Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. Still, investors are uneasy as banks face challenges from credit quality concerns and potential regulatory changes. These doubts have certainly contributed to banking stocks’ recent underperformance - over the past six months, the industry’s 8.8% gain has fallen behind the S&P 500’s 15.6% rise.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here are two bank stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Bank Stock to Sell:
Truist Financial (TFC)
Market Cap: $59.3 billion
Born from the 2019 merger of BB&T and SunTrust in one of the largest banking combinations since the 2008 financial crisis, Truist Financial (NYSE: TFC) is a bank holding company that offers a wide range of financial services including consumer and commercial banking, wealth management, insurance, and lending solutions.
Why Do We Think Twice About TFC?
- Net interest income stagnated over the last five years and signal the need for new growth strategies
- Net interest margin of 3% is well below other banks, signaling its loans aren’t very profitable
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1.2% annually
Truist Financial is trading at $45.99 per share, or 1x forward P/B. To fully understand why you should be careful with TFC, check out our full research report (it’s free).
Two Bank Stocks to Watch:
UMB Financial (UMBF)
Market Cap: $9.30 billion
With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial (NASDAQ: UMBF) is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.
Why Does UMBF Stand Out?
- Annual net interest income growth of 19.7% over the last five years was superb and indicates its market share increased during this cycle
- Productivity and efficiency ratio profits are expected to increase next year as some fixed cost leverage kicks in
- Earnings per share grew by 15.3% annually over the last two years, massively outpacing its peers
UMB Financial’s stock price of $121.50 implies a valuation ratio of 1.3x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
First Financial Bankshares (FFIN)
Market Cap: $4.96 billion
With roots dating back to 1890 and a network spanning over 70 locations across the Lone Star State, First Financial Bankshares (NASDAQ: FFIN) is a Texas-focused regional bank providing commercial banking, trust services, and wealth management across numerous communities throughout the state.
Why Does FFIN Catch Our Eye?
- 7.3% annual revenue growth over the last two years surpassed the sector average as its loans resonated with customers
- Net interest margin expanded by 34.7 basis points (100 basis points = 1 percentage point) over the last two years, providing additional flexibility for investments
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 5.3% annually
At $34.87 per share, First Financial Bankshares trades at 2.7x forward P/B. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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