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% gain has fallen behind the S&P 500’s 13% 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 is one resilient bank stock at the top of our wish list and two we’re steering clear of.
Two Bank Stocks to Sell:
Hope Bancorp (HOPE)
Market Cap: $1.83 billion
With roots in serving Korean-American communities and now expanded to a multi-ethnic clientele across 12 states, Hope Bancorp (NASDAQ: HOPE) operates Bank of Hope, providing commercial and retail banking services with a focus on serving multi-ethnic communities across the United States.
Why Should You Sell HOPE?
- Net interest income stagnated over the last five years and signals the need for new growth strategies
- Earnings per share fell by 4.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Tangible book value per share was flat over the last two years, indicating it’s failed to build equity value this cycle
At $14.29 per share, Hope Bancorp trades at 0.8x forward P/B. If you’re considering HOPE for your portfolio, see our FREE research report to learn more.
Truist Financial (TFC)
Market Cap: $64.34 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 Pass on TFC?
- Scale is a double-edged sword because it limits the firm’s growth potential compared to its smaller competitors, as reflected in its below-average annual net interest income increases of 1.9% for the last five years
- Projected net interest income growth of 1.7% for the next 12 months suggests sluggish demand
- Earnings per share have contracted by 1.6% annually over the last five years, a headwind for returns as stock prices often echo long-term EPS performance
Truist Financial is trading at $52.65 per share, or 1.1x forward P/B. Check out our free in-depth research report to learn more about why TFC doesn’t pass our bar.
One Bank Stock to Buy:
ServisFirst Bancshares (SFBS)
Market Cap: $4.95 billion
Founded in 2005 with a focus on serving underserved mid-sized businesses, ServisFirst Bancshares (NYSE: SFBS) is a bank holding company that provides commercial banking services to businesses and professionals through its subsidiary ServisFirst Bank.
Why Is SFBS a Top Pick?
- Impressive 19.5% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Net interest margin jumped by 71.1 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more resources to pursue growth initiatives
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 25.7% outpaced its revenue gains
ServisFirst Bancshares’s stock price of $89.67 implies a valuation ratio of 2.3x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
