You may think dividend-paying bank stocks are in trouble, or at least their dividends are given the current climate. The banking crisis that began with the collapse of Silicon Valley Bank continues, leaving what look like bargains but could be yield traps.

The easiest way to seek safety is to look at the dividend-paying bank stocks from banks that deposited $30 billion into First Republic (NYSE:FRC) on March 16. These are the “too big to fail” banks the government backed in 2008.

In the current crisis Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and JPMorgan Chase (NYSE:JPM) each deposited $5 billion at First Republic. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) each put in half that.

Two other big national banks, State Street (NYSE:STT) and Bank of New York Mellon (NYSE:BK) also put in $1 billion each, but their dividend yields are low. Citigroup, with a yield of 4.55%, leads the way.

These are the dividend-paying bank stocks offering the best combination of safety and yield for the average investor who wants to take advantage of the current crisis to build a nest egg for tomorrow.

Truist Financial (TFC)

Truist Financial (NYSE:TFC), the largest regional bank in the Southeast, was born from the 2019 merger of BB&T Bancshares of Winston-Salem with SunTrust of Atlanta. The two decided the merged company would be based in Charlotte. (Full disclosure: I have my business bank account at Truist.)

The bank had assets of $555 billion at the end of 2022, up 2.6% from a year earlier. The book value per share is $40.58, giving it a price-to-book of about .77 on March 20. At the start of March, the shares sold at almost $47. That means it’s down 23% on the month.

Rebellion Research, which uses machine learning to rate securities, insists Truist is in great shape. Bad loans encumber only 16.56% of the equity, and they don’t intend to sell them. Citigroup raised its rating on Truist amid the crisis, calling any comparison with SVB “apples to oranges” because of the broad swath of industries its deposits support.
The bank’s 18 analysts think Truist will report $1.17 of earnings this quarter, $4.89 per share for the year. That’s a forward price-earnings ratio of just 6.5.

US Bancorp (USB)

US Bancorp (NYSE:USB) takes its name from a Portland bank founded in 1891. It has been based in Minneapolis since buying First Trust Bank in 1997. That bank traces its history back to 1864. 

USB had assets of $674 billion at the end of 2022, making it the fifth largest U.S. bank, behind only the four money center banks. It has a market cap of $59 billion and a price to book value of 1.148 as of March 17.

Besides its consumer banking, commercial banking, and wealth management operations, USB is also the seventh largest credit card bank, behind Discover (NYSE:DFS) and ahead of Wells Fargo.

While its franchise is regional, with branches in the Midwest and western U.S., its banking footprint is national. Near the end of last year it acquired MUFG Union Bank, increasing its franchise on the West Coast.

Baird upgraded USB as a “rare opportunity” in the current sell-off the same day Credit Suisse (NYSE:CS) was taken over. Along with the dividend yield, it has a price-earnings ratio of just 10.5. Over $31 in cash backs each share of stock. On March 6 the shares were trading at $47. That means it’s off 27% since the start of the crisis, with no news on outflows to justify it. 

One caveat is that “Big Short” investor Michael Burry worries that over half of USB’s deposits are uninsured, because they’re in accounts over the $250,000 FDIC limit for insurance. He thinks it is susceptible to a run. I think it is more important that USB is geographically diversified, with accounts in a wide range of industries.

The PNC Financial Services Group (PNC)

PNC (NYSE:PNC), based in Pittsburgh, is the dominant bank of the mid-Atlantic, but does a lot of things beyond standard banking.

It has offices in 25 states. Its biggest concentrations outside the Midwest are in Atlanta and the Atlantic coast of Florida.

PNC does mergers for smaller companies, it handles loan syndications, and it’s the second largest servicer of loans for other banks. It’s also one handler of Small Business Association (SBA) loans and a major credit card bank. It was formed from the 1983 merger of Provident and Penn National, both of which used the initials PNC.

PNC had assets of $557 billion at the end of 2022, making it the sixth largest U.S. bank. Almost all the loans are domestic. The market cap of $55 billion gives it a price-earnings ratio of under 14 and a fat dividend yield of 4.8%. Its price-to-book is currently 1.39.

PNC was big enough to be approached on an SVB bailout but turned it down. Rebellion Research recently calculated it has just $4.4 billion in losses on $40 billion of booked loans, and that its balance sheet looks good.

Analysts at Baird see a 50% upside in the bank’s stock. Tipranks also sees the stock beating the market this year. On March 15, a black day for bank stocks, PNC stock fell less than its peers.

Citigroup (C)

Citigroup (NYSE:C) is the only money center bank with a 4% dividend yield. It went through a reverse split of 1:10 after the 2008 financial crisis and the stock has never returned to its pre-crisis level.

Citi is a huge credit card bank, besides being an international lender. (Costco Wholesale (NASDAQ:COST) moved its credit card business to Citi a few years ago.) It even has its own travel portal, run with Booking.com (NASDAQ:BKNG)

The dividend compensates for a distinct lack of capital gains. Over the last two years, the stock has lost 37% of its value. Over one-third of its business is international, and it has just 661 domestic branches, lowest among the seven largest U.S. banks. The price-to-book ratio is just .42.

Some analysts consider Citi a gift at the current price. Bank of America recently raised its price target on the bank and gave it a buy rating.

On the date of publication, Dana Blankenhorn held a long position in COST. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. His 10^th novel is The Time Tunnel, now available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.