Salient to Investors:

Total loans at the four largest U.S. banks fell 4.9 percent in Q1 versus an increased of 9.8 percent for the 17 smallest of the 24 firms in the KBW Bank Index.

David Trone at JMP Securities said the big banks’ shrinking loans has earnings implications, because the removed loans, while identified as high-risk, are being paid off at par and are high interest-rate loans – they are not impaired loans that aren’t paying.

David Jones at DMJ Advisors believes that if anything helps in getting this recovery going, it will be regional banks.

Professor Dennis Logue at Dartmouth said the community bankers’ clientele are more in need of loans right now than the big banks’ clientele, which have big cash stashes.

The 17 smallest KBW Bank Index lenders had an average price-to-tangible-book value of 1.5 at the end of Q1 versus 1.2 average for JPMorgan, Bank of America, Wells Fargo and Citigroup.

Read the full article at http://www.bloomberg.com/news/2012-06-26/biggest-u-s-banks-curb-loans-as-regional-firms-fill-gap.html