By David Randall

NEW YORK (Reuters) – If regional banks show signs of accelerating debt growth next week, it could signal a weakening of the supply chain that has weakened the supply chain, analysts and investors said. .

Overall, small banks account for 63 percent of the $ 520 billion in loans under the federal wage protection program. The program allows small businesses to take out loans that can be forgiven or have a 1% interest rate, by US Small Business Administration https://www.sba.gov/sites/default/files/2020-07/PPP% 20 Results% 20-% 20 Sunday% 20 FINAL.pdf.

Increased demand for new loans at high interest rates may indicate that small businesses are saving and expanding, said Davis Ellison, manager of the Hennessy Fund portfolio.

“Everyone seems to have benefited from the reopening of the economy, but the banks have seen very little credit growth,” he said. “The epidemic has disproportionately affected small businesses, and these are customers of regional banks,” he said.

As of June 30, small banks will hold 15% of the total banking industry loans, but according to the Federal Deposit Insurance Corporation https://www.fdic.gov/analysis/quarterly-bank-profile/fdic-quartly/2020-vol14-4/ fdic-v14n4-3q2020-earlyrelease.pdf.

Overall, according to the Federal Reserve and Openheimer, business credit growth fell by 12% in September a year ago, following an annual decline of 16.3%. But automaker analyst Chris Kotkovsky, for his part, said the increase in innovation in automobile suppliers and retailers should boost credit growth next year.

“The next significant step seems to be going up – not down – probably not going down because of simplicity,” said Openhemer analyst Chris Kotkovsky.

Graphic – Has Business Growth Growth Out of Growth? -https: //graphics.reuters.com/MARKETS-LOANS/GROWTH/akvezamlmpr/chart.png

A healthy increase in the supply of new loans in regional banks is a strong signal that mediation issues are becoming a medium, says Gable Fund analyst Steven Comerie.

“If customers are unable to market their products because of the supply chain, they will not lend money to build their products,” he said. “If we see signs of supply chain problems, that will affect revenue estimates for 2023.

The four major US banks reported mixed credit growth on October 14, while J&P Morgan reported declining US Bank and Wales Fargo loans up 5% compared to the previous year. [L4N2R93KV]

Companies including First Community Bancshares Inc., First Midwest Bancorp Inc. and Zions Bancorp are expected to report earnings on Monday, while Fifth Bankcop> and United Banks Inc. are expected to report on Tuesday.

On Wednesday, October 13, the First Bank of the Republic of Ethiopia (CBE) received 1.5% of its quarterly loans, with an average of $ 15 billion in new loans and a median salary protection program. The results of the new loans will boost the bank’s direction in the next quarter, according to Jeffrey analyst Casey Hare.

Concerns over the growth of regional banks’ loans come at a time when the sector’s stocks are highly volatile. Regional banks in the S&P 500 have so far fallen to about 37% and are below the October 8th highest.

Despite those findings, regional banks continue to look attractive based on reviews, Ellison said.

Regional banks in the S&P 500 are trading at a reasonable price of 13.5 per cent below the 21.2, according to reference data. Loans may be more closely related to the 10-year treasury indicator used for setting credit rates, including loans, Ellison said.

“Estimation is not a problem for future discoveries,” he said.

(Reporting by David Randall; Editing by Megan Davis and David Gregory)