The banking sector is currently facing several persistent headwinds but is also poised to capitalize on key catalysts expected to emerge in the foreseeable future. On January 15, S&P Global shared key risk themes expected for the banking sector in 2026, following its resilient performance over the prior 12 months. Among the notable ones is the sector’s tail risk, stemming from acceleration across nonbanking financial segments, technology disruptions, and sovereign-level debt linkages.
Despite some improvement in non-performing loans (NPLs), the firm anticipates a more cautious commercial lending approach by banks. This goes back to tighter industry regulations aimed at fostering stability across the broader banking landscape. On the corporate side, 2026 will witness continued burden for institutional borrowers despite recent monetary easing. This is attributed to prior tightening measures, which resulted in high financing costs and will keep borrowers exposed to high debt-servicing pressures.
Importantly for banks, the firm expects profitability to remain above historical levels even after projecting lower net margins due to recent rate cuts. For investors, it still continues to be an attractive sector that offers stable dividends along with capital appreciation potential.
With that background, let’s explore our 10 best banking stocks to buy according to hedge funds.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed banking companies with market capitalizations above $2 billion. From this pool, we shortlisted only stocks with at least 10% upside potential according to TipRanks consensus, as of the February 23 closing.
Next, we identified the number of hedge funds holding positions in these stocks as of the end of the third quarter of 2025. Finally, we selected 10 stocks with the highest number of hedge fund holdings and ranked them in ascending order. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment.
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).
10. Huntington Bancshares (NASDAQ:HBAN)
Number of Hedge Fund Holders: 42
Huntington Bancshares (NASDAQ:HBAN) is one of the 10 best banking stocks to buy according to hedge funds.
On February 3, John Pancari from Evercore ISI resumed coverage of Huntington Bancshares (NASDAQ:HBAN) with an Outperform rating and $21 price target, after the acquisition of Cadence Bank. This results in an upside potential of almost 23% at the current level.
The analyst sees Huntington as one of the most proactive regional banks in his coverage universe. He highlights the bank’s expanded scale and stronger presence in high-growth Texas and Southeast markets following the acquisitions of Veritex Holdings and Cadence.
On February 9, Huntington Bancshares (HBAN) made an announcement regarding the finalization of its merger with Cadence Bank (CADE). While current Cadence Bank customers will continue to use the existing branch network, a full-scale conversion of customer accounts is planned for mid-2026.
Huntington Bancshares (NASDAQ:HBAN) is a bank holding company that primarily delivers commercial, consumer, and mortgage banking services. Some of its offerings include lending, payments, deposits, investment management, brokerage, and insurance. Moreover, it offers other financial services, including wealth management, risk management, and capital market solutions.
9. Pinnacle Financial Partners (NYSE:PNFP)
Number of Hedge Fund Holders: 44
Pinnacle Financial Partners (NYSE:PNFP) is one of the 10 best banking stocks to buy according to hedge funds.
On January 28, Stephen Scouten from Piper Sandler increased the firm’s price target on Pinnacle Financial Partners (NYSE:PNFP) from $120 to $122. The analyst maintained his Overweight rating on the shares, with a revised upside potential of more than 29%.
Despite recent underperformance following the fourth-quarter results, the analyst noted some incremental positives, along with management’s commentary, that support a constructive view of the company’s future trajectory.
On January 26, the price target for Pinnacle Financial Partners (NYSE:PNFP) was increased from $118 to $122 by Citi analyst Benjamin Gerlinger, who maintained his Buy rating. The analyst’s upward revision to the price target followed the company’s fourth-quarter results, which indicated an improvement in the capital base. Another factor leading to such optimism is an elevated earnings forecast.
Pinnacle Financial Partners (NYSE:PNFP) is a bank holding company that offers banking solutions for individuals and institutions. It provides deposit services, including certificates of deposit, money market & savings accounts, and non-interest-bearing & interest-bearing accounts. It also delivers wealth management and treasury management services.
8. Citizens Financial Group (NYSE:CFG)
Number of Hedge Fund Holders: 48
Citizens Financial Group (NYSE:CFG) is one of the 10 best banking stocks to buy according to hedge funds.
On January 23, Kevin Heal from Argus increased the firm’s price target on Citizens Financial Group (NYSE:CFG) from $60 to $72. The analyst maintained his Buy rating on the shares, with an upside potential in the mid-teens.
Argus shared its revision following the company’s stronger-than-expected fourth-quarter results. He believes that potential benefits from regulatory easing, including deregulation, relaxed capital requirements, and improved stress test clarity, could support the bank. Moreover, he also noted that the bank continues to deliver solid performance in the New York metropolitan area.
On January 26, Keith Horowitz from Citi reiterated his Buy rating on Citizens Financial Group (NYSE:CFG). The analyst also increased the price target from $65 to $71. The upward revision follows the fourth-quarter earnings report, in which net interest income guidance of 10%–12% growth surpassed street estimates. This favorable outlook is aided by accelerating deposit growth within the company.
Citizens Financial Group (NYSE:CFG) operates through two broader segments, i.e., consumer banking and commercial banking. Through these, it offers various banking solutions such as retail banking, wealth management, corporate finance advisory, and mortgage lending. It caters to the needs of individuals, small- and mid-market businesses, and large institutions.
7. KeyCorp (NYSE:KEY)
Number of Hedge Fund Holders: 48
KeyCorp (NYSE:KEY) is one of the 10 best banking stocks to buy according to hedge funds.
On January 26, Truist analyst Brian Foran reaffirmed his Hold rating for KeyCorp (NYSE:KEY). The analyst increased the stock’s price target from $22 to $23, resulting in a revised upside potential above 9%.
Foran’s revision followed the company’s fourth-quarter results announcement. The upward adjustment is driven by expectations for higher FY26 net interest income and a projected boost to the annual buyback amount, now estimated at $1.3 billion.
Later, on February 5, the price target for KeyCorp (NYSE:KEY) was increased from $25 to $26 by Evercore ISI analyst John Pancari. The analyst maintained his Outperform rating on the stock, with a revised upside potential of almost 24% at the current level. Pancari’s adjustments came after the company’s fourth quarter report, which led him to revise his EPS forecasts as well.
KeyCorp (NYSE:KEY) offers retail and commercial banking solutions. Some of these include commercial leasing, investment management, consumer & personal finance, student loan refinancing, and mortgage and home equity products. It also delivers wealth & investment advisory products and services targeted towards institutions, and high-net-worth clients.
6. First Horizon Corporation (NYSE:FHN)
Number of Hedge Fund Holders: 52
First Horizon Corporation (NYSE:FHN) is one of the 10 best banking stocks to buy according to hedge funds.
On February 24, Ben Gerlinger from Citi reaffirmed his Buy rating on First Horizon Corporation (NYSE:FHN). The analyst also raised the firm’s price target slightly, from $28 to $28.50, yielding an upside potential of almost 19%. His revision is based on “solid” profitability projections for regional banks amid a “normalized yield curve now in play.”
Back on January 16, Peter Winter from DA Davidson also increased his price target on First Horizon Corporation (NYSE:FHN) from $25 to $27. The analyst maintained a Neutral rating on the shares after the company’s fourth-quarter results, which built strong momentum heading into 2026.
Winter expects the bank to deliver mid-single digit loan growth, supporting projected revenue growth of 3–7% while keeping expenses stable. He also noted that First Horizon Corporation (NYSE:FHN) has already posted healthy revenue growth over the past year, with analysts forecasting EPS of $2.05 for fiscal 2026.
First Horizon Corporation (NYSE:FHN) is a holding company for First Horizon Bank, which is structured around the Regional Banking, Specialty Banking, and Corporate Banking segments. Apart from an extensive range of banking services, it also offers other financial solutions such as wealth and asset management, financial planning, and trust services.
5. Truist Financial Corporation (NYSE:TFC)
Number of Hedge Fund Holders: 56
Truist Financial Corporation (NYSE:TFC) is one of the 10 best banking stocks to buy according to hedge funds.
On February 17, Morgan Stanley analyst Manan Gosalia raised the price target on Truist Financial Corporation (NYSE:TFC) from $56 to $69. In the process, the analyst also upgraded the stock from an Equal Weight to an Overweight rating.
Gosalia estimates that the bank holds approximately $14.6 billion in excess capital above regulatory requirements, representing about 22% of its market cap, the highest level within Morgan Stanley’s coverage. The analyst also increased loan growth projections to 4.7% for 2026 and 5% for 2027.
In addition, Truist’s share buybacks are expected to accelerate to around a $5 billion annual rate in 2027 and 2028, well ahead of street expectations. Given the stock’s lower valuation relative to peers, Gosalia believes that Truist Financial Corporation (NYSE:TFC) can efficiently deploy additional capital toward repurchases, resulting in a faster earn-back.
On February 5, John Pancari from Evercore ISI also increased the firm’s price target on Truist Financial Corporation (NYSE:TFC) from $58 to $64, maintaining an Outperform rating on the shares. This upward revision results in an upside potential of almost 29% for investors.
Truist Financial Corporation (NYSE:TFC) is one of the top 10 bank holding companies across the U.S. market. It offers consumer, wholesale, and small business banking solutions, as well as trust services. Some of its products include asset management, consumer lending, mortgage lending, and direct retail lending.
4. PNC Financial Services (NYSE:PNC)
Number of Hedge Fund Holders: 59
PNC Financial Services (NYSE:PNC) is one of the 10 best banking stocks to buy according to hedge funds.
On January 20, RBC Capital Markets analyst Gerard Cassidy raised the firm’s price target on PNC Financial Services (NYSE:PNC) from $222 to $235, while maintaining an Outperform rating.
The analyst highlighted that the bank’s strategy remains centered on commercial banking, supported by a strong and stable consumer deposit base. The firm also pointed to PNC’s diversified revenue mix, with fee-generating businesses such as wealth management, mortgage, and investment banking complementing its core operations. In addition, PNC has strengthened its long-term growth through value-enhancing acquisitions that have contributed to tangible book value expansion.
On January 20, TD Cowen analyst Steven Alexopoulos increased his price target for PNC Financial Services (NYSE:PNC) from $250 to $260, and maintained a Buy rating on the stock.
The revision is based on the company’s fourth-quarter outperformance, aided by higher fee income and lower provisioning. Furthermore, management’s 2026 guidance projects strong top and bottom-line growth, underpinned by a 4% operating leverage.
PNC Financial Services (NYSE:PNC) is a financial services company that delivers retail & institutional banking, and asset management services. It offers a comprehensive suite of services across all segments, catering to the diverse needs of individuals and institutions. Some of its services include savings & money market accounts, mortgages, education loans, equipment leases, loan syndications, and more.
3. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 76
Wells Fargo & Company (NYSE:WFC) is one of the 10 best banking stocks to buy according to hedge funds.
As of the close of play on February 23, consensus sentiment around Wells Fargo & Company (NYSE:WFC) remained moderately bullish. The stock received coverage from 19 analysts, 10 of whom assigned Buy ratings and 9 gave Hold calls. With no Sell rating, it has a projected median 1-year price target of $100.03, which leads to an upside potential of more than 18%.
On February 9, Vivek Juneja from J.P. Morgan slightly increased his price target on Wells Fargo & Company (NYSE:WFC) from $99 to $99.50. The analyst maintained a Neutral rating on the shares, with an upside potential in the high-teens.
Juneja revised targets across large-cap banks, noting that the market continues to price in two potential rate cuts, while long-term interest rates are expected to remain relatively firm amid ongoing inflation concerns. He also highlighted that the regulatory backdrop remains supportive and that consolidation activity within the banking sector has picked up and is likely to continue. The analyst believes that banking stocks are showing resilience, supported by sector rotation, stable economic conditions, and steady fundamentals.
Wells Fargo & Company (NYSE:WFC) is engaged in a diverse array of financial services such as banking, mortgages, investments, and commercial finance solutions. It serves consumers, small businesses, and large institutions, offering unique products and services tailored to specific requirements.
2. Citigroup Incorporated (NYSE:C)
Number of Hedge Fund Holders: 107
Citigroup Incorporated (NYSE:C) is one of the 10 best banking stocks to buy according to hedge funds.
On January 15, Piper Sandler reiterated its Overweight rating for Citigroup Incorporated (NYSE:C). The firm also raised the price target from $130 to $135, leading to an upside potential of 23% at the prevailing level.
Piper Sandler’s revisions came at the back of the company’s fourth quarter earnings. Based on management’s adjusted guidance, the firm has raised its EPS forecast for Citigroup Incorporated (NYSE:C).
On January 15, Truist Securities maintained its price target of $129 and a Buy rating on Citigroup Incorporated (NYSE:C), after the company reported solid fourth-quarter results. The firm noted that while reported EPS came in at $1.19, earnings adjusted to $1.81 after excluding a one-time loss related to the sale of Citi’s Russia subsidiary.
The adjusted figure exceeded consensus estimates by 12%, supported by solid provision and pre-provision net revenue performance. Citi also reaffirmed its target of generating a 10–11% ROTCE in 2026, with cost efficiency expected to improve as the bank guides towards an efficiency ratio of approximately 60%.
Citigroup Incorporated (NYSE:C) serves consumers, corporations, governments, and institutions through an extensive range of financial products and services. The business is broadly structured around five distinct segments, i.e., Services, Markets, Banking, U.S. Personal Banking, and Wealth. The company offers a range of products and solutions across its underlying segments.
1. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 111
Bank of America Corporation (NYSE:BAC) is one of the 10 best banking stocks to buy according to hedge funds.
As of February 23 closing, Bank of America Corporation (NYSE:BAC) carried a highly bullish sentiment. The stock received coverage from 19 analysts, 15 of whom assigned Buy ratings and 4 gave Hold calls. With no Sell rating, it has a projected median 1-year price target of $61.81, which leads to an upside potential of more than 22%.
On February 19, Bank of America Corporation (NYSE:BAC) unveiled plans to introduce BofA Rewards, a fee-free loyalty program designed to enhance customer benefits. The bank stated:
“Starting May 27, millions of clients can enroll in the new program to unlock benefits on eligible credit cards, cash back deals, banking services, curated experiences and more. BofA Rewards members can benefit from $150 to $4,000 in annual value based on their membership tier and program engagement.”
Earlier, on February 9, Vivek Juneja from J.P. Morgan reaffirmed his Overweight rating on Bank of America Corporation (NYSE:BAC), and increased the firm’s price target from $61 to $61.50.
Juneja’s rating is based on J.P. Morgan’s target adjustments across the large-cap banks, amid the expectations of two additional rate cuts in the near-term. The analyst also acknowledged a conducive regulatory landscape for large-cap banks.
Bank of America Corporation (NYSE:BAC) delivers financial solutions to individuals, small and mid-sized enterprises, large institutions, and governments. It has a global presence with expertise in consumer banking, wealth & investment management, and capital markets. The company offers a range of financial products & services across its four broad segments.
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