Legendary investor Warren Buffett has recently sold his entire stake in Citigroup to load up on the likes of Constellation Brands, indicating he now sees consumer goods as a better pick than bank stocks.
Still, Truist analysts led by David Smith continue to see value in financial services, particularly the regional bank stocks that are known for paying solid dividend as well.
Some of them even have “outsized organic growth opportunities driven by differentiated business models,” Smith told clients in a research note this week.
These include Old National Bancorp and Western Alliance Bancorp.
Old National Bancorp (NASDAQ: ONB)
Old National Bancorp has recently expanded its footprint into several new markets, including Wisconsin and North Dakota, with the acquisition of Bremer Financial.
“The bank has a good track record on meeting and beating targets of previous large deals,” Truist analysts argued in their latest report.
The investment firm expects Bremer integration to result in a 20% boost to ONB’s earnings per share (EPS) in 2026.
Truist also cited the regional bank’s ability to maintain Return on Tangible Equity (ROTE) at over 15% and a healthy dividend yield of 2.53% for its bullish view on Old National Bancorp.
Western Alliance Bancorporation (NYSE: WAL)
Western Alliance is a Phoenix headquartered bank that trumps all of its regional peers in terms of organic growth and is a dividend stock that yields 1.95%.
In recent years, it’s evolved into a diversified commercial bank with several niche businesses. According to David Smith:
“Following a considerable liquidity and capital build after the March Madness of ’23 that saw its industry-leading returns dip, WAL is poised to once again be among the more profitable midsize banks.”
Truist’s $92 price target on WAL shares indicates potential upside of about 17% from here.
Webster Financial Corp (NYSE: WBS)
Stamford-based Webster Financial offers a big enough footprint and operational efficiency that generates lucrative profits quarter after quarter.
Plus, the regional bank’s management is focused on organic growth and buybacks that may help unlock significant further upside in the back half of 2025.
“Webster also boasts some niche lending businesses and high capital levels. We view WBS shares as offering diversification and see a compelling valuation,” Smith told clients in a research note.
Truist currently has a $61 price target on Webster Financial stock that pays a lucrative dividend yield of 3.02% at writing.
Synovus Financial Corp (NYSE: SNV)
Synovus Financial is attractive for exposure to regional banks as it currently has about 70% of its footprint in high-growth areas.
According to Truist Securities, SNV stock is currently trading at a material discount, and “current profitability/franchise value offers an opportunity to shed legacy perceptions through consistent execution.”
The investment firm likes Synovus for its 3.15% dividend yield and a focus on organic growth and consistent credit quality. Its $56 price target on SNV indicates potential upside of nearly 15% from here.
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