Deutsche Bank Raises 3 Top Banks to Buy After Recent Sell-Off

PNC Financial Services

This top regional bank is down over 10% in the past month. The PNC Financial Services Group Inc. (NYSE: PNC) is one of the largest U.S. diversified financial services organizations providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. With consistent earnings growth and a very positive and growing loan portfolio, the company is a premiere super-regional bank stock to own.

The Deutsche Bank team highlights numerous positives, including the bank implementing huge cost savings plans. They note the fact the bank pointed to up to $100 million of new saving on the second-quarter earnings conference call. They also cite the bank’s outstanding credit/risk management and the limited exposure to the capital markets related areas.

PNC shareholders receive a very solid 2.3% dividend. The Deutsche Bank price target for the stock is $105, while the Thomson/First Call consensus target is $102.55. Shares closed Tuesday at $90.98.

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U.S. Bancorp

This is another top regional bank that took a beating in the recent downturn, dropping over 15% at one point. U.S. Bancorp (NYSE: USB) has $419 billion in assets as of June 30, 2015, and is the parent company of U.S. Bank National Association, the fifth largest commercial bank in the United States. The company operates 3,164 banking offices in 25 states and 5,020 ATMs, and it provides a comprehensive line of banking, investment, mortgage, trust and payment services products to consumers, businesses and institutions.

The analysts at Deutsche Bank note that the bank has underperformed other, larger regional banks over concerns about lower revenue and higher expenses. They also point to the fact that U.S. Bancorp has no meaningful capital markets exposure, has among the best risk management/credit profile in the industry and generates the highest returns of its peers.

USB investors are paid a very solid 2.5% dividend. The Deutsche Bank price target is $47, and the consensus price objective is $47.54. Shares closed most recently at $41.43.

Wells Fargo

While more than a super-regional, this top bank was also upgraded at Deutsche Bank. Wells Fargo & Co. (NYSE: WFC) may see a solid benefit when yields start moving higher. In the meantime, the analysts like the bank’s diverse business model, which protects against current low rates. 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. An increase in commercial real estate lending could really boost the bank’s bottom line, which some on Wall Street feel could aid a big return in capital to shareholders. The stock remains a top Warren Buffett holding.

The Deutsche Bank team points to the potential for cost savings and note that the bank’s excess liquidity provides flexibility to take advantage of higher rates, and the exposure to capital markets is less than comparable market sensitive banks/brokers. They also think that third-quarter interest income could be better than expected.

Wells Fargo investors are paid a generous 2.9% dividend. The Deutsche Bank price target is $60, and the consensus is set lower at $59.81. The stock closed on Tuesday at $52.93.

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These top bank stocks provide very solid total return potential. More conservative accounts looking to add new positions may be well served buying any of the three.