Mid-cap banks expected to post muted Q1 earnings - Wells Fargo

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11/04/2022 15:06

** Wells Fargo says it expects mid-cap banks to post muted
Q1 earnings amid plummeting mortgage volumes, slow loan growth
and fears of potential recession 
    ** However, brokerage says start of hawkish Fed cycle should
result in management talking up FY expectations
    ** Brokerage chooses Signature Bank  SBNY.O  as its top pick
    ** Adds asset sensitive value names like Associated
Banc-Corp  ASB.N , F.N.B. Corporation  FNB.N , Synovus Financial
Corp  SNV.N , and Popular Inc  BPOP.O  are also among its picks
for bank stock investments 
    ** "These banks all post above average asset sensitivity,
which supports above average EPS growth" - Wells 
    ** Also says while yield curve's flattening hurts banks,
higher rates are still a tailwind 
    ** Banks, which borrow relatively cheaper in short term,
while making more money through lending in longer term,
typically take a hit to profitability with flatter yield curve
    ** S&P 500 Regional Banks Sub-Index  .SPLRCBNKS  down 10.26%
YTD  

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