Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. But concerns about loan losses and tightening regulations have tempered enthusiasm, limiting the banking industry’s gains to 2.9% over the past six months. This return lagged the S&P 500’s 9.9% climb.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here is one bank stock poised to generate sustainable market-beating returns and two we’re steering clear of.

Two Bank Stocks to Sell:

Home Bancshares (HOMB)

Market Cap: $5.43 billion

Founded in Conway, Arkansas in 1998 and growing through strategic acquisitions across the Southeast, Home Bancshares (NYSE: HOMB) operates as the bank holding company for Centennial Bank, providing commercial and retail banking services to businesses and individuals across multiple states.

Why Are We Wary of HOMB?

1. Annual net interest income growth of 8.9% over the last five years was below our standards for the banking sector
2. Estimated net interest income growth of 6.6% for the next 12 months implies demand will slow from its five-year trend
3. Earnings growth over the last two years fell short of the peer group average as its EPS only increased by 4.8% annually

Home Bancshares’s stock price of $27.78 implies a valuation ratio of 1.3x forward P/B. Check out our free in-depth research report to learn more about why HOMB doesn’t pass our bar.

Fifth Third Bancorp (FITB)

Market Cap: $30.94 billion

Named after the merger of Third National Bank and Fifth National Bank in 1908, Fifth Third Bancorp (NASDAQ: FITB) is a financial services company that provides banking, lending, wealth management, and investment services to individuals and businesses across the Midwest and Southeast.

Why Does FITB Worry Us?

1. 4.1% annual net interest income growth over the last five years was slower than its banking peers
2. Sales over the last two years were less profitable as its earnings per share fell by 2.8% annually while its revenue was flat
3. Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 1.2% annually over the last five years

At $47.33 per share, Fifth Third Bancorp trades at 1.6x forward P/B. Read our free research report to see why you should think twice about including FITB in your portfolio.

One Bank Stock to Watch:

First BanCorp (FBP)

Market Cap: $3.25 billion

Tracing its roots back to 1948 in San Juan, First BanCorp (NYSE: FBP) is a bank holding company that provides commercial banking, consumer financing, mortgage services, and insurance products across Puerto Rico, the U.S. mainland, and the Caribbean.

Why Could FBP Be a Winner?

1. Differentiated product suite results in a Strong performance of its loan book leads to a High-yielding loan book and low cost of funds result in a best-in-class net interest margin of 4.5%
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 41.7% exceeded its revenue gains over the last five years
3. Annual tangible book value per share growth of 28.4% over the past two years was outstanding, reflecting strong capital accumulation this cycle

First BanCorp is trading at $20.73 per share, or 1.7x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.

High-Quality Stocks for All Market Conditions

Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.