Regional banks are expected to pop under Trump. The Street loves these dividend payers
President-elect Donald Trump is returning to the White House , and shares of regional banks are surging on his Election Day victory. Republicans have also secured a new majority in the Senate , but the House of Representatives remains a toss-up . Nevertheless, the development thus far is a largely positive one for the regional banks. “The group’s story could certainly change meaningfully under greater Republican control,” wrote R. Scott Siefers, managing director at Piper Sandler, in a Wednesday note. “From capital requirements (where fears of punitive increases were already being dialed back, anyway), to areas such as ‘junk fees’ and overdraft, to M & A, the list of burdens that could be eased seems extensive,” he wrote. Indeed, the SPDR S & P Regional Banking ETF (KRE ) jumped more than 13% on Wednesday, soaring on hopes for less regulation in the sector and further merger-and-acquisition activity. CNBC Pro used FactSet data to screen the KRE ETF for names with a dividend yield that’s greater than the S & P 500’s 1.3%. These names must also be rated buy or overweight by at least 55% of the analysts covering them, and have upside of at least 15% based on their average price targets. The data below is based on Tuesday’s close. Western Alliance Bancorp turned up on the list, with a dividend yield of 1.8% as of Tuesday’s close. Shares are up 44% in 2024. In all, about 93% of analysts covering the stock rate it a buy or overweight, per FactSet. D.A. Davidson’s Gary Tenner stuck with his buy rating after the company reported its third-quarter results in October. Earnings of $1.80 per share missed the Street’s call for $1.89 a share, per FactSet. Still, net interest income came in at $696.9 million and beat consensus estimates for $689.1 million, according to StreetAccount. “While 3Q results came in below expectations, and we modestly lowered our 2025E (by 2%), we expect positive balance sheet momentum, and lower [earnings credit rate] costs to result in an upward trajectory of adjusted [net interest income] beginning 4Q,” Tenner said in an Oct. 21 note. WAL YTD mountain Western Alliance in 2024 Popular also made it onto CNBC Pro’s screen. The stock offers a dividend yield of 2.8% as of Tuesday’s close. In October, Popular posted earnings of $2.16 per share, missing the Street’s estimate of $2.30, per FactSet. Net interest income also fell short of expectations, coming in at $572.5 million, versus the StreetAccount consensus estimate of $585.1 million. Piper Sandler analyst Frank Schiraldi has a buy rating on the stock, and he dialed back his expectations for 2025. “We reiterate our [overweight] rating though note it may take a quarter of stabilization for investors to get more comfortable in the updated target and earnings power,” he said, noting that he also trimmed his price target to $100 from $112. On the upside, however, loan growth came in nearly double the firm’s expectations. Shares of Popular are up more than 20% on the year. BPOP YTD mountain Popular shares in 2024 Provident Financial Services turned up on CNBC Pro’s screen. The company reported its third-quarter figures last week, with earnings that fell short of analysts’ estimates. Provident posted a profit of 36 cents per share, versus analysts’ call for 47 cents a share, per FactSet. Net interest income also missed the mark, arriving at $183.7 million compared with consensus estimates of $187.5 million. Piper Sandler’s Mark Fitzgibbon reiterated his overweight rating on the stock last week, but he dialed back his 2025 EPS estimate by five cents to $2.18. “The company has the scale to compete on product and price with the nation’s largest banks and is still small enough to be nimble and responsive to customers,” Fitzgibbon wrote on Oct. 30. He added that he expects the bank’s profitability to “steadily improve each quarter.” Shares are up more than 21% in 2024, and as of Tuesday’s close, it had a dividend yield of 5%. — CNBC’s Fred Imbert contributed reporting.
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