Wells Fargo analyst Timur Braziler has assumed coverage of 15 banks in addition to the seven currently covered. The analyst transferred coverage of midcap banks, downgraded 4 to Equal Weight, and became more selective given the risk to earnings (rates, credit) and delayed consolidation benefits, mitigated by inexpensive valuations.

His new ratings are almost equally split between Overweight and Equal Weight after the downgrade of 4 banks to Equal Weight. The main themes reflect the "3 C's" - Competition for deposits in a higher-for-longer rates environment; Credit given increased normalization in CRE and C&I relative to his prior expectations; and Consolidation that can be a solid long-term tailwind but also seems unlikely to impact the near-term much.

Braziler's top picks include F N B Corp (NYSE: FNB), Western Alliance Bancorp (NYSE: WAL),  East West Bancorp Inc (NASDAQ: EWBC), Pinnacle Financial Partners Inc (NYSE: PNFP).

FNB benefits by drawing in deposits from lower-cost rural markets and deploying the funds in recently entered, higher-growth geographies. 

WAL remains a beat-and-raise story, as industry-leading deposit growth should again get the shares higher.

EWBC also benefits from idiosyncratic deposit trends and seems among the best positioned from a capital and conservative approach to lending as the group goes through the credit cycle.

PNFP with geography will be the main difference in credit performance. The Southeast is the best-performing geography in the U.S., and PNFP is the best bank in the SE.

For ASB, a higher-for-longer interest rate environment will pressure NII trends, limiting the near-term possibility of valuation expansion. A combination of a high loan-to-deposit ratio and continued asset growth is going to prove more costly in a higher-rate environment.

For FIBK, the deposit base has underperformed expectations during the current rising rate environment, and the analyst saw several bumps in credit, including in-office CRE, over the past few quarters, risks that the valuation multiple to this point do not reflect.