Profits at small banks surge in Q3 - Will their stocks follow?
The pandemic has arguably inflicted the biggest economic damage on small businesses. That's why it's surprising to see small, local banks performing so well in the second half of 2020. Will the strength continue?
In Q3, profits surged 10%, total loans rose 13.4% and deposits surged 16.7%, according to the Federal Deposit Insurance Corp. Compare this with 4.9% loan growth for the entire banking sector.
Much of the strength at small banks can be attributed to fiscal stimulus, namely in the form of PPP loans. PPP brought small banks new customers, with small banks handling some 28% of all PPP loans. Since lenders earn a fee of 1% to 5% on each loan, small banks managed to continue profitability even as the economy struggles to maintain the recovery.
For Tickeron's A.I.-driven insights into regional banks, and some trading ideas, continue reading below.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
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