Ahead of the Bell: Regional Banks

NEW YORK - Investors are not fully factoring in losses tied to commercial loans at regional banks, a Friedman, Billings, Ramsey & Co. analyst said Thursday. Losses tied to commercial loans are likely to rise in the coming quarters, analyst James Abbott wrote. "Commercial credit continues to deteriorate, and, while regional banks are still experiencing relatively low loss levels in their C&I portfolios, we expect these losses to accelerate toward, and potentially exceed, historical peak losses over the coming quarters," Abbott wrote. Geography, industry exposure and underwriting guidelines will determine the pace and severity of losses in commercial lending portfolios, Abbott said. Commercial credit cycles, on average, last about four years, and the market is just entering a downturn now, Abbott said. Based on historical stock... [read full story]