KBW recommends safe-haven bank stocks to buy after SVB collapse

Published Mon, Mar 13 20231:57 PM EDTUpdated Mon, Mar 13 20235:03 PM EDT

Some bank stocks remain "safe havens" for investors even after the Silicon Valley Bank collapse , according to Keefe, Bruyette & Woods. The firm recommended 11 stocks that investors should buy "right here, right now" following the sell-off in bank stocks in the wake of SVB's failure, as well as the regulatory response over the weekend, according to a Sunday note. The Federal Reserve said Sunday it's making a new Bank Term Funding Program that would offer loans for up to a year to banks, in an effort to safeguard firms affected by SVB. That could spell a buying opportunity for some bank stocks. "We see a potentially significant rebound in several bank stocks, as the market is likely to believe that the Fed and FDIC stuck the landing," analyst Christopher McGratty wrote to clients Sunday. Of course, that comes with a major caveat, with McGratty noting that regulators "are walking a tightrope" that could lead to more downside for stocks if "any significant missteps" add to depositor and investor fears, the note said. USB 1D mountain U.S. Bancorp shares 1-day KBW considers U.S. Bancorp one of its best ideas for 2023, saying the firm has "one of the strongest return profiles" in the industry, according to KBW analyst David Konrad. Shares tumbled 10% on Monday, as many banking names suffered. "Asset quality for USB has historically outperformed peers, and USB's ROA did not dip below 75bps during the Great Financial Crisis. With the stock trading at 7.3x our 2024E, or a 6% discount to peers, we recommend investors overweight the shares during this period of heightened volatility," Konrad wrote in recommendation of the stock. Old National Bancorp is a buying opportunity that's also a best idea for 2023, according to the note. Shares closed 4% lower Monday. KBW cited the company's strong business, saying the stock will continue to outperform. SouthState is another 2023 best idea for KBW. The firm cited SouthState's "high-quality, very granular deposit base" with small businesses, as well as its proven credit history and cheap valuation. Last week, the stock fell 5%. Shares slid 8.6% on Monday. "Should markets remain volatile, we believe SSB will continue to outperform, and we believe the risk-reward today remains compelling," the note said.