Mid-cap banks strong in rising rate environment - Wells Fargo

Bank of NT Butterfield & Son

07/07/2022 11:29

** With the U.S. Federal Reserve's recent rate hikes and
expectations of interest rates rising further in the near term,
fundamentals for mid-cap banks are strong, says Wells Fargo 
    ** Adds commercial customers of loans have not been spooked
by talks of a looming recession and loan growth remains robust
    ** Expects Western Alliance Bancorp  WAL.N , Signature Bank 
 SBNY.O  and Pinnacle Financial Partners  PNFP.O  to post the
highest growth in loans in Q2
    ** Upgrades Bank of N.T. Butterfield & Son  NTB.N  to
"overweight" from "equal weight"; Brokerage's PT of $38 implies
an upside of ~23% to stock's last close  
    ** "Shares of NTB do best in rising rate environments where
there is uncertainty surrounding US domestic banks" - Wells
Fargo
    ** However, says sentiment on the stocks is likely to remain
weak as fears of an upcoming recession keeps valuations
pressured
    ** Says it sees banks which maintain deposit balances
performing the best as questions around sustainable balance
sheet size weigh on sentiment 
    ** As of last close, NTB, PNFP, WAL and SBNY down between
~18.8% and ~42.5% YTD vs a ~22.5% decline in the S&P 500
Regional Banks Index  .SPLRCBNKS 

 (Reporting by Manya Saini in Bengaluru)
 ((Manya.Saini@thomsonreuters.com;))