Introduction#
Bank of America (BofA) has spotlighted several mid-cap banking stocks that are expected to perform well in the coming months. The bank cites factors like margin expansion, loan growth, and improved capital returns as key reasons for their optimism.
Key Bank Picks#
BofA's analysis features a range of banks with different growth strategies, from commercial lending to fee income generation.
1. Associated Banc-Corp (ASB)#
Associated Banc-Corp is BofA’s top choice, anticipating growth through relationship-driven commercial lending. New hires are expected to contribute significantly to loan growth. The bank's initiatives to attract deposits and its ability to manage assets are projected to enhance profit margins. Additionally, the company has received regulatory approval for its merger with American National Corporation and has initiated a $100 million share buyback program.
2. Cullen/Frost Bankers (CFR)#
Cullen/Frost Bankers is noted for its strong credit quality and potential benefits from fewer interest rate cuts. The bank has gained market share and has options in capital markets that could bolster its earnings. In its latest earnings report, the bank exceeded expectations with earnings per share of $2.56 on revenues of $603.38 million.
3. East West Bancorp (EWBC)#
East West Bancorp maintains a positive loan growth outlook of 5-7%, supported by a robust commercial pipeline. The bank's strong balance sheet and low credit risk are seen as advantages, despite some fluctuations in fee income. The latest earnings report showed operating earnings per share of $2.52, slightly above expectations.
4. First BanCorp (FBP)#
First BanCorp is expected to see continued margin expansion through deposit repricing and securities rollover. The bank's loan growth is projected to be moderate, with stable credit trends. In its recent earnings report, it reported earnings per share of $0.55 on revenues of $257.17 million, surpassing analyst forecasts.
5. FNB Corporation (FNB)#
FNB Corporation is characterized as a growth story for the latter half of the year, with improving commercial momentum. The bank's net interest margin is expected to grow steadily. Moody’s has affirmed its Baa2 long-term issuer rating, changing the outlook to stable.
6. Popular Inc (BPOP)#
Popular Inc is recognized for its strong capital levels and consistent margin expansion. The bank's exposure to Puerto Rico provides a supportive economic environment, though rising oil prices could pose risks in the long term. The latest earnings report showed earnings per share of $3.53, significantly exceeding expectations.