Strong dividend yields and an improving industry outlook make these under-the-radar bank stocks increasingly appealing.
Regional banks have been doing well because several fundamental tailwinds have shifted in their favor, improving profitability, investor sentiment, and balance-sheet stability.
Additionally, many regional banks are benefiting from a more normal yield curve, improving loan activity, easing regulatory pressure, stronger capital levels, and fading credit fears — all of which support earnings and valuations.
That said, here are two top-rated regional bank stocks that are standing out in particular and are certainly worthy of consideration after crushing their Q1 EPS expectations this week.
Zacks Rank #1 (Strong Buy)
Bank7 BSVN) serves customers in Oklahoma, Kansas, and Texas, providing a range of banking and financial services to both individual and corporate clients. At the moment, Bank7’s Zacks Banks-Southeast Industry is in the top 21% of over 240 Zack industries.
Benefiting from a strong business environment, Bank7 reported Q1 EPS of $1.25 on Tuesday, beating expectations of $1.01 by 23.76% and seeing its earnings increase from $1.08 per share in the comparative quarter. Trading at an attractive 9X forward earnings multiple, FY26 and FY27 EPS estimates have risen 6% and 2% in the last week, respectively. Making its stronger outlook more enticing, BSVN offers a generous 2.51% annual dividend yield.
It’s also noteworthy that Bank7 has now surpassed the Zacks EPS Consensus for 10 consecutive quarters, posting an average earnings surprise of 15.15% in its last four quarterly reports.
Image Source: Zacks Investment Research
Zacks Rank #2 (Buy)
Chemung Financial Corp CHMG) operates a full-service community bank through its subsidiary Chemung Canal Trust Company, which serves the southern tier of New York with a presence in northern Pennsylvania as well.
Blasting Q1 EPS expectations on Friday, Chemung also belongs to the top-rated Zacks Banks-Southeast Industry. Quarterly earnings came in at $1.91 per share and 17% above Q1 estimates of $1.63. Furthermore, Chemung’s Q1 EPS soared over 50% from $1.26 in the prior year quarter.
Trading at 8X forward earnings, Chemung’s FY26 and FY27 EPS estimates have increased 4% in the last 60 days, respectively. Plus, CHMG offers a respectable 2.29% annual dividend yield.
Image Source: Zacks Investment Research
Rising EPS estimates point to more upside for these top regional banks, especially given their attractive P/E valuations. Strong dividend yields and an improving industry outlook make these under-the-radar bank stocks increasingly appealing — and current conditions suggest it may be an ideal time to buy.
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