Pick up 'resilient regional banks' post SVB and Signature Bank collapses - CFRA
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In his latest note on the banking industry, CFRA analyst Alexander Yokum sees "regional banks" as "potential winners" in the aftermath of the infamous recent collapses of Silicon Valley Bank and Signature Bank.
The analyst notes that several "resilient regional banks" have fallen 15%-25% over the past few weeks, driven by the general shakeup in the sector in the wake of two major banking failures.
CFRA sees the share losses as unwarranted and highlights the "opportunity to pick up" shares in banks that have "smaller unrealized losses on held-to-maturity securities portfolios" and those "less likely to rely on more expensive outside funding and are less susceptible to a bank run."
The analyst thus lists two groups of regional banks he sees outperforming:
1. "Regional banks that maintain strong deposit balances and service healthy customers" - East West Bancorp (NASDAQ: EWBC), Citizens Financial Group (NYSE: CFG), and Synovus Financial (NYSE: SNV).
2. "Banks with high percentages of insured deposits, as the customers of these banks are usually less worried about bank solvency, noting smaller account balances are less susceptible to interest rate moves" - Regions Financial (NYSE: RF), Webster Financial (NYSE: WBS), and Fifth Third Bancorp (NASDAQ: FITB).
By Vlad Schepkov
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