report Provides Stock Research on Hudson City Bancorp and SunTrust Banks

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 Hudson City Bancorp, Inc. (NASDAQ: HCBK) and SunTrust Banks, Inc. (NYSE: STI).

Access to the full company reports can be found at:
www.ParagonReport.com/HCBK
www.ParagonReport.com/STI

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.

Paragon Report releases regular market updates on the Regional Banking Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at www.ParagonReport.com and get exclusive access to our numerous stock reports and industry newsletters.

"Our net interest margin decreased 10 basis points to 2.02% in the third quarter of 2012 from the linked quarter as yields on our mortgage related assets declined due to record low market interest rates," Hudson Chief Executive Ronald E. Hermance Jr. said. "The decision by the Federal Reserve to continue to purchase mortgage-backed securities will likely keep rates low for the foreseeable future."

As of June 30, 2012, SunTrust had total assets of $178.3 billion and total deposits of $128.4 billion. Excluding net gains from their shares in The Coca-Cola Company total revenues in the third quarter declined 13.3 percent to $1.90 billion. The bank's net interest margin also declined 11 basis points to 3.38 percent from third quarter 2011.

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