Last week we saw a lot of interesting action in the broad markets as well as the individual sectors. The Federal Reserve announced their decision that they would likely leave interest rates unchanged for the rest of the year which temporarily sent stocks higher.
One area that did not participate in the rally was the bank stocks. Looking through the different banking stocks one could see that all of them took a hit on the news. From the large banking centers like Goldman Sachs
A faster way to see the carnage is to look through the two popular ETF's that investors like to use. The first is the
That is where many investors have been wondering why one did worse than others. While one would expect the banks to take a hit on the Fed news given that they would profit more should rates move higher, why would the smaller banks get hit harder? Well, the larger banks are involved in the traditional banking businesses but also have the diversity of trading divisions both for themselves and for clients. Regional banks are mainly focused on the lending side of the business which means they would be more likely to see slower growth while the larger banking centers can focus more on other, more profitable ares to continue to drive earnings.
For this reason, among others, you see the regional banks suffering the most compared to the larger banks.