At this point most big banks have paid back their bailout money. Last week we heard that Bank of America managed to come up with the $45 billion it owes. Only a few other big guys now remain indebted to taxpayers. Wells Fargo is aching to repay. Citigroup is also likely to soon follow, since it doesn't want to be the last titan to remain under the government's thumb. But what about all of those smaller, regional banks? They'll likely have a much more difficult time paying back Uncle Sam.

Bloomberg explains one reason why:

Unpaid loans on malls, hotels, apartments and home developments stood at a 16-year high of 3.4 percent in the third quarter and may reach 5.3 percent in two years, according to Real Estate Econometrics LLC, a property research firm in New York. That's a bigger threat to regional banks, which are almost four times more concentrated in commercial property loans than the nation's biggest lenders, according to data compiled by Bloomberg on bailout recipients.



The article goes on to say that commercial loan problems might prevent these regional banks from repaying the government until at least 2011.

Big banks are also likely better hedged when it comes to their commercial loan exposure. Of course, they also have far larger portfolios of equity, derivatives and commodities than regional banks. Those assets have all seen significant returns in 2009. Thus, regional banks have far larger portions of their assets in real estate and other commercial loans, while the big ones are much more diversified. So when associated losses hit regional banks, it will hurt them far more.

But commercial loan exposure isn't the only reason regional banks aren't doing as well as the big guys. The giant banks also have Wall Street arms that have been seeing quite good times. Trading profits have soared in 2009. Regional banks don't get a cut of that money, since they generally don't do a whole lot of trading: their bread and butter are old fashioned checking accounts, savings accounts and loans.

As the Bloomberg article also notes, 130 regional banks have failed this year. As the little guys continue to go bust, it's more likely that big banks will scoop up a lot of their business, since their balance sheets can handle new lending more easily. Unfortunately, as the regional banks struggle, the big banks will get even bigger and more systemically entrenched. Small businesses will also have more trouble getting loans, since regional banks have traditionally catered to that market.

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