Citizens' Ryan Highlights Regional Bank Investment Opportunities Amid 2025 Sector Performance Divergence

This analysis is based on the CNBC Squawk Box interview [1] with Citizens Financial Group (CFG) senior research analyst Devin Ryan, where he emphasized investment opportunities in regional bank stocks. Key YTD 2025 performance data [0][3] reveals a divergence within the banking sector: large banks (^BKX) delivered +29% growth, outpacing the S&P 500’s +16.83%, while the regional bank ETF (KRE) lagged at +8.82%. Notably, CFG—Ryan’s employer—was an outlier among regional banks, posting 35.04% YTD growth [0]. On the day of the interview, the Financial Services sector underperformed (-0.31255% [0]), reflecting short-term caution, but Ryan’s comments provided a bullish counterpoint. State Street’s 2025 Q4 analysis [2] suggests a potential yield curve steepening in 2026, which would support net interest margin expansion for regional banks, a critical long-term driver of their profitability.

1. Banking sector performance divergence
   : Large banks have outpaced the broader market, while regional banks as a group have lagged, creating potential “catch-up” upside if macro conditions improve [0][3].
2. Citizens Financial Group as an outlier
   : CFG’s 35.04% YTD growth far exceeds the KRE ETF average, indicating strong fundamentals specific to the bank [0].
3. Counterpoint to short-term sentiment
   : Ryan’s bullish stance contrasts with the Financial Services sector’s underperformance on the interview day, potentially shifting investor focus to regional banks [0][1].
4. Macro dependency
   : Regional bank long-term performance will be heavily influenced by yield curve movements and loan demand, as noted in State Street’s analysis [2].

• Opportunities
  :
  • Regional banks’ lagging performance relative to large banks and the S&P 500 creates potential undervaluation opportunities [0][3].
  • A steepening yield curve in 2026 (expected by State Street [2]) would benefit regional bank net interest margins.
  • CFG’s strong YTD performance highlights the potential for outperformance among select regional banks [0].
• Risks
  :
  • Regional banks’ sensitivity to yield curve movements; failure to steepen could pressure net interest margins [2].
  • Credit quality risks, including potential defaults or a recession, which could impact balance sheets [2].
  • Regulatory changes (e.g., increased capital requirements) that may reduce profitability [4].

The CNBC interview with CFG’s Devin Ryan brought attention to regional bank investment opportunities amid a year of mixed banking sector performance. While large banks outpaced the S&P 500 YTD 2025, regional banks lagged, with CFG standing out as a high-performing exception. The interview may influence short-term investor sentiment, but long-term regional bank performance will depend on macroeconomic factors like yield curve steepening. Decision-makers should consider the divergence in sector performance, CFG’s outlier status, and the associated risks (yield curve sensitivity, credit quality, regulation) when evaluating regional bank-related instruments.