JPMorgan analyst Steven Alexopoulos has recently highlighted seven bank stocks that are primed for significant growth in the current market conditions. These picks, dubbed the “Magnificent Seven” by Alexopoulos, consist of mid- and small-cap banks with promising prospects.
First Citizens BancShares Inc (Delaware) Class A FCNCA is one of the picks, despite facing challenges in the VC environment in 1Q24. The bank’s acquisition of SVB has helped stabilize deposit balances and increase new deposits, indicating potential growth in the future. Additionally, First Citizens’ asset-sensitive balance sheet could benefit from potential Fed rate cuts, leading to strong net interest income growth.
Western Alliance Bancorporation WAL has achieved key financial targets in 1Q24, setting the stage for continued growth. The bank’s national businesses have outperformed peers, offering significant upside potential for shareholders as shares trade at an elevated implied cost of equity.
Live Oak Bancshares Inc LOB’s growth has been delayed by Fed rate cuts, but its long-term growth story remains intact. With strong loan originations and a favorable valuation, LOB is well-positioned for future growth.
Pinnacle Financial Partners Inc PNFP stands out among regional banks with strong balance sheet growth exceeding peers. The bank’s focus on client relationships could lead to a favorable NIM outlook and further revenue upside.
Cullen/Frost Bankers, Inc. CFR, known for its founder-inspired culture and strong balance sheet, continues to invest for the long term. Despite modest NII guidance adjustments, Frost’s trajectory suggests an increase in NIM and strong growth ahead.
MVB Financial Corp MVBF has underperformed peers due to NIM compression, but this is expected to reverse in 2Q. With a strong presence in the online gaming industry and an attractive valuation, MVBF is poised for long-term growth.
Webster Financial Corporation WBS, despite underperforming peers in 1Q24, offers an attractive buying opportunity as shares trade at a discount. Strong loan growth in 1Q24 and potential improvements in 2H24 could lead to upside for Webster.
While the U.S. mid- and small-cap banks’ 1Q24 earnings outlook presented a mixed bag of results, JPMorgan remains bullish on the sector. Despite challenges such as limited loan demand and uncertain Fed rate cuts, Alexopoulos believes the “Magnificent Seven” picks are well-positioned for significant intrinsic value growth in the current environment.
DailyBubble sees the potential for these bank stocks to outperform expectations and drive growth in the coming months. Despite uncertainties in the market, the selected banks offer strong upside potential and are worth considering for investors looking for growth opportunities in the banking sector.