Wall Street returned from its vacation Tuesday -- and promptly shook up the banking market, announcing a flurry of upgrades for regional bankers Regions Financial (NYSE:RF) and New York Community Bancorp (NYSE:NYCB), alongside price target cuts for megabankers Citigroup (NYSE:C)Wells Fargo (NYSE:WFC), and US Bancorp (NYSE:USB).

Here's how it all went down.

Regions Financial
Piper Jaffray started off the action Tuesday morning, announcing an upgrade to overweight for Regions Financial. Regions has tracked the decline of the S&P 500 pretty closely over the past year, falling about 6% in stock price against a 7% decline in the broader market. According to Piper, this leaves the stock "trading at levels last since early 2013" (when valued on earnings and tangible book value).

According to StreetInsider.com, Piper is predicting "huge losses" on Regions' "energy portfolio." But given that Regions stock currently sells for less than tangible book value (and less than 0.7 times ordinary book value), Piper thinks the risks are more than priced into the stock.

New York Community Bancorp
The story's a less optimistic at New York Community Bancorp -- but still somewhat optimistic. Here we fund another analyst, FBR Capital this time, arguing that a slow pace of interest rate increases at the Fed will be relatively good news for NYCB's income from mortgage "prepayment penalties."

Logically, higher interest rates dissuade homeowners from prepaying their mortgages -- they're more likely to hold onto cheap mortgages as rate hikes make new mortgages more expensive. That's bad news for NYCB, because it won't be collecting as many prepayment penalties. But if rates increase only slowly, it's at least not terribly bad news. Accordingly, FBR sees the stock as somewhat less at-risk than in October, when FBR first downgraded NYCB to underperform. FBR is now upgrading to market perform (still with a $15 price target).

Citi, Wells Fargo, and US Bancorp
Tic-tac-toe, bankers are cutting their price targets three-in-a-row for the banking majors. UBS announced Tuesday that while Citigroup is a buy at a price target of $50 (the stock costs $42 and change today), Citi has significant exposure to credit losses on its loans to oil and gas companies because of the falling value of oil.

Conversely, Piper Jaffray sees Wells Fargo as worthy of no more than a neutral rating, arguing that bank is at risk of higher loan losses and lower income from fees. According to Piper, while Wells Fargo is "one of the best managed banks in the U.S," it's also priced at a level indicating that everyone knows this already. Says Piper, Wells trades at a premium "versus every bank over $50B in assets." But government regulation is going to keep a lid on profitability at big banks, and that limits the ability of Wells Fargo's stock to rise. New price target: $50.

Finally, Piper is cutting its price target on US Bancorp from $49 to $48. Piper sees the Federal Reserve raising interest rates perhaps less quickly than other analysts expect, and thinks this will hurt profits at USB. Additionally, it sees the bank paying "a higher tax rate" in 2016.

That said, Piper gives credit where credit is due, declaring US Bancorp to be "one of the most diversified, best managed banks within our coverage." Even at a $48 price target, Piper thinks the stock is worth buying (USB only costs about $39 today).

Summing up
Whoosh! That sure was a lot of banks -- and banking recommendations -- to plow through! So now, what is an investor to make of all this data?

Well let's take a quick look at the numbers:





5-Year Earnings Growth Rate*

Dividend Yield

New York Community





Regions Financial










Wells Fargo





US Bancorp





*Projected, per data from S&P Capital IQ.

A few quick observations on the above numbers: At 13.6 times earnings, now-upgraded New York Community Bancorp is the priciest stock on today's list of new-rated banks -- but with a 6.5% projected growth rate and 6.7% dividend yield, it's one of the fastest growing, and easily the most generous dividend payer. With a total return that therefore equals 13.2%, NYCB is also arguably the closest thing to a "bargain" on the list.

Regions Financial, the day's other official upgrade, sports a respectable dividend yield and the highest projected growth rate -- making it another strong contender for investment. And it doesn't hurt that the analysts recommending these two stocks, FBR Capital and Piper Jaffray, both rank in the top 15% of analysts we track on Motley Fool CAPS.

The upshot for investors
For that matter, UBS is no slouch in the stock ratings department, either, ranking in the top 10% of investors we track on CAPS. Accordingly, the fact that UBS (and Piper, too) is cautious on banking majors may give investors pause. The fact that none of Citigroup, Wells Fargo, and US Bancorp is an obvious bargain when valued on P/E, growth, and dividends, may be an additional red flag.

Which of the five offers the best prospect for investment? My hunch is that Regions is worth at least a look. Its combination of a strong growth rate, respectable dividend payout, "total return ratio" of 1.1, and below-book valuation all look incredibly tempting to me. While I wouldn't mind seeing the share price drop a bit lower, and the P/E ratio with it, I agree with Piper Jaffray on this one: Regions Financial offers a good prospect for a decent profit.