Banks kicked off the Q1 earnings season on a positive note, and while the bigwigs like JPMorgan JPM) will get most of the attention, several regional banks are starting to look attractive as well.
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.
Bank7 – BSVN
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.
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Chemung Financial Corp – CHMG
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.
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Bottom Line
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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This article originally published on Zacks Investment Research (zacks.com).