Wells Fargo spotted 3 ‘bargain banks’ worth buying — and they pay dividends
There are three buying opportunities among beaten-up regional bank names, according to Wells Fargo. The stocks also pay solid dividends. The sector has been facing pressure this year as concerns over the economy weigh on investors. The SPDR S & P Regional Banking ETF (KRE) has lost about 5% in 2025. “Banks are a proxy for economic uncertainty, but we believe the pendulum swung too far,” analyst Timur Braziler said in a March 11 note. In particular, the analyst likes “bargain banks.” KRE YTD mountain SPDR S & P Regional Banking ETF In fact, there are three catalysts ahead for regional banks, he said. First, Braziler expects an inflection point in earnings per share. “We look for EPS growth to turn positive for the first time in 3 years, as largely the entire group benefits from fixed asset repricing and further reduction in funding costs,” the analyst wrote. “Timing is still for 2Q25, as the coming quarter deals with typical seasonality on both sides of the balance sheet, but the recent pullback in the group warrants being early.” He also expects valuation improvement alongside EPS growth, with potential upside of at least 30% if the group retains its historical multiple. “As the EPS inflection plays out and the economic outlook becomes less volatile, regionals stand to benefit the most from new generalist or long-only interest,” Braziler said. Lastly, he expects mergers and acquisitions to pick up around the same time of the anticipated EPS inflection. “Higher uncertainty is a negative, yet there are material tailwinds for bank M & A, with the best regulatory inflection in 3 decades and the recent decline in yields helping purchase accounting,” he said. A trio of bargain basement bank stocks Braziler’s top picks include BankUnited , which is down 9% year to date and has a 3.3% dividend yield. The company is now at 89% of tangible book value and has a management team that is pragmatic about a potential partnership, the analyst said. More than half of the analysts covering BankUnited rate it a hold, according to LSEG. However, consensus price targets call for 25% upside from current levels. BKU YTD mountain BankUnited Webster Financial also makes the cut, with Braziler noting that there aren’t many banks with a sustainable 17% return on tangible common equity that are trading below eight times EPS. This name will also benefit from more M & A, he added. The stock, which pays a 3.1% dividend yield, is down 6% so far this year. Webster is well-liked on Wall Street, with 13 out of 15 analysts rating it buy or strong buy, per LSEG. Consensus price targets call for nearly 35% upside. WBS YTD mountain Webster Financial Lastly, Banc of California is “too good a deal to pass up” with its tangible book value of 85%, Braziler said. The stock has a dividend yield of 2.8% and has lost 8% year to date. Eight of the 11 analysts covering the stock deem it a buy or strong buy, and consensus price targets suggest upside of 32%, per LSEG. BANC YTD mountain Banc of California
