The banking sector was red hot until the February and March volatility took its toll, but with rates continuing a slow but steady journey higher, some nice tailwinds could be helping some of the banks with higher securities concentrations or lower current securities yield. One thing is for sure, investors looking for solid stocks to buy in front of earnings also may want to look for the best values in the sector.

In a new report, the analysts at Baird make the case that the first-quarter earnings for many of the banks in their coverage should be solid, and they expect the stocks to trade higher, albeit perhaps modestly. While they are keeping Neutral ratings on the big money center banks, many of which had magnificent runs, they are positive on three top stocks, all of which are rated Outperform.

PNC Financial Services

Shares of this top regional bank were down over 5% in the past month but have started to rebound. The PNC Financial Services Group Inc. (NYSE: PNC) is one of the largest U.S. diversified financial services organizations and the sixth largest U.S. bank by deposits, with $375 billion in assets.

PNC provides retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; and wealth management and asset management.

Wall Street analysts point to numerous positives, including the bank implementing huge cost savings plans in 2016. The bank is also applauded for outstanding credit/risk management and the limited exposure to the capital markets related areas, while focusing on traditional banking.

PNC shareholders are paid a 1.97% dividend. The Baird price target for the shares is $153, and the Wall Street consensus target is $162.90. The bank closed trading on Thursday at $152.49.

U.S. Bancorp

This is a top super-regional bank that the Baird team favors for the rest of 2018. U.S. Bancorp (NYSE: USB) is the parent company of U.S. Bank, the fifth largest commercial bank in the United States and fourth largest by number of branches. Founded in 1929 and headquartered in Minneapolis, USBancorp offers a comprehensive line of banking, investment, brokerage, trust and mortgage services to consumers, businesses and institutions.

Many on Wall Street like the fact that USB has no meaningful capital markets exposure and has among the best risk management/credit profile in the industry, and it generates among the highest returns of peers. Fee income represents a whopping 45% of total revenue, spread over four separate business silos, providing a strong overall base. The diversity of business lines/revenue streams is expected to drive strong through-the-cycle performance, and the analysts expect overall loan growth in the range of 4% to 6% year over year.

Investors are paid a 2.35% dividend. Baird has a $56 price target, and the consensus price objective is $58.81. Shares closed Thursday at $51.24.

Wells Fargo

This large cap bank is a solid value play for 2018 but still faces the possibility of large fines. Wells Fargo & Co. (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.8 trillion in assets. The company provides banking, insurance, investments, mortgage and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the Internet and mobile banking. It also has offices in 36 countries to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States.

Wells Fargo has slowly, but surely, become one of the biggest mortgage lending companies in the United States, in addition to its normal banking and brokerage businesses. A continued increase in commercial real estate lending could really boost the bank’s bottom line and overall revenue.

While earnings beat analysts’ estimates for the fourth quarter, revenue, net interest income and net interest margins all fell short of expectations. Wells Fargo management emphasizes that 2018 should be a different story. With positive industry catalysts and several initiatives designed to restore consumer confidence in the bank, it’s possible that the first quarter and the rest of 2018 could be a much better year for the bank.

Wells Fargo shareholders receive a 2.95% dividend. The $62 Baird price target is less than the consensus target of $63.15. Shares closed Thursday at $52.70.

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These are three top companies for investors to look at before the first-quarter results are out. All make good sense for long-term growth accounts looking to add financial stocks that are not overextended on a valuation basis.

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