Smaller%20Lenders%20Struggle%20to%20Survive%20Article

Smaller%20Lenders%20Struggle%20to%20Survive%20Article -...

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APRIL 15, 2011 Smaller Lenders Struggle to Survive By ROBIN SIDEL The factors that propelled quarterly earnings at J.P. Morgan Chase & Co. this week aren't doing much to help smaller institutions struggling to stay afloat. For some, like Birmingham, Ala.-based Superior Bancorp, time may be running out. Large institutions, some of which were clobbered during the financial crisis but are now enjoying profit growth, have an array of disparate businesses from credit cards to investment banking. Strong performance in one division can be used to offset troubles in another. Similarly, their national reach helps soften the blow of a trailing economic region like Florida, for example. And when a region or division starts to improve, big banks can boost profits by releasing funds set aside to cover bad loans in those areas. Regional banks typically have fewer rabbits in their hats. Many still are wrestling with the fallout from credit that they extended to borrowers before the financial crisis, even though loan delinquencies and defaults are declining. They are concentrated in fewer geographic areas and have fewer lines of business to cushion them. "The smaller names are certainly in a very precarious and difficult position because their credit problems are enormous," says Gerard Cassidy, an analyst at RBC Capital Markets.
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Smaller%20Lenders%20Struggle%20to%20Survive%20Article -...

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