BIG NUMBER | 144 = 2
Regional Banks: Smaller than you think
Fear-inducing headlines are likely painting too grim of a picture.
Silicon Valley Bank. Signature. First Republic. PacWest. Comerica. The list of regional banks that have either failed or are rumored to be in financial trouble grows by the week. That’s putting plenty of investors on edge—fueled by fear-inducing media headlines like “The Regional Banking Crisis is Expanding” and “How Bad Will It Get?”. We think it’s a good time for some big-picture perspective on the issue. Consider this: When we add up all 144 regional banks found in the S&P Regional Banks Select Industry Index, we find that collectively they’re about the same size in key metrics as just two of the largest banks, Wells Fargo and Bank of America.
Source: Bloomberg as of 05/10/23
As the chart above shows, the case is the same regardless of whether the metric used is market cap (which reflects broad passive index total exposure), customer deposits (which reflects the total amount of funds individuals and businesses keep at these banks), or total assets (which effectively measures the aggregate amount of lending done by the banks). The message to investors: Take a deep breath. While regional bank-related headlines may weigh on market sentiment and make for a challenging environment in the short term, it should take far more than the failure of some of these smaller banks to upend the health of the U.S. or global financial system.
Securities and Investment Advisory Services offered through Founders Financial Securities, LLC. Member FINRA, SIPC and Registered Investment Advisor. This material contains the opinions of the author(s) but not necessarily those of Founders Financial Securities, LLC and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Investors should consult their financial, tax, and legal advisors before making investment decisions. Past performance does not guarantee future results. Materials above are produced by Horizon Investments, LLC, which is not affiliated with the advisory firm identified on the front page. © 2023 Horizon Investments, LLC.
