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3 Bank Stocks We’re Skeptical Of

ⓘ This article is third-party content and does not represent the views of this site. We make no guarantees regarding its accuracy or completeness.

GBCI Cover Image

Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. Furthermore, economic conditions have supported loan growth and fee income, a trend that has enabled the banking industry to return 13.7% over the past six months. At the same time, the S&P 500 was up 4.1%.

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 we’re swiping left on.

Glacier Bancorp (GBCI)

Market Cap: $6.38 billion

Operating through seventeen distinct bank divisions with local brands and management teams, Glacier Bancorp (NYSE: GBCI) is a bank holding company that provides various banking services to individuals and businesses across eight western states.

Why Are We Wary of GBCI?

  1. Muted 9.2% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
  2. Incremental sales over the last five years were much less profitable as its earnings per share fell by 5.3% annually while its revenue grew
  3. 3.3% annual tangible book value per share growth over the last five years was slower than its banking peers

Glacier Bancorp is trading at $49.02 per share, or 1.4x forward P/B. To fully understand why you should be careful with GBCI, check out our full research report (it’s free).

Citizens Financial Group (CFG)

Market Cap: $27.71 billion

Tracing its roots back to 1828 as a community-focused institution, Citizens Financial Group (NYSE: CFG) is a regional bank that provides retail and commercial banking services to individuals, small businesses, and large corporations across 14 states.

Why Do We Think Twice About CFG?

  1. Annual revenue growth of 2.6% over the last two years was below our standards for the banking sector
  2. Net interest income trends were unexciting over the last five years as its 5.8% annual growth was below the typical banking firm
  3. Annual earnings per share growth of 2.5% underperformed its revenue over the last five years, showing its incremental sales were less profitable

At $64.99 per share, Citizens Financial Group trades at 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than CFG.

First Citizens BancShares (FCNCA)

Market Cap: $22.84 billion

With roots dating back to 1898 and a significant expansion through its 2023 acquisition of Silicon Valley Bank, First Citizens BancShares (NASDAQGS:FCNC.A) is a bank holding company that provides financial services to individuals and businesses through its First-Citizens Bank & Trust Company subsidiary.

Why Does FCNCA Worry Us?

  1. Customers postponed purchases of its products and services this cycle as its revenue declined by 3.7% annually over the last two years
  2. Net interest margin shrank by 74.8 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
  3. Performance over the past two years shows each sale was less profitable as its earnings per share dropped by 5.6% annually, worse than its revenue

First Citizens BancShares’s stock price of $1,985 implies a valuation ratio of 1.1x forward P/B. Read our free research report to see why you should think twice about including FCNCA in your portfolio.

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