According to analyst Christopher Marinac, the dramatic fall in regional bank stocks is an important entry point for investors.
Marinac, who serves as Director of Research at Janney Montgomery Scott, believes the group’s decline over the past week is an attractive entry point for investors as underlying company fundamentals remain intact.
“We’ve definitely slipped on a banana peel when it comes to this worry and anxiety about deposits,” Marinac told CNBC’s “Fast Money” on Monday.
The SPDR S&P Regional Banking ETF fell more than 12% on Monday after regulators shut down Silicon Valley Bank and Signature Bank. They are the second and third largest bank failures in US history, respectively.
“The top lenders in America are still medium and small community banks,” he added. “Those companies are excellent plays.”
When asked which regional banks look the most attractive, Marinac recommends Fifth Third Bank. The stock is down more than 27% in the past week.
“They are a very innovative company in the fintech arena that continues to have merit going forward,” he said, adding that CEO Timothy Spence has an “excellent” handle on interest rate risk and credit.
Also called Marina Truist as a top sector pick, saying the company has a competitive advantage over regional banks after selling part of its insurance unit. Truist shares are down 30% in the past five sessions.
“That will help them pass the stress test in June, so that company is definitely not just a survivor, but a bloomer,” he said.
As for the longer-term outlook for regional equities, Marinac expects the group to recoup its losses.
“Eventually the storm will subside and the seas will part, allowing banks to trade again at book value and higher as we go forward,” said Marinac.
