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’s 8.5% return has trailed the S&P 500 by 3.1 percentage points.
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 are two bank stocks we think can generate sustainable market-beating returns and one we’re steering clear of.
One Bank Stock to Sell:
S&T Bancorp (STBA)
Market Cap: $1.51 billion
Tracing its roots back to 1902 in western Pennsylvania's industrial heartland, S&T Bancorp (NASDAQ: STBA) is a Pennsylvania-based bank holding company that provides retail and commercial banking services, cash management, trust services, and investment advisory solutions.
Why Is STBA Not Exciting?
- Net interest income trends were unexciting over the last five years as its 3.9% annual growth was below the typical banking firm
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 5.1%
- Net interest margin shrank by 35.7 basis points (100 basis points = 1 percentage point) over the last two years, suggesting the profitability of its loan book is decreasing or the market is becoming more competitive
At $39.26 per share, S&T Bancorp trades at 1x forward P/B. Read our free research report to see why you should think twice about including STBA in your portfolio.
Two Bank Stocks to Watch:
Stock Yards Bank (SYBT)
Market Cap: $2.34 billion
Founded in 1904 in Louisville and named after the city's historic livestock market district, Stock Yards Bancorp (NASDAQ: SYBT) operates a regional bank providing commercial banking, wealth management, and trust services across Kentucky, Indiana, and Ohio.
Why Do We Watch SYBT?
- Annual net interest income growth of 16.9% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 6.7% over the last two years outstripped its revenue performance
- Capital strength is on track to rise over the next 12 months as its 23.5% projected tangible book value per share growth implies profitability will accelerate from its two-year trend
Stock Yards Bank’s stock price of $79.42 implies a valuation ratio of 2.2x forward P/B. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Frost Bank (CFR)
Market Cap: $8.28 billion
Tracing its roots back to 1868 when it was founded during Texas's post-Civil War reconstruction era, Cullen/Frost Bankers (NYSE: CFR) operates Frost Bank, a Texas-based financial institution providing commercial and consumer banking, wealth management, and insurance services.
Why Does CFR Catch Our Eye?
- Market share has increased this cycle as its 12.1% annual net interest income growth over the last five years was exceptional
- Net interest margin grew by 30 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more chips to play with
- Impressive 25% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
Frost Bank is trading at $128.78 per share, or 1.9x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% 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
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