CNBC's Jim Cramer on Friday gave investors his take on which regional banks came out of earnings reports looking the best.
It was a tough year for regional banks in 2023 after a series of failures in the spring. The sector started to make a comeback toward the end of 2023, but now many in the group have "gone cold," Cramer said. However, he added that there are opportunities to buy into weakness.
"I think this could be just the pullback we've been waiting for," he said. "We're in a world where long rates have peaked and the Fed's likely to cut short rates, albeit not as much as Wall Street might want. That's good news for the regional banks here, especially since the economy's holding up just fine."
Cramer's favorites from this week were First Horizon and Huntington Bancshares. Horizon reported a solid quarter on Thursday, in part due to a successful deposit campaign. The stock was able to rally because management convinced investors the bank could do well even if the Federal Reserve cuts rates slowly, Cramer added. Huntington Bancshares won Cramer's favor because its earnings were solid, but its guidance was great. He said the stock can climb this year if the bank hits its goals.
He also praised Regions Financial's quarter, as well as that of M&T Bank, saying the outfit has been able to avoid the bond portfolio mistakes of its peers. Citizens Financial Group's earnings were in line with expectations, but its outlook for the rest of the year was more encouraging. Management predicted a net income bottom during the second quarter, and Cramer said if the company is right, the stock can run.
"While I'm still bullish on the group, and it could have big percent gains coming up, not all regionals are created equal," he said. "As long as interest rates don't surge higher again, I think all five can work."
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