Hot Picks: Analyst bullish on U.S. regional banks as growth and credit strength improve

U.S. regional banks are showing surprising resilience despite tariff concerns and slowing economic growth. Analysts say credit quality and loan momentum are improving, setting the stage for stronger results through 2025.

BNN Bloomberg spoke with Alexander Yokum, senior vice-president of equity research at CFRA, who discussed why he expects record performance from East West Bancorp, Huntington Bancshares and Citizens Financial Group as they expand into new markets and improve capital strength.

Key Takeaways

• East West Bancorp is outperforming peers with record loan and deposit growth, strong capital and its best credit quality in two years.
• Huntington Bancshares’ Texas acquisition and Carolinas expansion are expected to lift growth, with improved guidance likely in upcoming earnings.
• Citizens Financial Group is recovering from stress-test setbacks, with its private banking push boosting profitability and long-term growth prospects.
• Tariff concerns appear overstated as regional banks continue to post rising deposits and stronger credit quality across portfolios.
• Analysts expect record revenue and earnings in 2025 for several regional lenders as valuations remain reasonable and fundamentals improve.

Read the full transcript below:

ANDREW: On Hot Picks today, we’re focusing on U.S. regional banks. Our guest has East West Bancorp as a top pick. He says this should be a record year for the bank’s revenue and profit. We’re joined by Alexander Yokum, senior vice-president of equity research at CFRA. Alexander, thanks very much for joining us. Remind us where East West Bancorp is located, and tell us why you like the look of the stock.

ALEXANDER: Thanks for having me on. Where they’re located is actually interesting — they’re based in California. This is a bank that got caught up in the 2023 regional banking crisis when Silicon Valley Bank and First Republic collapsed. There was a lot of concern about California banks back then, but East West actually performed really well. They had deposit inflows while many other banks experienced outflows.

They’ve maintained a steady customer base. Earlier this year, you could see a small dip in April when tariff concerns spooked investors. That’s a common pattern with East West Bancorp — there’s a selloff when there’s concern, but the company tends to outperform fundamentally. Since April, credit quality has been better than expected. Instead of tariffs hurting results, credit quality has improved. In fact, last quarter the bank reported its best credit quality in two years.

Some worried that business activity might slow, but management has said you can’t just listen to what customers are saying — you have to look at what they’re doing. Loan and deposit growth are both accelerating, and we think the bank is on pace for record revenue, earnings, loans and deposits this year, despite all the tariff noise. And if there were a downside scenario, East West’s capital position is one of the strongest among regional banks. They’re well prepared if something goes wrong, though we don’t see signs of that happening.

ANDREW: That one’s doing pretty well, up around 12 per cent so far this year. Your next idea is Huntington Bancshares, based in Ohio. It’s been something of a laggard this year, up only about two or three per cent.

ALEXANDER: Right. Huntington is in more of a turnaround phase. The bank has struggled in the past. It’s based in the Midwest, as you mentioned, and that’s a slower-growing region of the U.S., which has been a drag in recent years because the banking market there is mature.

What we like is that Huntington recently announced an acquisition of a Texas-based bank. That helps improve its demographic mix and opens growth opportunities. They’re also expanding into the Carolinas. The Texas deal came at a 23 per cent premium, which is on the lower end for bank mergers, where the typical range is about 20 to 35 per cent.

In many bank deals, you see cost-cutting as the main driver, but Huntington is taking a more offensive approach. This is more about expansion than just synergies. We see it as a smart move to use Texas as a springboard for broader growth. On tariffs, again, concerns have not translated into weaker performance — loans and deposits have both risen, and credit quality is improving. We think when they report third-quarter earnings in a couple of weeks, they’ll raise their guidance. So we’re quite optimistic about Huntington’s results this year.

ANDREW: And finally, Citizens Financial has been something of an outperformer this year, with the stock up more than 20 per cent.

ALEXANDER: Yes, it has outperformed, but in the past it did have credit quality issues. During the April tariff-related selloff, the stock also underperformed briefly. We actually wrote a note last year calling Citizens the biggest loser in the 2024 stress test. At that time, we weren’t optimistic, but things have turned around.

They’ve reduced their commercial real estate exposure, and credit quality is improving. Looking ahead to next year, we think Citizens is well positioned for a significant reduction in its capital requirements, which would free up capital for loan growth and potentially share buybacks.

They’ve also launched a private banking division aimed at high-net-worth clients, picking up where First Republic left off by hiring some of its former bankers. We like that move because First Republic didn’t fail due to its wealth business — it failed because of large uninsured deposits. Citizens doesn’t have that issue, with more than 50 per cent of deposits insured.

The private bank has already boosted results: two years ago it was losing money, last year it broke even, and this year it’s expected to contribute about five per cent to Citizens’ earnings. Going forward, that could exceed 10 per cent. It’s a unique growth driver in a sector where many regional banks look similar. As you mentioned, the stock has performed well this year, but we see more upside, especially as the company performs well in next year’s stress test.

ANDREW: Alexander, thank you very much. Three fresh ideas there — really appreciate it. That’s Alexander Yokum from CFRA, with his top picks in regional banking: East West Bancorp, Huntington Bancshares and Citizens Financial.

---

This BNN Bloomberg summary and transcript of the Oct. 8, 2025 interview with Alexander Yokum are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.