This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Can Regional Brokers Keep Outperforming?

By choice or circumstance, smaller brokerage firms like Stifel Financial (SF - Get Report) and SWS Group (SWS) have maintained their independence. More importantly for investors, they have also outperformed the banking giants.

These regionals may not have as much recognition as the mammoth securities firms -- Stifel's market cap is $962 million, SWS's market cap is $488 million -- but they won't be receiving as many unwanted headlines either.

Like the big guys, regionals provide a range of services including financial advice, banking, asset management and fixed income and equity products. Of course regionals can't ignore the ravages of the recession, because their customers are just as frightened as are customers of the financial supermarkets.

For the most part, however, they have avoided the severe stock shocks of jumbo names like Goldman Sachs (GS - Get Report) and the mishaps of financial supermarkets like Bank of America (BAC - Get Report) and Citigroup (C - Get Report).

How have they managed to do this? Regional brokerages have done comparatively well thanks to healthy balance sheets and investment philosophies that are more conservative than those of larger financial institutions.

"Although the private client business tends to be the marquee business segment from a revenue and recognition standpoint, capital markets and banking have grown in their importance to each firm's overall business mix," says a recent report by Keefe, Bruyette & Woods, which specializes in analyzing financial services firms and banks.

KBW predicts the recession will take a toll on regional brokers as clients make fewer trades and investments. "As a result, commission- and transaction-based revenue will be lower than 2008's levels," the firm says. Low interest rates will cause a drop in net interest income in 2009 vs. 2008.

Still, those strong balance sheets should help them grow. "We believe that they will continue to benefit from the fallout of the recent mergers at the large-cap wire houses," KBW says.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SWS $6.91 -0.14%
BAC $12.95 0.00%
C $39.86 0.00%
GS $156.47 0.00%
RJF $43.40 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs