2 Banks With Growth Potential To Keep On Your Watchlist

Benzinga

David Chiaverini is a managing director covering the disruptive finance and bank sector with over 20 years of investment experience.  Benzinga's PreMarket Prep is the #1 go-to source for everything you need to know before the market opens! Join our expert hosts as they break down the latest market trends, analyze key indicators, and provide actionable insights to help you navigate the trading day ahead.

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00:00What about the traditional banks? You say you've got 35 that you cover there and, you

00:05know, obviously we trade banks. I trade banks regularly on the show and, you know, there's

00:10been a lot of talk, you know, on dividend raises potentially happening maybe into next

00:15year here. Talk about, you know, who do you like from the traditional banks?

00:19Yeah, so a lot to talk about with the other 35 names. So, you know, I would start with,

00:26you know, one of the growthier banks in my coverage. So Wintrust, WTFC, they are leaning

00:34into what they view as competitors are pulling back from their market. So they're in the

00:40Chicago area. They're the largest independent bank in the Chicago market. And competitors

00:46are pulling back from, you know, CRE lending, CNI lending, and they're seeing really good

00:52risk adjusted opportunities on the lending side. So their loan growth is we expect it

00:57to be in the high single digits and perhaps low double digits, which is well above the

01:02typical bank is in the low single digits type of loan growth. They also have a mortgage

01:08business. So as interest rates come down next year, we should see that mortgage banking

01:13business start to pick up as people look to refi and the housing market, you know, potentially

01:18rebounds in a lower interest rate environment. Now we do expect their net interest margin

01:23to come on under incremental pressure, but I think that the growth in loans and their

01:28average earning assets should offset that and continue to lead to net interest income

01:33growth. And they trade in line with peers and we're talking, you know, 10 and a half

01:38times earnings for 2025. So you're getting a decent grower at what I view as an inexpensive

01:47price. So Wintrust is one that we like, another growth oriented bank, Western Alliance. They

01:55were kind of had their backs against the wall during the mini banking crisis a year and

02:00a half ago. And they managed through it very well, given the circumstances. And now that

02:06they've grown their capital ratios to being essentially in line with peers, because they

02:12were, I guess you could say undercapitalized, at least in the market's view, a year and

02:16a half ago. So they rectified that, get those capital ratios higher. And now they're in

02:22position to resume being a growth bank. So we're expecting, you know, mid to high single

02:27digit growth in loans, their deposit growth has been through the roof, north of 20% this

02:34year. And they too have a mortgage business that should benefit with lower rates into

02:40next year. So Western Alliance, WAL, is one that we that we like here.

02:46Transcribed by https://otter.ai

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