The sustainability of the latest rebound is rather questionable in light of the upcoming stricter capital rules for banks. G-20 meeting, that took place in Toronto this weekend, came to the conclusion that more strict regulations have to be forced onto banks. New regulation need to raise the amount and quality of the minimum capital required to enhance loss absorption ability.[BANNER]
The reform should be finished by the end of 2012, so we’re only looking at possible short term changes to the stock value, as long as a transition period of the reform is there to prevent large market fluctuations. First steps towards the reform should come before the Seoul Summit takes place in November.
On the other hand, a small regional bank stock like this one might not feel the difference altogether. Its small value comes in the first place from the common understanding of how troubled their financials are.
PremierWest has boosted their cash position back in 2009 and the last quarter demonstrated their willingness to sell stock in order to retain those $320 million in vault. These attempts to retain high liquidity are very handy at the moment, even if they come at the cost of dilution to stockholders.
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