First Citizens BancShares and Glacier Bancorp are smart smaller bank stocks to own as investors re-examine the pummeled financial sector, according to Brian Belski, chief investment strategist at BMO Harris. "Unfortunately, you have to kind of sift through the rubble to find ... the best names," he said on CNBC's " Halftime Report ." The financial sector has turned into a stock-picker's market from a broadly reliable play following the crisis ignited by the closure of Silicon Valley Bank , he said. Glacier and First Citizens, he said, are smart picks in a small- or mid-cap portfolio because they have great management teams on top of clean balance sheets and loan portfolios. That's despite the fact that small- and mid-size banks will likely see massive consolidation more broadly, Belski added. He said new regulations will likely be targeted at financial institutions of these sizes. "This is about stock picking," Belski said. "We in the investment community, frankly, have gotten lazy by just buying ETFs or being broader on the market. That's why you have to roll up your sleeves and do individual work on some of these banks." KBE FCNCA,GBCI YTD mountain First Citizens and Glacier compared with the bank ETF Bank stocks dropped across the board last month as the banking crisis played out, with the SPDR S & P Bank ETF (KBE) finishing March down 23.2%. The SPDR S & P Regional Banking ETF (KRE) fell even further, with a 28.8% drop, as concerns centered on whether other smaller banks would suffer the same fate as Silicon Valley and Signature Bank , which was also closed. But First Citizens and Glacier were able to buck the broader sector's trend. While investors sold off First Citizens in the first half of March, the stock was able to rally and end the month up 32.6% as investors realized it could be a safe haven. Three out of the five analysts with ratings on First Citizens say the stock is worth buying, according to Refinitiv. But the average analyst's price target implies share value could fall nearly 7% over the next year after the latest rally. Glacier, meanwhile, similarly ticked up in the latter half of the month but could not completely avoid the broader sector's downturn. The stock ended the month down 11.3%. The majority of analysts rate the stock a hold, according to Refinitiv. But after its recent drop, the average analyst expects the stock to rally almost 25% in the next year. While not giving any specific stock picks in the space, Belski said large U.S. banks and Canadian banks should be big winners as the sector recovers from the crisis. He said he would still be overweight on the sector.
