Wedbush rotates into liability sensitive banks with 8 rating changes

Following last week’s Federal Reserve interest rate cut, Wedbush analyst David Chiaverini upgraded to Outperform from Neutral shares of Banc of California (BANC), Comerica (CMA), Columbia Banking (COLB), Prosperity Bancshares (PB) and Regions Financial (RF) while downgrading to Neutral from Outperform shares of Customers Bancorp (CUBI), First Citizens (FCNCA) and First Horizon (FHN). The firm also added Comerica and Western Alliance (WAL) to the Wedbush Best Ideas List, while removing First Citizens and First Horizon. While Wedbush can’t rule out the possibility of a recession just yet, its base case scenario as of today is the Federal Reserve “may be able to glide the economy into a soft landing.” Banks should be in a stronger position “to pivot to a more offensive posture, as lower short term rates and a more normalized yield curve should make for a more ideal operating environment on multiple fronts,” contends Wedbush. As a result, the firm upgraded the liability sensitive and interest rate neutral banks. Its top picks include M&T Bank (MTB), Comerica, Western Alliance, Prosperity Bancshares, Fifth Third (FITB) and Wintrust Financial (WTFC).