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 10.3% return has trailed the S&P 500 by 7.2 percentage points.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here are two bank stocks we think can generate sustainable market-beating returns and one we’re swiping left on.

One Bank Stock to Sell:

Stellar Bancorp (STEL)

Market Cap: $1.58 billion

Created through strategic mergers to serve the growing Texas business community, Stellar Bancorp (NYSE: STEL) is a Texas bank holding company that provides commercial banking services primarily to small and medium-sized businesses and professionals.

Why Should You Sell STEL?

1. Sales were flat over the last two years, indicating it’s failed to expand this cycle
2. Projected 5.7 percentage point efficiency ratio increase over the next year signals its day-to-day expenses will rise
3. Annual tangible book value per share declines of 3.7% for the past five years show its capital management struggled during this cycle

Stellar Bancorp is trading at $30.77 per share, or 1x forward P/B. Check out our free in-depth research report to learn more about why STEL doesn’t pass our bar.

Two Bank Stocks to Watch:

Popular (BPOP)

Market Cap: $8.46 billion

Founded in 1893 as the first bank in Puerto Rico to serve the working class, Popular (NASDAQ: BPOP) is a financial holding company that provides retail, mortgage, and commercial banking services primarily in Puerto Rico and the mainland United States.

Why Will BPOP Outperform?

1. Net interest margin jumped by 19.7 basis points (100 basis points = 1 percentage point) over the last two years, giving the firm more resources to pursue growth initiatives
2. Share repurchases over the last five years enabled its annual earnings per share growth of 14.4% to outpace its revenue gains
3. Impressive 22.5% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle

At $126.90 per share, Popular trades at 1.4x forward P/B. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

First Financial Bancorp (FFBC)

Market Cap: $2.45 billion

Tracing its roots back to 1863 during the Civil War era, First Financial Bancorp (NASDAQ: FFBC) is a bank holding company that provides commercial banking, lending, deposit services, and wealth management to individuals and businesses.

Why Does FFBC Stand Out?

1. Share buybacks propelled its annual earnings per share growth to 8%, which outperformed its revenue gains over the last five years
2. Impressive 17% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
3. Market-beating return on equity illustrates that management has a knack for investing in profitable ventures

First Financial Bancorp’s stock price of $25.68 implies a valuation ratio of 0.9x forward P/B. Is now a good time to buy? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. 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-small-cap company Exlservice (+354% 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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