The dramatic drop in regional bank stocks is a key entry point for investors, according to analyst Christopher Marinac.
Marinac, who serves as director of research at Janney Montgomery Scott, believes the group’s decline over the past week provides an attractive entry point for investors as the underlying business fundamentals remain intact.
“We’ve definitely slipped on a banana peel with this concern and fear of deposits,” Marinac told CNBC’s Fast Money 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.
“The main lending in America is still medium-sized and small community banks,” he added. “These companies are excellent games.”
When asked which regional banks look the most attractive, Marinac recommends Fifth Third Bank. The stock is down more than 27% over the past week.
“They are a very innovative company in the fintech arena that still has merit going forward,” he said, adding that CEO Timothy Spence has an “excellent” interest rate risk and credit management.
Also called marinac shop steward as a top industry pick and said the company has a competitive advantage among regional banks after selling part of its insurance unit. Truist stock is down 30% over the past five sessions.
“That will help them pass the stress test in June, so the company is certainly not just a survivor but a thriving one,” he said.
As for the longer-term prospects for Regionals, Marinac expects the group to cut losses.
“Eventually the storm will calm down and the seas will part, allowing banks to trade at book value and higher again in the future,” Marinac said.