CNBKA - 5 Small Bank Stocks That Could Do Well During a Downturn
The coronavirus pandemic has had an outsized effect on the banking sector, as lenders brace for loan losses brought on by the economic shutdown. As of Wednesday's close, the KRE regional bank index had declined by more than 40% since Feb. 20, when the market really began to drop. Likewise, the First Trust Nasdaq ABA Community Bank Index Fund has lost about 37% since then.
But there are some smaller and regional bank stocks that could do well during an economic downturn. The banks you will want to look for are those that have a smaller percentage of their assets tied up in loans, because all banks are expecting loan losses to start to stack up during the next few quarters. The banks below have a relatively small loan-to-asset ratio compared to their peers, or make more revenue from non-interest income sources such as fees from trading activity, investment management, or other sources.
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