The Wall Street street sign will be displayed outside New York City, New York, USA, July 19, 2021, outside the New York Stock Exchange (NYSE). REUTERS / Andrew Kelly / File Photo

NEW YORK, Oct. 15 (Reuters) – If regional banks showed signs of accelerating credit growth during the week of revenues, the recovery could signal a weakening of US supply chains that have 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, US Small Business Administration.

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 accounted for 15% of the total banking industry loans, but according to the Federal Deposit Insurance Corporation, 31% of the salary protection program loans accounted for the largest share.

Overall, according to Federal Reserve and Openheimer data, annual credit growth fell by 16.3%. But automaker analyst Chris Kotkovsky, for his part, said innovations in automotive suppliers and retailers should boost credit growth next year.

“The next significant step is to move upward – not downwards,” said Openhemer analyst Chris Kotkovsky.

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A healthy increase in the supply of new loans to regional banks is a strong indication that the supply chain issues are modest, says Gable Fund analyst Steven Comery.

“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 look at supply chain issues, that will affect revenue estimates for 2023.

The four largest US banks reported mixed credit growth while reporting earnings. L4N2R93KV

Companies including First Community Bancshares Inc (FCBC.O), First Midwest Bancorp Inc (FMBI.O) and Zions Bancorp (ZION.O) are expected to report earnings on Monday, while Fifth Third Bank Banks and O’Connor Banks Inc. are expected to report on Tuesday. Among the expectations are UCBI.O).

On Wednesday, October 13, the First Bank of the Republic of Ethiopia (FRC) acquired 1.5% of its quarterly earnings-on-quarter balance of $ 15 billion in new loans and the average 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 (.SPLRCBNKS) have so far reached about 37% and are higher than they reached on October 8, according to reference data.

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 related to the 10-year treasury indicator used to set credit rates, including loans, Ellison said.

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

Reported by David Randall; Edited by Megan Davis and David Gregory

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