Banking, finance, and taxes

Deutsche Bank Extremely Selective on Banks: 4 Large Cap Regionals to Buy

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Needless to say, the merger between BB&T and SunTrust took Wall Street by storm, and when completed it will make the combined company the sixth largest U.S. bank. With the merger of these two large capitalization regional banks, there is always the chance that there will be more to come. While approval for some deals can be difficult due to overlapping coverage, there is always the chance that the mergers and acquisition potential remains prominent.

While not overly bullish on banks at current levels, the analysts at Deutsche Bank have carefully screened the universe and are noticeably selective on the industry. We looked at the firm’s large-capitalization regional bank universe for stocks that were rated Buy and found four that look promising for investors looking to add some exposure to the sector.

Citizens Financial

This remains a top financial pick across Wall Street. Citizens Financial Group Inc. (NYSE: CFG) operates 1,200 branches primarily throughout 11 states across the New England, Mid-Atlantic and Midwest regions. It has consolidated total assets of $150 billion, ranking as the 13th largest bank in the United States by assets. The company offers a broad range of retail and commercial banking products and services to more than 5 million individuals, institution and companies.

The bank has multiple levers to grow revenue and remains committed to deploy its excess capital. It also may be a better value as compared to some of its peers.

Shareholders receive a 3.46% dividend. Deutsche Bank has a $40 target on the shares. The Wall Street consensus target is $40.60, and shares closed on Wednesday at $37.03.

Huntington Bancshares

This smaller cap bank could be an outstanding addition for more aggressive portfolios. Huntington Bancshares Inc. (NASDAQ: HBAN) operates as a holding company for the Huntington National Bank, which provides commercial, small business, consumer and mortgage banking services.

Its Retail and Business Banking segment offers financial products and services, including checking accounts, savings accounts, money market accounts, certificates of deposit, consumer loans and small business loans, as well as investments, insurance, interest rate risk protection and foreign exchange and treasury management services.

The company’s Commercial Banking segment provides corporate risk management and institutional sales, trading, and underwriting services; commercial property and casualty, employee benefits, personal lines, life and disability, and specialty lines of insurance; and brokerage and agency services for residential and commercial title insurance, as well as excess and surplus product lines of insurance.

Huntington also offers automotive and commercial real estate financing, and a regional private bank and private client business.

Shareholders pocket a 3.9% dividend. The $15 Deutsche Bank price target is in line with the $15.09 consensus figure. The stock ended trading at $14.37 on Wednesday.

KeyCorp

This is one of the better-known banks among the group and looks to be a solid pick for 2019. KeyCorp (NYSE: KEY) operates as the bank holding company for KeyBank National Association, which provides deposit, lending, cash management and investment services to individuals, small and medium-sized businesses.

The company also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets banner.

The top managers are attracted to the larger regional banks, as valuations look very reasonable and cost-saving plans are helping to make forward estimates look very achievable. With overall credit remaining solid, earnings and loan deposit and fee growth all are positive metrics for the bank.

KeyCorp investors receive a 3.86% dividend. The Deutsche Bank target price is $19. The consensus price target is $19.30, and shares closed most recently at $17.63.

Zions Bancorporation

This is another top regional that the Deutsche Bank team likes, and it is a top play in the western United States. Zions Bancorporation (NASDAQ: ZION) offers community banking services, such as small and medium-sized business and corporate banking; commercial and residential development, construction and term lending; retail banking; treasury cash management and related products and services; and residential mortgage servicing and lending. It also provides trust and wealth management services; capital markets services, including municipal finance advisory and underwriting; and investment services.

The company also offers personal banking services to individuals, including home mortgages, bank cards, other installment loans, home equity lines of credit, checking accounts, savings accounts, certificates of deposit of various types and maturities, safe deposit facilities, direct deposits and internet and mobile banking services.

Shareholders are paid a 2.35% dividend. The Deutsche Bank price objective is $54, and the Wall Street consensus is posted at $54.74. The stock closed trading at $51.08 per share.

These four top large-cap regional banks offer solid growth potential and dependable dividends. While no one can be sure there will be any additional mergers in the industry, it still remains possible, and with the BB&T/SunTrust deal looking like it will be approved, the chances do spike some.

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