As Buffett bails on Wall Street banks, Truist says these regional peers are worth buying

While Warren Buffett divests from Citigroup, Truist analysts recommend Old National Bancorp (ONB), Western Alliance Bancorp (WAL), Webster Financial Corp (WBS), and Synovus Financial Corp (SNV) as promising regional bank stocks for 2025. Truist cites ONB's Bremer Financial integration boosting EPS by 20% in 2026, WAL's organic growth potential and recovery post-2023, WBS's operational efficiency and buyback focus, and SNV's exposure to high-growth regions and discounted valuation as key drivers for their bullish outlook, with price targets indicating 15-17% upside potential and dividend yields ranging from 1.95% to 3.15%.

Analysis

Warren Buffett's recent divestment from Citigroup, shifting focus towards consumer goods, contrasts with Truist's continued bullish outlook on the financial services sector, specifically highlighting four regional bank stocks poised for growth in 2025. Truist identifies Old National Bancorp (ONB) as a key pick, anticipating a 20% earnings per share (EPS) boost by 2026 driven by the Bremer Financial integration, and citing its consistent Return on Tangible Equity (ROTE) above 15% alongside a 2.53% dividend yield. Western Alliance Bancorp (WAL) is recognized for its superior organic growth among peers and its evolution into a diversified commercial bank; Truist projects a rebound to industry-leading returns after the March 2023 liquidity build, with a $92 price target suggesting approximately 17% upside and a 1.95% dividend yield. Webster Financial Corp (WBS) is favored for its operational efficiency, consistent profitability, and management's focus on organic growth and buybacks anticipated to unlock value in the latter half of 2025, supported by a 3.02% dividend yield and a $61 price target. Lastly, Synovus Financial Corp (SNV) is presented as an attractive investment due to its significant presence (70% of its footprint) in high-growth markets, a current trading discount, a 3.15% dividend yield, and a $56 price target implying nearly 15% upside, with Truist emphasizing its potential to improve legacy perceptions through consistent execution and credit quality.

Key Decisions for Investors

• Investors seeking exposure to the regional banking sector should evaluate the specific growth drivers, such as Old National Bancorp's Bremer Financial integration expected to boost EPS by 20% in 2026, and valuation metrics presented by Truist for ONB, WAL, WBS, and SNV, considering their potential for organic growth and dividend yields ranging from 1.95% to 3.15%.
• Despite Warren Buffett's recent divestment from Citigroup, the targeted opportunities within these regional banks, highlighted by Truist's analysis focusing on differentiated business models, strong capital levels, and recovery potential as seen with Western Alliance, may warrant consideration for portfolio diversification or tactical allocation within financials, especially given the positive sentiment signals for these specific tickers.
• Closely monitor the execution on strategic initiatives, such as Old National Bancorp's integration of Bremer Financial and Synovus Financial's efforts to improve legacy perceptions through consistent execution, as well as Webster Financial's buyback programs, as these are key catalysts for achieving Truist's price targets which indicate potential upsides of up to 17%.