Compass Point on Banks: C&I Lending: The Next Bubble?
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Rating Summary:
6 Buy, 28 Hold, 7 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
6 Buy, 28 Hold, 7 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Compass Point on Banks: C&I Lending: The Next Bubble?
Analyst, Mike Turner, said, "As commercial and industial (C&I) lending growth talk has become hotter than Justin Bieber concert tickets, we are concerned another lending bubble may be underway. C&I lending has become the growth engine of every regional bank CEO, yet anecedotal comments suggest competition is getting more aggressive. As such, we've analyzed historical loan growth, lending spreads, underwriting standards, and NCOs to determine where we may stand. At this point, all the data and anecdotel evidence suggest a bubble may be underway, though all the hallmark signs seem to suggest a peak is not near. Absent an external shock (which is admittedly becoming more real by the day), history suggests the C&I wave could last another two years."
"Best positioned to ride the C&I wave?...We view loan yields as an important component since the higher the current portfolio yield, the greater the required C&I growth needed to offset the yield dilution. The results may be unsurprising as Comerica (NYSE: CMA), KeyCorp (NYSE: KEY), and Fifth Third (Nasdaq: FITB) screen most favorably. Last, we highlight C&I growth rates since 4Q10 and note that East West Bancorp (Nasdaq: EWBC), SuntTrust (NYSE: STI) and U.S. Bancorp (NYSE: USB) all have exhibited the most rapid pace of growth."
Analyst, Mike Turner, said, "As commercial and industial (C&I) lending growth talk has become hotter than Justin Bieber concert tickets, we are concerned another lending bubble may be underway. C&I lending has become the growth engine of every regional bank CEO, yet anecedotal comments suggest competition is getting more aggressive. As such, we've analyzed historical loan growth, lending spreads, underwriting standards, and NCOs to determine where we may stand. At this point, all the data and anecdotel evidence suggest a bubble may be underway, though all the hallmark signs seem to suggest a peak is not near. Absent an external shock (which is admittedly becoming more real by the day), history suggests the C&I wave could last another two years."
"Best positioned to ride the C&I wave?...We view loan yields as an important component since the higher the current portfolio yield, the greater the required C&I growth needed to offset the yield dilution. The results may be unsurprising as Comerica (NYSE: CMA), KeyCorp (NYSE: KEY), and Fifth Third (Nasdaq: FITB) screen most favorably. Last, we highlight C&I growth rates since 4Q10 and note that East West Bancorp (Nasdaq: EWBC), SuntTrust (NYSE: STI) and U.S. Bancorp (NYSE: USB) all have exhibited the most rapid pace of growth."
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