Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. Market leaders have certainly capitalized on rising interest rates and strong loan demand to boost profitability, helping fuel a 10.9% gain for the banking industry over the past six months – 8.4 percentage points higher than the S&P 500.
Regardless of these results, investors must exercise caution as many banks are sensitive to interest rate fluctuations and economic cycles. On that note, here are three bank stocks best left ignored.
Market Cap: $44.65 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 Should You Sell FITB?
-
Net interest income trends were unexciting over the last five years as its 4.6% annual growth was below the typical banking firm
-
Earnings per share were flat over the last two years and fell short of the peer group average
-
Tangible book value per share was flat over the last five years, indicating it’s failed to build equity value this cycle
Fifth Third Bancorp’s stock price of $49.47 implies a valuation ratio of 1.4x forward P/B. Check out our free in-depth research report to learn more about why FITB doesn’t pass our bar.
Market Cap: $8.15 billion
Tracing its roots back to 1910 when Oklahoma was still a young state, BOK Financial (NASDAQ:BOKF) is a regional bank holding company that provides commercial banking, consumer banking, and wealth management services across eight states in the central and southwestern US.
Why Do We Avoid BOKF?
-
Annual revenue growth of 2.2% over the last five years was below our standards for the banking sector
-
Annual net interest income growth of 3.7% over the last five years was below our standards for the banking sector
-
Weak unit economics are reflected in its net interest margin of 2.8%, one of the worst among bank companies
BOK Financial is trading at $134.15 per share, or 1.3x forward P/B. If you’re considering BOKF for your portfolio, see our FREE research report to learn more.
Market Cap: $5.44 billion
Tracing its roots back to 1902 when it first opened its doors in Virginia, Atlantic Union Bankshares (NYSE:AUB) is a full-service regional bank providing commercial and retail banking, wealth management, and insurance services throughout Virginia and parts of Maryland and North Carolina.