Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. Market leaders have certainly capitalized on rising interest rates and strong loan demand to boost profitability, helping fuel a 13.8% gain for the banking industry over the past six months - 6.1 percentage points higher than the S&P 500.
Although banks have produced good results, only a handful will thrive over the long term as fintech disruptors are rapidly taking market share from traditional institutions. On that note, here is one bank stock boasting a durable advantage and two we’re passing on.
Two Bank Stocks to Sell:
National Bank Holdings (NBHC)
Market Cap: $1.87 billion
Operating under familiar local brands like Community Banks of Colorado, Bank Midwest, and Bank of Jackson Hole, National Bank Holdings (NYSE:NBHC) operates regional banks across Colorado, Kansas, Missouri, Wyoming, Texas, and other western states, offering commercial, business, and consumer banking services.
Why Do We Steer Clear of NBHC?
- Annual sales declines of 1.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Incremental sales over the last five years were less profitable as its earnings per share were flat while its revenue grew
- Estimated tangible book value per share growth of 4% for the next 12 months implies profitability will slow from its two-year trend
At $41.52 per share, National Bank Holdings trades at 1.1x forward P/B. Check out our free in-depth research report to learn more about why NBHC doesn’t pass our bar.
First Horizon (FHN)
Market Cap: $12.11 billion
Tracing its roots back to 1864 during the Civil War era, First Horizon (NYSE:FHN) is a Tennessee-based bank holding company that provides commercial and consumer banking, wealth management, and specialty financial services across multiple states.
Why Are We Cautious About FHN?
- Annual net interest income growth of 9.5% over the last five years was below our standards for the banking sector
- Estimated net interest income growth of 4% for the next 12 months implies demand will slow from its five-year trend
- Anticipated tangible book value per share growth of 8% for the next year implies profitability will be modest
First Horizon is trading at $25.37 per share, or 1.4x forward P/B. Read our free research report to see why you should think twice about including FHN in your portfolio.
One Bank Stock to Buy:
Coastal Financial (CCB)
Market Cap: $1.33 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 Are We Backing CCB?
- Annual net interest income growth of 40.1% over the last five years was superb and indicates its market share increased during this cycle
- Differentiated product suite leads to a Strong performance of its loan book leads to a High-yielding loan book and low cost of funds result in a best-in-class net interest margin of 7.1%
- Earnings per share grew by 19.6% annually over the last five years, massively outpacing its peers
Coastal Financial’s stock price of $87.74 implies a valuation ratio of 2.3x 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
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 9 Market-Beating Stocks. 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-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.