Big Bank Stocks vs. Small Bank Stocks: Which Is Better?
An age-old question for investing in the stocks of banks is: Are large banks better than small banks? Every bank is different, but today bank investors are finding that many small regional banks have healthier balance sheets than the larger banks which became embroiled in the credit market debacle. The stocks of banks which were once large enough to be included in the Standard and Poor’s 500 Index, have lost an average of over 50 percent of their pre-2008 value, compared to the 24 percent loss seen in an index of regional banks for the same time period. The day of assuming that large banks are better than small banks is probably over. As a general rule, any bank which grows their deposits or grows their number of branch offices too quickly can face growing pains. At the same time, a bank that doesn’t grow their deposit base or loan portfolio is unlikely to increase profits consistently and pay competitive dividends to investors. The best answer for a bank investor is to evaluate each b
