As Bank of America and other large consumer banks grapple with a surge in litigation, settlement woes, declining rates and regulatory changes, super-regional banks may be poised to make great gains.

Already we're seeing the rise of new challengers with enough heft to be considered a near-Big Four type of bank. If Capital One is successful in its efforts to buy ING's online bank operations, it would rank as the fifth largest consumer bank in the U.S. Bloomberg notes that other super-regionals are expanding as well, notably PNC and U.S. Bank. PNC bought the U.S. operations of RBC, while U.S. Bank is making a move in wealth management and corporate banking. Region's has also been making some purchases, notably a credit card portfolio from Bank of America.

Frankly, all sub-"too big to fail" banks are sensing some opportunity, all the way down to credit unions that aim to pitch themselves as a downhome alternative to the conflicted big banks. One analyst just lifted recommendations to buy on regionals like CVB Financial, Home Bancshares, PacWest Bancorp and Pinnacle Financial Partners.

The regional bank earnings picture has been and will likely remain brighter than the picture for the big banks for the rest of the year. Earnings have held up at many regional banks despite weak revenue growth because improved balance sheets have allowed them to take advantage of improved credit conditions to release funds previously set aside for loan losses. Big banks have done this too, but their earnings picture is much more convoluted with all the litigation risk they face. One regional, SunTrust, was able to hike is dividend 400 percent. But at the end of the day, even these banks will be expected to grow revenue. Which leads right back to the vexing question: What's the next big thing?    

For more:
- here's the article on PNC and U.S. Bank

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