Recent updates from bank executives reinforce the idea that while deposits have stabilized, the industry faces pressure from rising funding costs, weaker lending and coming regulations, according to Piper Sandler analysts.
The analysts named two picks for the current environment: "From here, our favorite large regional is Fifth Third Bank , and we find U.S. Bank a compelling value for patient investors," Siefers wrote.
Regional bank stocks have r ebounded off the year's lows in recent weeks.
The analyst said that customers' move away from non-interest bearing deposits and falling demand for loans have prompted several regional banks to lower their 2023 guidance for net interest income.
Fifth Third Bank is "now among the most conservative on through-the-cycle [deposit] assumptions and preparedness for a sustained challenging environment," Siefers wrote.
Persons:
Piper Sandler, Scott Siefers, Siefers, Piper Sander, CNBC's Michael Bloom
Organizations:
Fifth Third Bank, U.S, Bank, Silicon Valley Bank
Locations:
Silicon