Banks use their capital and expertise to help businesses grow while offering consumers essential financial products like mortgages and credit cards. 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 11.2% return has trailed the S&P 500 by 13.2 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. Taking that into account, here is one bank stock boasting a durable advantage and two we’re passing on.
Two Bank Stocks to Sell:
S&T Bancorp (STBA)
Market Cap: $1.41 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 Do We Think Twice About STBA?
- Annual net interest income growth of 4.3% over the last five years was below our standards for the banking sector
- Estimated net interest income growth of 6% for the next 12 months is soft and implies weaker demand
- Net interest margin shrank by 33.7 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
S&T Bancorp is trading at $36.66 per share, or 0.9x forward P/B. Check out our free in-depth research report to learn more about why STBA doesn’t pass our bar.
BankUnited (BKU)
Market Cap: $2.93 billion
Born from the ashes of a failed Florida thrift during the 2009 financial crisis, BankUnited (NYSE: BKU) is a regional bank that provides commercial lending, deposit services, and treasury solutions to businesses and consumers primarily in Florida and the New York metropolitan area.
Why Does BKU Worry Us?
- 5.5% annual net interest income growth over the last five years was slower than its banking peers
- Net interest margin of 2.8% is well below other banks, signaling its loans aren’t very profitable
- Overall productivity is expected to decrease over the next year as Wall Street thinks its efficiency ratio will degrade by 17.6 percentage points
At $38.98 per share, BankUnited trades at 1x forward P/B. If you’re considering BKU for your portfolio, see our FREE research report to learn more.
One Bank Stock to Buy:
Coastal Financial (CCB)
Market Cap: $1.61 billion
Pioneering the intersection of traditional banking and financial technology in the Pacific Northwest, Coastal Financial (NASDAQ: CCB) operates as a bank holding company that provides traditional banking services and Banking-as-a-Service (BaaS) solutions to consumers and businesses.
Why Should You Buy CCB?
- Impressive 43.2% annual net interest income growth over the last five years indicates it’s winning market share this cycle
- Differentiated product suite results in a Strong performance of its loan book is reflected in its High-yielding loan book and low cost of funds are reflected in its best-in-class net interest margin of 7.2%
- Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 22.7% annually
Coastal Financial’s stock price of $106.74 implies a valuation ratio of 3.3x forward P/B. Is now the time to initiate a position? See for yourself in our full research report, it’s free for active Edge members.
Stocks We Like Even More
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 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-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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