U.S. regional banks largely sold off after the collapse of Silicon Valley Bank in March. Regulators seized its deposits, in what is the largest U.S. bank failure since the global financial crisis . Although their shares have regained some ground since, after the government said it was ready to provide further guarantee of deposits , the SPDR Regional Banking ETF (KRE) is still down 26% in the year to date. Should you buy the dip or steer clear of the uncertainty? A bull and a bear on U.S. regional banks faced off on CNBC’s ” Street Signs Asia ” on Thursday and shared their stock picks. ‘The worst is behind’ Christopher Marinac, director of research at Janney Montgomery Scott, a financial services firm, said banks are profitable, and he estimates that tangible book value per share this quarter will gain 3% on average despite “all of the noise and worries in March.” He said the industry still has very good credit quality and reserves are rising. “The [regional] banks are in very good shape – leverages [are] substantially less today than it was in 2007 and 2008 which positions the banks for a lot less losses than the market realize. So the stocks I think have a chance to bounce and I think the worst is behind,” Marinac told CNBC. ‘Not the environment’ for regional banks It’s “not the environment” for regional banks right now, said Brian Stutland, portfolio manager at Equity Armor Investments. He said regional banks rely on a few major economic factors. First, they need to be able to borrow commercial paper — near or at the U.S. Federal Reserve funds rate — and at the same time lend out to customers at 150 to 200 basis points higher than where they borrowed against deposits. “That condition is not available,” he said. “Also, GDP expansion and increasing new business formations with declining unemployment rates are also necessary and that too is in question at the very least as you can see by a flight to safety into the 10 year note,” he said. A rising 10-year…
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