SOURCE: Paragon Financial Limited

Paragon Financial Limited

October 26, 2012 08:20 ET

Regional Banks Battle Falling Net Interest Margins in the Third Quarter

The Paragon Report Provides Stock Research on BB&T and Huntington Bancshares

NEW YORK, NY--(Marketwire - Oct 26, 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 BB&T Corp. (NYSE: BBT) and Huntington Bancshares Inc. (NASDAQ: HBAN).

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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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BB&T Corp. is one of the largest financial services holding companies in the U.S. with $178.5 billion in assets and market capitalization of $21.6 billion, as of June 30, 2012. The bank reported their net interest margin in the third quarter fell to 3.94 percent, a decline of 15 basis points from the year-ago quarter. CFO Daryl Bible stated that the margin is expected to decline further to approximately 3.75 percent in the fourth quarter.

Huntington Bancshares Inc. is a $56 billion regional bank holding company headquartered in Columbus, Ohio. The company reported their net interest margin in the third quarter of 2012 declined 4 basis points to 3.38 percent. Huntington Chief Executive Stephen Steinour has stated that the bank plans to open about 12 branches this year and approximately 35 in 2013.

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