Interest Rate And Inflation Concerns Knock Regional Bank Stocks To Even Lower Lows

Economist Mohammed El-Erian says it’s wrong to call this a bank “crisis” — he prefers the word “tremors” — but it’s apparent from the steady selling by shareholders of regional banking stocks that serious concerns are present. Big, monster banks such as JP Morgan seem to be weathering the storm without too much difficulty, but the regionals do not look non-crisis like.

The SPDR S&P Regional Banking ETF (NYSE: KRE
KRE
) is the benchmark for the sector with holdings of the 145 stocks that make up the S&P’s Regional Banking Index. The ETF is managing to barely hold the March lows. Here’s the daily price chart:

The relative strength indicator (RSI, below the price chart) shows a positive divergence from the early March low to the late March low. Both the 200-day moving average and the 50-day moving average are headed downward.

Here are a few samples of specific regional banks whose shares continue to be sold:

Banc of California Inc (NYSE: BANC), with headquarters in Santa Ana, has a market capitalization of $727 million. Being a bank in the same state as Silicon Valley Bank is probably affecting interest in these shares:

The stock has taken out the late March low as sellers continue to control the direction of price.

Berkshire Hills Bancorp
BHLB
(NYSE: BHLB) has a market capitalization of $92.50 million with branches in Massachusetts, Connecticut, Rhode Island, Vermont and New York.

That looked like a decent rally as the stock hit a March 13th low and then found interested buyers — but since late March, it’s been almost nothing but selling. Note that the 50-day moving average has crossed over and below the 200-day moving average.

First Financial Corp Indiana (NASDAQ
NDAQ
: THFF) is based in Terra
LUNA
Haute and has a market capitalization of $435 million. It’s the oldest bank in Indiana, in business for 185 years.

This is yet another of the regional banking stocks that just keeps dropping lower and lower. The 50-day moving average crossed below the 200-day moving average back in February.

ServisFirst Bancshares (NYSE: SFBS), with corporate offices in Birmingham, Alabama, has a market capitalization of $2.91 billion. Early in April, Raymond James analysts issued a “market perform” rating for the stock.

This stock has been steadily down trending since at least last August and just hit another new low. It’s now trading well below both the 50-day and the 200-day moving average.

Investors are asking themselves whether worries about inflation — and concerns about the likelihood of more Fed rate hikes — are worth holding onto regional banking stocks. So far, the answer is “no” for most.