The Plunge In Regional Bank Stocks Creates A Key Entry Point For Investors

Investors should take advantage of the dramatic drop in regional bank stocks, according to Christopher Marinac.

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As Director of Research at Janney Montgomery Scott, Marinac believes that the group's decline over the past week represents a good entry point for investors because the fundamentals of its business remain unchanged, despite the short-term decline.

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“I think we've slipped on a banana peel with regard to this deposit worry and scare,” Marinac said on Monday.

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A drop of more than 12% was reported in the SPDR S&P Regional Banking ETF on Monday after regulators shut down Silicon Valley Bank along with Signature Bank. This is the second and third-largest bank failure in the history of the United States, respectively.

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According to him, "the majority of loans are made by small and mid-sized community banks in America. These companies are excellent investments.”

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Marinac recommends Fifth Third Bank when asked which regional banks are most attractive. Over the past week, the stock has fallen more than 27%.

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“Their company is very innovative in the fintech arena, and they will continue to have merit as we go forward,” he said, adding that CEO Timothy Spence manages interest rate risk and credit well.

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Having sold a portion of its insurance business, Truist has a competitive advantage over regional banks, according to Marinac. During the past five sessions, the stock of Truist has dropped 30%.

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“They'll pass the stress test in June, which means they're not just surviving, but thriving,” he said.

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Marinac expects regionals to pare their losses in the longer term.

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“Eventually, the storm will subside, and the seas will part so that banks will be able to trade at book value and higher as we move forward,” Marinac told Trade Algo.

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