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5 Bank Stocks to Gain Amid Potential Economic Recovery
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For the most part of the year, the banking industry took a hit as economic activities were halted due to the coronavirus outbreak. Nonetheless, banks have now started to perform well fueled by several positive developments, including the progress on the COVID-19 vaccine front.
The advisory committee of the FDA recently gave its nod to the vaccine candidate of Pfizer Inc. (PFE - Free Report) and BioNTech SE (BNTX - Free Report) , as mentioned in a Washington Post article. The article further mentioned that this provides certainty that the FDA will approve the authorization of emergency use soon. Coupled with this, the government is also working to pass another fiscal stimulus aid in order to boost the economy. Per the latest development, House Speaker Nancy Pelosi said that the bipartisan group is making “great progress” over the stimulus deal, as mentioned in a press release.
A possible vaccine rollout along with expectations of increased government spending will surely aid the economy. This should also lead consumer borrowings to a pick up as consumers will be willing to borrow more if the economic condition improves.
Moreover, the Federal Reserve has maintained the interest rates at ultra-low levels of 0% to 0.25%. Traditionally, a low interest rate environment is thought to be negative for banks since it affects their profitability as net interest income falls. However, it isn’t that bad for banks as a low interest rate decreases the borrowing costs for consumers. Notably, per the latest survey conducted by the Mortgage Bankers Association (“MBA”) for the week ending Dec 4, the Refinance Index increased 2% from the previous week and 89% higher on a year-over-year basis. The survey further stated that the increase in refinance activity for the said week was in “response to mortgage rates for 30-year, 15-year, and FHA loans hitting their lowest levels in MBA's survey.”
Meanwhile, the emerging scenario should also aid in lowering the loan default rates. Notably, banks have lowered their provisioning in the third quarter, per an analysis by S&P Global Market Intelligence. The analysis said that bank provisioning for the third quarter dropped by 77% from the second quarter even though reserves remained steady. Banks set aside $14.25 billion, a return to pre-pandemic levels, compared to more than $100 billion provisioning made during the first two quarters of this year.
All these factors should aid the banking industry in doing well going ahead. Notably, the Financial Select Sector SPDR (XLF), which includes the performance of several banks, emerged as one of the best-performing sectors in November, gaining 16.8% during the month. It has also gained 3.1% month to date.
5 Top Banks to Invest in Now
With talks progressing on the fiscal stimulus package along with the imminent vaccine approval, the finance sector is set to receive a boost. Mortgage rates have also been at record lows allowing more borrowers to seek refinancing. Meanwhile, banks have also started to lower their provisions. Such a scenario makes it prudent to invest in fundamentally sound banking names that can benefit from this trend going ahead. We have selected five such stocks that carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Independent Bank Corporation (IBCP - Free Report) operates as the holding company for Independent Bank that provides various banking services to individuals and businesses in the United States. The Zacks Consensus Estimate for its current-year earnings increased 34.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 21%.
Bankwell Financial Group, Inc. (BWFG - Free Report) operates as the bank holding company for Bankwell Bank that provides a range of banking products and services to commercial and consumer customers at Connecticut in the United States. The Zacks Consensus Estimate for its current-year earnings increased 18.6% over the past 60 days. The company’s expected earnings growth rate for next year is 86.3%.
Allegiance Bancshares, Inc. operates as the bank holding company for Allegiance Bank that provides a range of commercial banking services primarily to small and medium-sized businesses, professionals, and individual customers in the United States. The Zacks Consensus Estimate for its current-year earnings increased 25.7% over the past 60 days. The company’s expected earnings growth rate for next year is 12.6%.
BOK Financial Corporation (BOKF - Free Report) operates as the financial holding company for BOKF, NA that provides various financial products and services in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona, and Kansas/Missouri. The Zacks Consensus Estimate for its current-year earnings increased 18.9% over the past 60 days. The company’s expected earnings growth rate for next year is 9%.
First Hawaiian, Inc. (FHB - Free Report) operates as a bank holding company for First Hawaiian Bank that provides a range of banking services to consumer and commercial customers in the United States. The Zacks Consensus Estimate for its current-year earnings increased 20.9% over the past 60 days. The company’s expected earnings growth rate for next year is 12%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
5 Bank Stocks to Gain Amid Potential Economic Recovery
For the most part of the year, the banking industry took a hit as economic activities were halted due to the coronavirus outbreak. Nonetheless, banks have now started to perform well fueled by several positive developments, including the progress on the COVID-19 vaccine front.
The advisory committee of the FDA recently gave its nod to the vaccine candidate of Pfizer Inc. (PFE - Free Report) and BioNTech SE (BNTX - Free Report) , as mentioned in a Washington Post article. The article further mentioned that this provides certainty that the FDA will approve the authorization of emergency use soon. Coupled with this, the government is also working to pass another fiscal stimulus aid in order to boost the economy. Per the latest development, House Speaker Nancy Pelosi said that the bipartisan group is making “great progress” over the stimulus deal, as mentioned in a press release.
A possible vaccine rollout along with expectations of increased government spending will surely aid the economy. This should also lead consumer borrowings to a pick up as consumers will be willing to borrow more if the economic condition improves.
Moreover, the Federal Reserve has maintained the interest rates at ultra-low levels of 0% to 0.25%. Traditionally, a low interest rate environment is thought to be negative for banks since it affects their profitability as net interest income falls. However, it isn’t that bad for banks as a low interest rate decreases the borrowing costs for consumers. Notably, per the latest survey conducted by the Mortgage Bankers Association (“MBA”) for the week ending Dec 4, the Refinance Index increased 2% from the previous week and 89% higher on a year-over-year basis. The survey further stated that the increase in refinance activity for the said week was in “response to mortgage rates for 30-year, 15-year, and FHA loans hitting their lowest levels in MBA's survey.”
Meanwhile, the emerging scenario should also aid in lowering the loan default rates. Notably, banks have lowered their provisioning in the third quarter, per an analysis by S&P Global Market Intelligence. The analysis said that bank provisioning for the third quarter dropped by 77% from the second quarter even though reserves remained steady. Banks set aside $14.25 billion, a return to pre-pandemic levels, compared to more than $100 billion provisioning made during the first two quarters of this year.
All these factors should aid the banking industry in doing well going ahead. Notably, the Financial Select Sector SPDR (XLF), which includes the performance of several banks, emerged as one of the best-performing sectors in November, gaining 16.8% during the month. It has also gained 3.1% month to date.
5 Top Banks to Invest in Now
With talks progressing on the fiscal stimulus package along with the imminent vaccine approval, the finance sector is set to receive a boost. Mortgage rates have also been at record lows allowing more borrowers to seek refinancing. Meanwhile, banks have also started to lower their provisions. Such a scenario makes it prudent to invest in fundamentally sound banking names that can benefit from this trend going ahead. We have selected five such stocks that carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Independent Bank Corporation (IBCP - Free Report) operates as the holding company for Independent Bank that provides various banking services to individuals and businesses in the United States. The Zacks Consensus Estimate for its current-year earnings increased 34.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 21%.
Bankwell Financial Group, Inc. (BWFG - Free Report) operates as the bank holding company for Bankwell Bank that provides a range of banking products and services to commercial and consumer customers at Connecticut in the United States. The Zacks Consensus Estimate for its current-year earnings increased 18.6% over the past 60 days. The company’s expected earnings growth rate for next year is 86.3%.
Allegiance Bancshares, Inc. operates as the bank holding company for Allegiance Bank that provides a range of commercial banking services primarily to small and medium-sized businesses, professionals, and individual customers in the United States. The Zacks Consensus Estimate for its current-year earnings increased 25.7% over the past 60 days. The company’s expected earnings growth rate for next year is 12.6%.
BOK Financial Corporation (BOKF - Free Report) operates as the financial holding company for BOKF, NA that provides various financial products and services in Oklahoma, Texas, New Mexico, Northwest Arkansas, Colorado, Arizona, and Kansas/Missouri. The Zacks Consensus Estimate for its current-year earnings increased 18.9% over the past 60 days. The company’s expected earnings growth rate for next year is 9%.
First Hawaiian, Inc. (FHB - Free Report) operates as a bank holding company for First Hawaiian Bank that provides a range of banking services to consumer and commercial customers in the United States. The Zacks Consensus Estimate for its current-year earnings increased 20.9% over the past 60 days. The company’s expected earnings growth rate for next year is 12%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>