No. There will not be another regional bank crisis to the extent with what happened to Silicon Valley Bank, Signature Bank and First Republic Bank last year, according to Wolfteam Ltd.'s projections and estimates.
If the Federal Reserve went on raising interest rates, then that would have been another story. But now the Federal Reserve is expected by Wall Street research analysts to lower the Federal Funds Rate 3 to 4 times by 0.25 % in 2024 and thus exert pressure to lower interest rate levels in the US and globally.
Regional banks are much more economically leveraged than big, pan US corporate banks and Wall Street banks. In that order. This means when credit losses are incurred, US regional banks tend to suffer larger percentage losses of capital. However, when things are good and the economy is booming, regional banks reap higher net profit margins.
Actually, the net profit margins of US regional banks are around 33 %, while the net profit margins of money center banks are around 23 %.
Regional banks have disbursed a large notional amount of real estate loans. This could prove an Achilles heel. But now, that the Federal Reserve has signaled it would target lower interest rates, this regional bank commercial real estate problem will be meliorated in the next several months.
To quote the US Treasury Secretary Janet Yellen, the problem will be 'contained'. The Federal Reserve could start its distressed loans programs to regional banks, anew.
Which will mellow any problems with US regional banks.
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