Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. But worries about an economic slowdown and potential credit deterioration have kept sentiment in check, and over the past six months, the banking industry has tumbled by 6.2%. This drawdown is a far cry from the S&P 500’s 5.2% ascent.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one resilient bank stock at the top of our wish list and two we’re swiping left on.

Two Bank Stocks to Sell:

Zions Bancorporation (ZION)

Market Cap: $7.56 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 Does ZION Worry Us?

1. 2.7% annual net interest income growth over the last five years was slower than its bank peers
2. Estimated net interest income decline of 39% for the next 12 months implies a challenging demand environment
3. Flat tangible book value per share over the last five years suggest it must find different ways to enhance shareholder value during this cycle

At $52.00 per share, Zions Bancorporation trades at 1.1x forward P/B. Check out our free in-depth research report to learn more about why ZION doesn’t pass our bar.

First Horizon (FHN)

Market Cap: $10.77 billion

Tracing its roots back to 1864 during the Civil War era, First Horizon (NYSE: FHN) is a Tennessee-based bank holding company that provides commercial and consumer banking, wealth management, and specialty financial services across multiple states.

Why Are We Wary of FHN?

1. Sales tumbled by 6.3% annually over the last two years, showing market trends are working against its favor during this cycle
2. Estimated net interest income growth of 3.4% for the next 12 months implies demand will slow from its five-year trend
3. 20.3 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the company’s willingness to accept lower yields to defend its market position

First Horizon’s stock price of $21.46 implies a valuation ratio of 1.2x forward P/B. Dive into our free research report to see why there are better opportunities than FHN.

One Bank Stock to Watch:

Rocket Companies (RKT)

Market Cap: $36.92 billion

Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.

Why Is RKT Interesting?

1. Market share will likely rise over the next 12 months as its expected net interest income growth of 47.8% is robust
2. ROE punches in at 34.1%, illustrating management’s expertise in identifying profitable investments

Rocket Companies is trading at $16.84 per share, or 3.3x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

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