5 Best Small Bank Stocks To Invest In

In this article, we will be taking a look at the 5 best small bank stocks to invest in. To read our detailed analysis of banking stocks and the sector in general, you can go directly to see the 10 Best Small Bank Stocks To Invest In.

5. Huntington Bancshares Incorporated (NASDAQ:HBAN)

Number of Hedge Fund Holders: 23

Huntington Bancshares Incorporated (NASDAQ:HBAN) is the bank holding company for The Huntington National Bank. It provides commercial, consumer, and mortgage banking services in the US.

On October 24, Terry McEvoy at Stephens placed an Equal Weight rating on Huntington Bancshares Incorporated (NASDAQ:HBAN) shares, alongside a $16 price target.

Huntington Bancshares Incorporated (NASDAQ:HBAN) performed exceptionally well in the third quarter, reporting revenues of $1.9 billion, representing an $11.8% growth. The company is well-positioned to benefit from higher interest rates because of its asset sensitivity. The bank also grew average loans by $3 billion of 2.6% quarter-on-quarter.

In total, 23 funds were long Huntington Bancshares Incorporated (NASDAQ:HBAN) in the third quarter, with a total stake value of $168 million.

Aristotle Capital Boston, LLC, an investment advisor, mentioned Huntington Bancshares Incorporated (NASDAQ:HBAN) in its third-quarter 2022 investor letter. Here’s what the firm said:

“Huntington Bancshares Incorporated (NASDAQ:HBAN), an Ohio-based bank holding company, was removed from the portfolio based on our belief that shares were fully valued and there were better opportunities to deploy capital elsewhere within the portfolio.”

4. Regions Financial Corporation (NYSE:RF)

Number of Hedge Fund Holders: 32

Regions Financial Corporation (NYSE:RF) is a financial holding company. It provides banking and bank-related services to individual and corporate customers.

Michael Rose at Raymond James holds a Market Perform rating on Regions Financial Corporation (NYSE:RF) shares as of November 21.

In the third quarter, Regions Financial Corporation (NYSE:RF) reported strong loan growth as it builds more client relationships. The company’s net interest income rose from $1.11 billion to $1.27 billion quarter-on-quarter, representing a growth of over 30% from last year. Its net interest margin also grew from 3.06% to 3.53% in this quarter.

Out of 920 hedge funds tracked in the third quarter, 32 funds were long Regions Financial Corporation (NYSE:RF). Their total stake value was $330 million.

3. Fifth Third Bancorp (NASDAQ:FITB)

Number of Hedge Fund Holders: 35

Fifth Third Bancorp (NASDAQ:FITB) is an American regional bank working to help individuals, families, businesses, and communities grow through smart financial services. The company is based in Cincinnati, Ohio.

Vivek Juneja at JPMorgan holds a Neutral rating and a $39 price target on Fifth Third Bancorp (NASDAQ:FITB) as of November 2.

Fifth Third Bancorp (NASDAQ:FITB) has a high dividend yield of over 4% and is trading at a discount compared to its competitors, making it an attractive bank stock pick. Analysts at Bank of America see the company’s earnings growing sharply over 2023. For 2022, the company’s EPS is expected to come in at $3.5, and for 2023, it’s expected to stand at $4.3, representing a growth 23% between 2022 and 2023.

Our hedge fund data shows 35 funds long Fifth Third Bancorp (NASDAQ:FITB) in the third quarter, with a total stake value of $393 million.

2. First Republic Bank (NYSE:FRC)

Number of Hedge Fund Holders: 39

First Republic Bank (NYSE:FRC) provides private banking, private business banking, and private wealth management services in the US. The company is based in San Francisco, California.

An Outperform rating was reiterated on First Republic Bank (NYSE:FRC) shares on November 10 by analyst David Chiaverini at Wedbush.

First Republic Bank (NYSE:FRC) has a competitive strategy resulting in a superior value proposition to its customers. The company compounded its revenues at a rate of 18% from 2016 to 2021. In the second quarter of 2022, it also generated a growth rate of 23% in mortgage originations.

There were 39 hedge funds long First Republic Bank (NYSE:FRC) in the third quarter, with a total stake value of $1.2 billion.

RiverPark Funds, an investment management firm, mentioned First Republic Bank (NYSE:FRC) in its second-quarter 2022 investor letter. Here’s what the firm said:

“First Republic Bank is one of the most differentiated business models in our large cap universe. What makes the Company so different is not necessarily the activities that it does, but the activities it does not do. These trade-offs are an incredibly important strategic decision that every company must make. However, in our experience, rarely are these forgone activities lauded or even recognized as critical differentiators. The Company does mention these foregone activities, on page 45 of its most recent investor presentation appendix.

When we consider the financial industry, especially banking, is fraught with competition, simply being better than any of the other massive money-center banks is not enough to sustain many decades or even years of superior performance. Rather than try to outcompete every bank in the country, First Republic’s competitive strategy of doing only a handful of things well results in a superior value proposition to its customers. These trade-offs are easy to understand but difficult to copy, given widespread competitive and institutional imperatives that pressure management teams to revert to the mean…” (Click here to see the full text)

1. Citizens Financial Group, Inc. (NYSE:CFG)

Number of Hedge Fund Holders: 43

Citizens Financial Group, Inc. (NYSE:CFG) is the bank holding company for Citizens Bank, National Association. It provides retail and commercial banking products and services in the US.

JPMorgan’s Vivek Juneja holds an Overweight rating and a $43 price target on Citizens Financial Group, Inc. (NYSE:CFG) shares as of November 2.

In the third quarter, Citizens Financial Group, Inc. (NYSE:CFG) reported strong results with over $5.50 in earnings. This makes the stock too cheap to ignore at its current valuation. The company also generated a $1.27 billion revenue, with a 10.9% return on common equity and a 17% return on tangible equity.

Citizens Financial Group, Inc. (NYSE:CFG) was found among the 13F holdings of 43 hedge funds in the third quarter. Their total stake value was $659 million.

See also 16 Biggest Banks In the World and George Soros Stock Portfolio.