Bloomberg reported on February 12 that the US Federal Reserve is signaling to banks that it plans to drop some of its prior warnings (also known as matters requiring attention), opting instead to focus on immediate risks to a bank’s financial health and less on processes and procedures. This memo comes as Vice Chair for Supervision Michelle Bowman continues to relax the “Washington’s matrix of rules,” which banks say have become too complex, with more and more rules being added since the Great Financial Crisis.
This move by the Fed is the most recent of the Trump administration’s efforts to make the regulatory environment easier for banks.
In November 2025, the Federal Deposit Insurance Corporation (FDIC), Federal Reserve, and the Office of the Comptroller of the Currency relaxed capital requirements for banks (specifically the supplementary leverage ratio), which reduced capital requirements by $13 billion for global systemically important banks and $219 billion for their subsidiaries.
In October 2025, the US Fed Vice Chair for Supervision announced her plans to restructure the Fed’s supervision and regulation division (S&R) and cut its staff by 30%. According to a memo sent to staff and seen by Bloomberg:
She expects S&R to have a smaller overall footprint of roughly 350 employees – a reduction of approximately 30% from the previous authorized headcount of nearly 500 employees – by year-end 2026.
In October 2025, the FDIC revealed a plan that would narrow the way examiners issue warnings to lenders. Acting Chair Travis Hill said that examiners should focus on material risks, rather than “a litany of process-related items that are unrelated to a bank’s current or future financial condition,”
Given this favorable regulatory environment for banks, let us now take a look at 10 of the best bank stocks to buy in 2026.
Our Methodology
We filtered bank stocks, both regional and diversified, in the US market, with at least $2 billion in market capitalization, at least three analysts covering them, and at least 5% median projected upside from analysts. We then filtered the list to only contain stocks with at least 15 hedge fund holders, according to Insider Monkey’s proprietary hedge fund database, which tracks 978 hedge funds as of Q3 2025. Finally, we selected the 10 stocks with the highest number of hedge fund holders. When two or more stocks were tied in hedge fund holdings, we used the median analyst-projected upside as the tiebreaker.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: All data presented are as of 13 February 2026, market close.
10. East West Bancorp Inc. (NASDAQ:EWBC)
Number of Hedge Fund Holders: 27
East West Bancorp Inc. (NASDAQ:EWBC) is one of the 10 Best Bank Stocks to Buy in 2026.
UBS, on February 4, marginally trimmed its target price on East West Bancorp (EWBC) to $125 (from $126). Despite the target price cut, the firm retained its Neutral call on the stock, as it updated its bank models following the release of Q4 2025 results. The firm noted that mid-cap banks as a whole performed strongly in the previous quarter, avoiding credit risk concerns. It also noted that investor sentiment on regional banks is likely to remain high, supported by a steepening yield curve, accelerating loan growth, and increased M&A activity, such as Santander’s (SAN) acquisition of Webster (WBS).
EWBC reported its earnings on January 22. The company grew its Q4 net income by 21.5% YoY to $356.3 million (from $293.1 million), which led to a 103-basis point YoY improvement in the bank’s return on average common equity (from 15.08% points to 16.11% points). This strong result allowed EWBC to raise its quarterly dividend by 33% to $0.80 (from $0.60) and translated into a 15.9% YoY growth in its book value per share (from $55.79 to $64.68).
The earnings growth was driven primarily by an 11.9% YoY growth in net interest income (NII) (from $588 million to $658 million), which in turn was driven by both net interest margin (NIM) expansion and loan growth. NIMs rose 17 basis points to 3.41% (from 3.24%), as the bank’s cost of deposits fell 43 basis points to 2.16% (from 2.59%). The lower cost of funds from deposits more than offset the ~31-basis point decline in average loan yields (from 6.51% to 6.20%).
Loan book, meanwhile, grew 6.0% YoY to $56.9 billion (from $53.7 billion). For 2026, the bank’s management is expecting a 5% to 7% YoY increase in both loans and net interest income.
East West Bancorp Inc. (NASDAQ:EWBC) is a holding company that operates East West Bank. The company has two main operating segments: Consumer Banking and Commercial Banking. It is based in Pasadena, California, and was founded in August 1998.
9. SouthState Bank Corporation (NYSE:SSB)
Number of Hedge Fund Holders: 32
SouthState Bank Corporation (NYSE:SSB) is one of the 10 Best Bank Stocks to Buy in 2026.
On February 4, UBS slightly increased its target price on SouthState Bank (SSB) to $121 (from $120) and reiterated its Buy recommendation. The firm liked what it saw in the 4th quarter of 2025 from mid-cap banks, which delivered strong overall results and avoided asset quality deterioration in Q4. It also expects investor momentum on regional banks to remain strong, due to yield curve steepening, loan growth acceleration, and increased M&A activity.
The bank released its Q4 2025 results on January 22, which showed strong net income growth of 71.8% YoY to $247.7 million (from $144.2 million). On a per share basis, diluted earnings grew 31.6% YoY to $2.46 (from $1.87). The strong earnings growth yielded a 24-basis point improvement in return on average assets (from 1.23% to 1.47%) and a 178-basis point increase in return on common equity (from 9.72% to 10.90%). It also led to an 18.4% YoY growth in book value per share, from $77.18 to $91.38.
Strong earnings growth was driven primarily by a 57.2% YoY increase in net interest income (NII) to $581.1 million (from $369.8 million), which in turn was driven by both net interest margin (NIM) expansion and strong growth in the bank’s earning assets. NIMs expanded by 38 basis points YoY to 3.86% (from 3.48%), as average earning asset yields improved 46 basis points YoY to 5.62% (from 5.16%). This yield improvement outweighed the 9-basis point increase in the bank’s average cost of funding.
Earning assets grew 41.5% YoY to $59.9 billion (from $42.3 billion), with most of the growth coming from a 43.0% expansion in the bank’s loan book (from $33.8 billion to $48.4 billion). This $17.6 billion increase in earnings assets was mostly funded by a $17.1 billion YoY increase in deposits (from $38.1 billion to $55.1 billion), the rest by equity.
Asset quality, meanwhile, did not materially deteriorate in Q4. Net charge-off ratio slightly increased by 3 basis points YoY to 0.09% (from 0.06%) and improved by 18 basis points when viewed quarter-on-quarter. Non-performing loan %-age increased 1 basis point YoY to 0.64% (from 0.63%). Allowance for credit loss %-age improved 17 basis points YoY to 1.20% (from 1.37%). As a result, provisions for credit losses only grew 3.6% YoY to $6.6 million (from $6.4 million).
SSB’s board of directors also approved a new stock purchase plan, which would allow the bank to repurchase 5.56 million of its common shares. This figure represents roughly 5.6% of the company’s weighted average common shares outstanding as of 31 December 2025.
SouthState Bank Corporation (NYSE:SSB) is a financial services company that owns SouthState Bank, a nationally chartered bank serving 1.8 million customers in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Alabama, Virginia, and Tennessee. The bank is based in Winter Haven, Florida.
