Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. Furthermore, economic conditions have supported loan growth and fee income, a trend that has enabled the banking industry to return 13.4% over the past six months. At the same time, the S&P 500 was up 11.5%.
Nevertheless, investors should tread carefully as many banks are cyclical due to their exposure to credit risk and regulatory changes. With that said, here are three bank stocks we’re steering clear of.
F.N.B. Corporation (FNB)
Market Cap: $6.18 billion
Tracing its roots back to 1864 during the Civil War era, F.N.B. Corporation (NYSE: FNB) is a diversified financial services holding company that provides banking, wealth management, and insurance services to consumers and businesses across seven states and Washington, D.C.
Why Are We Wary of FNB?
- 5.2% annual revenue growth over the last two years was slower than its banking peers
- Net interest income trends were unexciting over the last five years as its 9.4% annual growth was below the typical banking firm
- Earnings per share lagged its peers over the last two years as they only grew by 4.5% annually
F.N.B. Corporation’s stock price of $17.33 implies a valuation ratio of 0.9x forward P/B. To fully understand why you should be careful with FNB, check out our full research report (it’s free).
Dime Community Bancshares (DCOM)
Market Cap: $1.62 billion
With roots dating back to 1910 and a name that evokes the historic "dime savings banks" of America's past, Dime Community Bancshares (NASDAQ: DCOM) is a New York-based bank holding company that provides commercial banking and financial services to businesses and consumers throughout Greater Long Island.
Why Are We Hesitant About DCOM?
- Inferior net interest margin of 2.9% means it must compensate for lower profitability through increased loan originations
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 1.1% annually
- 5.9% annual tangible book value per share growth over the last two years was slower than its banking peers
Dime Community Bancshares is trading at $36.42 per share, or 1.1x forward P/B. If you’re considering DCOM for your portfolio, see our FREE research report to learn more.
U.S. Bancorp (USB)
Market Cap: $82.92 billion
With roots dating back to 1863 and a presence across 26 states primarily in the Midwest and West, U.S. Bancorp (NYSE: USB) is one of America's largest banks providing lending, deposit services, wealth management, payment processing, and merchant services to individuals and businesses.
Why Does USB Fall Short?
- The company has faced growth challenges as its 5.9% annual net interest income increases over the last five years fell short of other banking companies
- Net interest margin of 2.7% reflects its high servicing and capital costs
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 4.7% annually
At $53.25 per share, U.S. Bancorp trades at 1.3x forward P/B. Read our free research report to see why you should think twice about including USB in your portfolio.
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month - FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
