Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. Still, investors are uneasy as banks face challenges from credit quality concerns and potential regulatory changes. These doubts have caused the industry to lag recently as banking stocks have collectively shed 3% over the past six months. This drop is a far cry from the S&P 500’s 12% ascent.
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. On that note, here are two resilient bank stocks at the top of our wish list and one that may face trouble.
One Bank Stock to Sell:
First Merchants (FRME)
Market Cap: $2.45 billion
Dating back to 1893 when it first opened its doors in Indiana, First Merchants (NASDAQ:FRME) is a Midwest regional bank providing commercial, consumer, and wealth management services through branches in Indiana, Ohio, Michigan, and Illinois.
Why Do We Think Twice About FRME?
- Sales trends were unexciting over the last two years as its 6.4% annual growth was below the typical banking company
- Muted 7.8% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
- Annual earnings per share growth of 1.7% underperformed its revenue over the last five years, showing its incremental sales were less profitable
First Merchants’s stock price of $39.07 implies a valuation ratio of 0.9x forward P/B. To fully understand why you should be careful with FRME, check out our full research report (it’s free).
Two Bank Stocks to Watch:
The Bancorp (TBBK)
Market Cap: $2.03 billion
Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp (NASDAQ:TBBK) is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.
Why Are We Positive on TBBK?
- Annual revenue growth of 18% over the past two years was outstanding, reflecting market share gains this cycle
- Anticipated efficiency ratio improvement of 6.7 percentage points over the next year signals it will gain leverage on its fixed costs and become more productive
- Share buybacks catapulted its annual earnings per share growth to 25%, which outperformed its revenue gains over the last five years
The Bancorp is trading at $49.85 per share, or 2.7x forward P/B. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
East West Bank (EWBC)
Market Cap: $17.13 billion
As the largest independent bank in the U.S. focused on bridging financial services between America and Asia, East West Bancorp (NASDAQ:EWBC) operates a commercial bank that provides personal and business banking services with a unique focus on facilitating U.S.-Asia cross-border transactions.
Why Are We Fans of EWBC?
- Annual net interest income growth of 13.9% over the last five years beat the sector average and underscores the value of its loans
- Annual tangible book value per share growth of 12.3% over the past five years was outstanding, reflecting strong capital accumulation this cycle
- ROE punches in at 17.1%, illustrating management’s expertise in identifying profitable investments
At $125.50 per share, East West Bank trades at 1.8x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.