This Day On The Street
Continue to site
ADVERTISEMENT
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

10 Bank Plays for the Manufacturing Recovery: KBW

JUPITER, Fla. ( TheStreet) -- Manufacturing growth in the Midwest and some regions of California can pay off big over the next several years for local banks and their investors.

In a report released late on Sunday KBW analyst Fred Cannon named 10 regional banks that "should be able to produce outsized loan and deposit growth over time," from the resurgence in manufacturing activity.

While there has been a very significant decline in U.S. manufacturing employment since 2007, the last two years have seen strong growth in manufacturing jobs, mainly in the Midwest, as the auto industry has recovered.

There are 1.9 million fewer workers employed by U.S. manufacturers than there were at the end of 2007, according to KBW. However, over the past two years, seven states have seen double-digit growth in manufacturing employment, including Indiana, Ohio, Illinois, Michigan, Georgia and Washington.

Manufacturing growth "tends to have high multiplier effects as increases in incomes to those with manufacturing jobs drive increased demand for housing and other consumer goods," according to Cannon, who also wrote that that "this manufacturing renaissance in the former rust belt is being driven by a resurgence in the U.S. auto industry and by low energy prices stimulated by the drive toward energy independence."

The Bureau of Labor Statistics on Friday said that, on a seasonally adjusted basis, 236,000 nonfarm jobs were created in the Unites States during February. Of that total, 14,000 were in manufacturing, and 48,000 were in various construction industries.

Regional economies see "large benefits" from manufacturing expansion, "because growth in the production of manufacturing products tends to be driven by demand outside a regional economy, so manufacturing and other 'export', oriented jobs stimulate the natural economic growth that occurs in a region's service sector based on demand internal to a region," according to Cannon.

Cannon noted that "the state data we reviewed can mask sub-state regions where manufacturing is expanding," including California's Bay Area. KBW's research team highlighted seven Midwest banks that the firm's analysts see benefiting from the manufacturing recovery, along with three California names.

1 of 3

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
Submit an article to us!
SYM TRADE IT LAST %CHG
ASBC $17.27 2.19%
FMER $19.24 0.00%
ONB $13.60 0.00%
PVTB $37.49 0.00%
SIVB $131.59 0.00%

Markets

DOW 18,070.40 +46.34 0.26%
S&P 500 2,114.49 +6.20 0.29%
NASDAQ 5,016.9290 +11.5380 0.23%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs