Thoughts on this. Down 50% has a dividend. They are based in a part of the country that is far less affected by CV than the rest of the country and the South looks like it will be the first to reopen.

Any thoughts or similar plays?

https://www.marketwatch.com/story/heres-a-breakdown-of-us-bank-exposure-to-the-energy-industry-as-oil-prices-tank-2020-03-12

5th highest exposure to oil & gas as a percentage of O&G loans to total assets. Still only 1.7% though.

Thoughts on CFR?

How are regional banks going to make any money in this interest rate environment. They also don't have they technology platforms that the big banks possess.

Low rates will certainly compress margins for banks, especially regional ones. This was evident coming out of the credit crisis when interest rates started rising, the rate of increase on deposit rates was much slower, indicative of banks normalizing their margins.

However, I don't see that as a big problem outside of norms. They "simply" need to stay healthy and survive the period and be positioned for growth/big earnings later, possibly with less competition on the back-end. Every business/industry goes through cycles, and this should be their tough period. Where it gets really complicated is if the regional bank's client/loan concentrations are deeply impacted by the economic fallout of this crisis. Those banks will have a tough time surviving if they don't have the right leadership in place to navigate the challenges in front of them.

***Not a banker.

Regional banks are in a tough spot. They've resisted getting bigger given some of added regulatory burden, however, the required spend on tech/platforms is not sustainable. That coupled with increased pressure in mid-markets with pricing/loan competition has weakened portfolios imo. Regional Banks are also heavily exposed to commercial real estate outside of the obvious e&p risk.

You need to be very careful with who you pick in this space.

I think we're going to see an exodus of small businesses from the big banks due to how badly they managed the PPP. I mean Wells basically told their small business clients to go somewhere else and Chase, BB&T and BofA look like they didn't allocate enough resources to handle the demand and have taken forever to get them processed. Not sure I'd want much in the financial sector for awhile.

Check out Prosperity Bank. I've been in it for years and has grown considerably.

Privately owned banks are better. But if you must... SBSI

To everyone, thanks for the input. I'm trying to explore all the options at this point. And appreciate the discussion

Mas89 said:

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Check out Prosperity Bank. I've been in it for years and has grown considerably.

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Interesting. What's their exposure to O&G. If they have a bunch of loans out to Whitting and Noble I might be concerned.

Prosperity bought LegacyTexas bank out of DFW who had a large loan book relative to size.

12.49 earlier today

Regionals and super regionals are due for some consolidation once we get past COVID. The best thing about the financial crisis is that banks are generally in much better positions than in prior recessions.

Banks that have large O&G exposure, restaurant exposure, commercial RE (particularly hospitality and retail) will have some pain.

The tech costs, regulatory costs, etc should propel some MOE's which will offer a nice opportunity.