Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. These institutions have benefited from improved net interest margins and robust credit growth, so it’s no surprise the banking industry has posted a 17.2% gain over the past six months, beating the S&P 500 by 2.8 percentage points.
Regardless of these results, investors must exercise caution as many banks are sensitive to interest rate fluctuations and economic cycles. With that said, here is one bank stock poised to generate sustainable market-beating returns and two that may face trouble.
Two Bank Stocks to Sell:
TriCo Bancshares (TCBK)
Market Cap: $1.60 billion
Founded in 1975 and headquartered in Chico, California, TriCo Bancshares (NASDAQ:TCBK) operates Tri Counties Bank, providing personal, small business, and commercial banking services through branches across California.
Why Are We Hesitant About TCBK?
- Annual net interest income growth of 6% over the last five years was below our standards for the banking sector
- 17 basis point (100 basis points = 1 percentage point) decline in its net interest margin over the last two years reflects the firm’s willingness to accept lower profitability to defend its market position
- Sales were less profitable over the last two years as its earnings per share fell by 4.2% annually, worse than its revenue declines
TriCo Bancshares is trading at $49.35 per share, or 1.2x forward P/B. To fully understand why you should be careful with TCBK, check out our full research report (it’s free for active Edge members).
First Bancorp (FBNC)
Market Cap: $2.21 billion
Founded during the Great Depression in 1934 and originally known as Montgomery Bancorp, First Bancorp (NASDAQ:FBNC) is a community-oriented commercial bank providing a wide range of financial services to businesses and individuals in North and South Carolina.
Why Is FBNC Not Exciting?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Expenses have increased as a percentage of revenue over the last five years as its efficiency ratio degraded by 9.3 percentage points
- Performance over the past two years shows each sale was less profitable, as its earnings per share fell by 8.4% annually
First Bancorp’s stock price of $53.32 implies a valuation ratio of 1.3x forward P/B. Dive into our free research report to see why there are better opportunities than FBNC.
One Bank Stock to Watch:
Live Oak Bancshares (LOB)
Market Cap: $1.62 billion
Founded during the 2008 financial crisis with a vision to reimagine small business banking through technology, Live Oak Bancshares (NYSE:LOB) is a bank holding company that specializes in providing online banking services and SBA-guaranteed loans to small businesses across targeted industries nationwide.
Why Do We Like LOB?
- Annual net interest income growth of 19.9% over the past five years was outstanding, reflecting market share gains this cycle
- Productivity and efficiency ratio profits are expected to increase next year as some fixed cost leverage kicks in
- Annual tangible book value per share growth of 10.8% over the last five years was superb and indicates its capital strength increased during this cycle
At $35.81 per share, Live Oak Bancshares 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 for active Edge members .
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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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