Banks use their capital and expertise to help businesses grow while offering consumers essential financial products like mortgages and credit cards. But concerns about loan losses and tightening regulations have tempered enthusiasm, and over the past six months, the banking industry has pulled back by 4.6%. This performance was disheartening since the S&P 500 gained 1.1%.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here is one resilient bank stock at the top of our wish list and two we’re passing on.
Two Bank Stocks to Sell:
Zions Bancorporation (ZION)
Market Cap: $7.93 billion
Founded in 1873 during Utah's pioneer era and named after Mount Zion in the Bible, Zions Bancorporation (NASDAQ: ZION) operates seven regional banks across the Western United States, providing commercial, retail, and wealth management services to over a million customers.
Why Do We Think Twice About ZION?
- 3.5% annual net interest income growth over the last five years was slower than its banking peers
- Inferior net interest margin of 3.1% means it must compensate for lower profitability through increased loan originations
- 1.2% annual tangible book value per share growth over the last five years was slower than its banking peers
Zions Bancorporation is trading at $53.66 per share, or 1x forward P/B. To fully understand why you should be careful with ZION, check out our full research report (it’s free).
Seacoast Banking (SBCF)
Market Cap: $2.83 billion
Founded during the Florida land boom of 1926 and surviving the Great Depression, Seacoast Banking Corporation of Florida (NASDAQ: SBCF) is a financial holding company that provides commercial and retail banking, wealth management, and mortgage services throughout Florida.
Why Should You Dump SBCF?
- Sales trends were unexciting over the last two years as its 7.4% annual growth was below the typical banking company
- Annual earnings per share growth of 2.7% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Annual tangible book value per share declines of 1.3% for the past five years show its capital management struggled during this cycle
Seacoast Banking’s stock price of $29.21 implies a valuation ratio of 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than SBCF.
One Bank Stock to Watch:
Old Second Bancorp (OSBC)
Market Cap: $1.02 billion
Dating back to 1871 as one of the Chicago area's longest-standing financial institutions, Old Second Bancorp (NASDAQ: OSBC) is an Illinois-based community bank offering deposit services, commercial and consumer loans, wealth management, and mortgage products through its 53 branch locations.
Why Are We Positive On OSBC?
- Annual net interest income growth of 26.1% over the past five years was outstanding, reflecting market share gains this cycle
- Projected net interest income growth of 13.1% for the next 12 months suggests its momentum from the last five years will persist
At $19.28 per share, Old Second Bancorp trades at 1x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
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