Truist Storms Into the SMID-Cap Bank Space – Here Are 2 Stocks to Buy

Investors have always favored banks – after all, they’re in the business of making money, which is precisely what investors aim to tap into. But one question always remains: which banks make the best investments? The big names – the so-called ‘too-big-to-fail’ banks – dominate the industry, but they’re not the only game in town.

Covering the banking stocks for Truist, the research firm’s financial sector experts are homing in on the small- to mid-cap (SMID) regional banks. These are the local banks that don’t get the headlines – but they do get the business. They don’t work in the same league as a giant like JPMorgan-Chase, with its $738 billion market cap – but they are on the ground, dealing with retail customers, small businesses, and local financing every day. The regional banks have smaller networks than the giants, are more locally focused, and they know how to leverage those attributes to their advantage.

Truist analyst David Smith makes a compelling case in a recent research note. “Much has been written about the challenges smaller banks face relative to their larger peers; banking is (or at least can be) a scale business. That said, it’s not like all hope is lost for smaller banks. Those with differentiated footprints or business models can still find strong organic growth. And there are reasons to be optimistic about eventual bank deregulation and M&A waves, both of which would be more likely to favor smaller banks in our view and would make it easier and more profitable to gain further scale,” Smith explained.

With that backdrop, let’s take a closer look at two SMID-cap banks Truist sees as standout opportunities. According to TipRanks’ database, both earn a ‘Strong Buy’ consensus rating from the Wall Street analysts.

Old National Bancorp (ONB)

The first small/regional bank stock we’ll look at here is Old National Bancorp, the holding company of the Midwest-located Old National Bank. The bank’s largest footprint – branch locations, ATMs, drive-through banking – is located in Indiana, but Old National also has locations in Michigan, Ohio, Kentucky, and Illinois.

Old National Bank offers a full range of services for personal and business banking. On the personal side, these include checking and savings accounts, mortgage and home equity loans, and investing options. On the commercial side, the bank’s services include small business-oriented banking, business wealth management, and treasury management. Old National provides digital banking options for all of its customers.

Importantly, Old National is in the midst of an expansion. On May 1 of this year, the company closed a previously announced $1.4 billion merger agreement with the Minnesota-based Bremer Bank, which adds that bank’s locations to Old National’s network, allowing Old National to expand westward. The facilities and systems conversion, which will brand Bremer as Old National, is expected to be completed in mid-October of this year; until that time, Bremer customers will access services through their existing branch, but can use ATMs from both systems. The merger was conducted as a cash-and-stock deal.

Looking at the financial results, we find that Old National reported earnings for 1Q25 this past April, and beat expectations at both the top and bottom lines. The bank company’s revenue for the quarter came to $486.8 million, up 10.5% year-over-year and beating the forecast by $8.7 million. At the bottom line, the bank reported an adjusted EPS of 45 cents; this was 2 cents per share better than had been expected. It is important to note that these results do not include earnings from Bremer, as that transaction closed after the first quarter ended.

Like most bank companies, Old National pays out a regular dividend. The last dividend declaration was made on May 14 for 14 cents per common share; at the annualized rate of 56 cents per share, this dividend gives a forward yield of 2.7%. The dividend will be paid out on June 16.

Truist analyst Brian Foran covers this regional bank, and he is impressed by Old National’s strengthening of its position with the Bremer deal. Foran writes, “The bank has strong roots in Midwest, and Bremer deal will enhance its presence to the further West especially in Twin Cities area. The bank has a good track record on meeting and beating targets of previous large deals, and we see a path of maintaining mid-to-high teens RoTCE and getting efficiency ratio below 50s, with more than 20% EPS accretion in 2026 generated from Bremer integration.”

Quantifying this stance, Foran gives ONB shares a Buy rating, with a $26 price target that suggests a 26% gain in the next 12 months. (To watch Foran’s track record, click here)

The 8 recent analyst recommendations on this stock include 6 to Buy and 2 to Hold, giving ONB its Strong Buy consensus rating. The stock is currently trading for $20.67, and its $25.75 average price target nearly matches the Truist view, offering 24.5% upside potential. (See ONB stock forecast)

SouthState Corporation (SSB)

Next on our list of Truist-approved bank stocks is SSB, the shares of SouthState Corporation. Like Old National above, this is a bank holding company; as its name suggests, SouthState operates the SouthState Bank. This regional bank is based in Winter Haven, Florida, and its main network is located in the Southeast, in the states of Florida, Alabama, Georgia, North and South Carolina, and Virginia. In addition, SouthState Bank also operates in Texas and Colorado. In all, the bank serves more than 1.5 million customers.

The bank’s Texas and Colorado operations are a relatively new addition, brought into SouthState’s network through the acquisition of Independent Bank Group (IBTX). This regional bank operates in Texas and Colorado. The merger transaction, which was closed in January of this year, cost SouthState approximately $2 billion and was conducted entirely in stock.

The bank offers the usual full range of services, and its customers come from both the retail and commercial sides. Individual customers access such services as checking and savings accounts, CDs, and credit cards, through branches or online. The bank’s online and mobile interfaces include built-in security features. For commercial and small business customers, the bank offers similar services, including checking accounts and cash flow management, and small business financing.

SouthState also offers real estate financing, in the form of mortgages for both homes and businesses. Mortgage borrowers can tap into fixed rates, funding from the VA, FHA, and USDA, and arrange loans for lot purchases or home construction. The bank’s commercial side offers loans and credit for a wide range of purposes, including real estate and equipment purchases. SouthState also offers specialty banking services and wealth management.

Turning to the financials, in Q1, the company’s revenue came to $530.1 million, up 32% vs. the year-ago period. At the other end of the scale, adj. EPS reached $2.15, beating the forecast by $0.51.

This bank’s dividend history stretches back to 1996; its current dividend, of 54 cents per common share, was declared on April 24 and paid out on May 16. The payment annualizes to $2.16 per share and gives a yield of 2.45%.

Analyst John McDonald covers this stock, and in his write-up on SSB for Truist he notes the bank’s history of success and its recent expansion outside of the Southeast. McDonald writes of the company, “SouthState has an impressive track record of delivering TBV growth and TSR through a combination of active M&A and organic growth. The bank has also produced top-tier credit quality and ROTCE and its typical valuation premium to peers has narrowed. We launch at Buy given core franchise strength w/ opportunity to leverage recently closed IBTX deal and large and growing capital base.”

That Buy rating is backed by a $106 price target that implies the stock will appreciate by 20.5% by this time next year. (To watch McDonald’s track record, click here)

SSB shares have a unanimous Strong Buy consensus rating, based on a unanimous 7 recent positive analyst reviews. The stock’s $87.89 trading price and $114.43 average target price together suggest a one-year upside potential of 30%. (See SSB stock forecast)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.