How to Trade 7 Regional Banks on Stock Charts and FDIC Data

NEW YORK (The Street) -- U.S. regional banks are well-positioned to benefit from increased real estate lending, given the healing process shown in the FDIC Quarterly Banking Profile for the first quarter of 2015. However, the technicals for stocks in this industry are deteriorating.

We will look at the key data from the Federal Deposit Insurance Corporation, profile the technicals and provide the key levels at which to buy these stocks, which include BB&T Corp (BBT), Fifth Third Bancorp (FITB), PNC Financial (PNC), Regions Financial (RF), SunTrust (STI), U.S. Bancorp (USB) and Zions Bancorp (ZION) stocks on weakness and to sell them on strength.

Here's a table of the FDIC data for real estate lending that shows mixed exposures to real-estate related loans. With first quarter GDP slumping by 0.7% in its second estimate, increased real estate lending is an important economic key to proclaiming that the "Great Credit Crunch" has ended.

Total Real Estate Loans include residential mortgages for 1 to 4 family homes, nonfarm / nonresidential loans, construction and development loans and home equity loans. The total of these loans increased by 2.5% year-over-year in the first quarter to $3.75 trillion. However, the healing process remains slow as these loans are down 15.8% since the end of 2007 when the Great Recession began.

Other Real Estate Owned declined a solid 30.6% year over year in the first quarter to $19.34 billion, but remains 59.3% above the level at the end of 2007. Banks had been slow to reduce these nonperforming assets making the bet that real estate prices would rise, so it's positive to see the pace of liquidation pick up. OREO peaked at $53.2 billion in the third quarter of 2010, which was a peak for foreclosure activities.

Notional Amount of Derivatives has been a financial stress among the largest seven banks, but 1,430 of the 6,419 FDIC-insured financial institutions reported some derivative exposure, which is up 2.2% year over year. The overall exposures declined 3.7% year over year to $205.9 trillion in the first quarter of 2015, but still up 23.9% from the end of 2007.

Deposit Insurance Fund are the dollars available to protect insured deposits. These monies are funded by all FDIC-insured institutions via annual assessments. The year-over-year gain of 20.3% to $65.3 billion has the FDIC well on its way to satisfy the regulatory guidelines, which is to have the fund at 1.35% of insured deposits by Sept. 20, 2020. At the current level of insured deposits, the DIF would have at $85.6 billion, so there is still work to do.

Insured Deposits are up 2.2% to $6.34 trillion and are up 47.8% since the end of 2007. The growth can be attributed to the increase in deposit insurance guarantees to $250,000 from $100,000 which occurred during the height of the credit crisis.

Reserves for Losses have been declining during the healing of the banking system. Reserves are at $121 billion are down 8.5% year over year, but still up 19% since the end of 2007, which is a sign that some loan stresses continue.

Noncurrent Loans declined by a significant 21.6% year over year in the first quarter to $153 billion, still 39.2% above the level at the end of 2007.

Here are the performance measures and how to trade these seven regional banks knowing that data from the FDIC suggests improved balance sheets as shown in the above table.

BB&T shares closed at $39.17 on Monday, up 0.7% year-to-date, and 12% above its Jan. 14 low of $34.95.

This regional bank has increased its total assets by 2% year over year in the first quarter to $184.4 billion.

The stock is above its 50-day and 200-day simple moving averages of $38.96 and $37.91, respectively, and has a positive weekly chart with shares trading above its key weekly moving average of $38.96. The 200-week simple moving average is the long-term uptrend at $33.11.

Investors looking to buy BB&T should place a good till canceled limit order to purchase the stock if it drops to $38.80, which is a key level on technical charts until the end of this week only.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $40.63, which is a key level on technical charts until the end of June.

Fifth Third Bancorp closed at $20.06 on Monday down 1.6% year to date and 17% above its Jan. 29 low of $17.14.

This regional bank has increased total assets by 8.5% year over year in the first quarter to $138.1 billion.

The stock is above its 50-day and 200-day simple moving averages of $19.74 and $19.63, respectively, but its weekly chart will shift to negative if the stock ends the week on Friday below its key weekly moving average of $19.97. The 200-week simple moving average is the long-term uptrend at $17.19.

Investors looking to buy Fifth Third should place a good till canceled limit order to purchase the stock if it drops to $19.20, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $23.59, which is a key level on technical charts until the end of June.

PNC Financial closed at $94.62 on Monday, up 3.7% year to date and 16% above its Jan. 14 low of $81.84.

This regional bank has increased total assets by 8.6% year over year in the first quarter to $340.2 billion.

The stock is above its 50-day and 200-day simple moving averages of $93.29 and $88.92, respectively, and its weekly chart is positive with the stock above its key weekly moving average of $93.87. The 200-week simple moving average is the long-term uptrend at $72.17.

Investors looking to buy PNC Financial should place a good till canceled limit order to purchase the stock if it drops to $86.74, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $96.18, which is a key level on technical charts until the end of June.

Regions Financial shares closed at $9.98 on Monday, down 5.5% year to date and 16% above its Jan. 20 low of $8.59.

This regional bank has increased total assets by 3.7% year over year in the first quarter to $121.4 billion.

The stock is above its 50-day and 200-day simple moving averages of $9.79 and $9.83, respectively, and its weekly chart will shift to negative if the stock ends the week on Friday below its key weekly moving average of $9.91. The 200-week simple moving average is the long-term uptrend at $8.24.

Investors looking to buy Regions should place good till canceled limit orders to purchase the stock if it drops to between $9.59 and $9.32, which are key levels on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $11.79, which is a key level on technical charts until the end of June.

SunTrust Bank shares closed at $41.98 Monday, up just 0.2% year to date and 15% above its Jan. 15 low of $36.52.

This regional bank has increased total assets by 5.6% year over year in the first quarter to $185.3 billion.

The stock is above its 50-day and 200-day simple moving averages of $41.87 and $40.07, respectively, and its weekly chart will shift to negative if the stock ends the week on Friday below its key weekly moving average of $42.02.

The 200-week simple moving average is the long-term uptrend at $31.48.

Investors looking to buy SunTrust should place a good till canceled limit order to purchase the stock if it drops to $35.96, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $43.60, which is a key level on technical charts until the end of June.

U.S. Bancorp closed at $42.97 Monday, down 4.4% year to date and 5.6% above its Jan. 15 low of $40.70.

This regional bank has increased their total assets by 10.4% year over year in the first quarter to $406.0 billion.

The stock is below its 50-day and 200-day simple moving averages of $43.48 and $43.20, respectively, and its weekly chart is negative with the stock below its key weekly moving average of $43.36. The 200-week simple moving average is the long-term uptrend at $36.09.

Investors looking to buy U.S. Bancorp should place a good till canceled limit order to purchase the stock if it drops to $33.83, which is a key level on technical charts until the end of 2015.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $45.07, which is a key level on technical charts until the end of June.

Zions Bancorp shares closed at $28.60 on Monday, up just 0.7% year to date and 21% above its Jan. 30 low of $23.72.

This regional bank has increased their total assets by 3% year over year in the first quarter to $57.5 billion. The stock is above its 50-day and 200-day simple moving averages of $28.02 and $27.75, respectively, and its weekly chart will shift to negative if the stock ends the week on Friday below its key weekly moving average of $28.33. The 200-week simple moving average is the long-term uptrend at $24.63.

Investors looking to buy Zions should place a good till canceled limit order to purchase the stock if it drops to $26.42, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $32.41, which is a key level on technical charts until the end of June.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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