They assured us after the failure of Silicon Valley Bank, First Republic and Signature Bank that all was well, that the banking system was totally secure and in no danger of further failures. While we have only seen two failures since then, Moody’s got way out in front of potential trouble that could be on the way by cutting the rating on 10 small and midsized banks, including M&T Bank. It also placed industry giants like Bank of New York Mellon, U.S. Bancorp and State Street, among others, on negative reviews.
Of course, the stock market did not take the downgrade and negative reviews lightly. The market was hammered on Tuesday as concerns of a contagion spreading throughout the financial system were front and center once again. Moody’s also feels that a recession is on the way later this year or early in 2024, and that could crimp earnings for many banks as most are tightening lending and credit standards.
We screened our 24/7 Wall St. financial sector research database looking for the top banks that were not a part of the Moody’s downgrade and negative review free-for-all. The logical winners happened to be the big money center giants that have the most assets and income-producing ability to survive a downturn. These five are rated Buy across Wall Street, posted stellar second-quarter results and pay dependable dividends.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Bank of America
Warren Buffett owns a billion shares of this bank. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.
Shareholders receive a 3.07% dividend. Oppenheimer’s $47 target price for Bank of America stock compares with a $35.81 consensus target and Tuesday’s closing share price of $31.27.
Citigroup
This top bank has rallied nicely off the lows and Buffett bought $2.5 billion worth of stock back in the summer of 2022. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations and governments a broad range of financial products and services.
Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. And it operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.
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