U.S. Bancorp (USB), PNC Financial Services (PNC): Two Super-Regional Banks to Watch

From that perspective though — from thinking about really focused regional banks — just like real estate is location, location, location, banking is very much location, location, location as well.

If you think about a small bank that’s focused on, not even Florida, but maybe a certain part of southern Florida, it’s almost a no-brainer that it was going to get killed in the financial crisis because that was where some of the worst hit.

You’ve got Florida, you’ve got Arizona, Nevada, Southern California; any bank that was focused on those particular regions, or any one of those particular regions, was going to get slaughtered.

Now when you think about the recovery that we’ve had — and in particular the housing market recovery — existing home sales, new home sales, home prices, have all been roaring back; particularly this year, and even more so in those hardest-hit areas.

Just as that will help homeowners there, it’ll help businesses there because that helps the economy, it helps banks there. You’re going to see a stronger bounce-back from the small regional bank in a very hard-hit area than you will, maybe, from a bigger bank that had a bigger geographic focus that hit some of the hard-hit areas, but some areas that weren’t particularly hit hard.

When we think about what regional banks or super-regional banks held up better than others, a big part of that was the geographic focus. Regents Financial is an example of a regional bank — it kind of borders regional/super-regional, it doesn’t matter — but they’re focused mainly on the U.S. Southeast.

It’s kind of like, if you’re there and that’s where you’re making most of your loans, you’re in bad luck when that area of the country melts down in the financial crisis.

The article 2 Super-Regional Banks to Watch originally appeared on Fool.com and is written by Matt Koppenheffer.

Matt Koppenheffer owns shares of PNC Financial Services. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Citigroup, PNC, and Wells Fargo.

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