The best that can be said about regional bank performance in 2011 is that the smaller regional banks did less poorly than their larger brethren this year. In fact, as measured by the Keefe, Bruyette & Woods Regional Banking Index, regional bank stocks are down more than 7% on a year-to-date basis and down about 2% on a rolling one-year basis. That's better than the larger cap KBW Bank Index (which is down almost 24% on a year-to-date basis), but still well short of matching the S&P 500 this year.
Is there really much surprise in the performance of these banks? Consumers are trying to repair their personal balance sheets, property values and unemployment remain stubbornly disappointing, and loan demand is a mess, as generally only poor credit risks seem to be actively seeking loans. Were it not for the concerted efforts of the Fed to keep rates low, many banks would be in tough shape. (For related reading on the Fed, see How The Federal Reserve Manages Money Supply.)
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