Regional Banks: Can You Feel the Energy?

Fourth quarter and full-year earnings reports are about to start coming in from large regional banks, twelve in the next ten days, and even though Zions Bancorporation is the only regional to mention the need for more energy-related reserves so far, there are some concerns about how falling oil prices will affect the other large regional banks. But Sterne Agee analysts Terry McEvoy and Austin Nicholas say that energy exposure is mostly confined to a couple of regional banks.

“Even with the inflow of large exploration efforts connected to shale oil, we feel very little of that lending business trickled down to the more local banks,” they write. “Should the decline in oil prices continue or remain depressed or...