Banks use their capital and expertise to help businesses grow while offering consumers essential financial products like mortgages and credit cards. But concerns about loan losses and tightening regulations have tempered enthusiasm, limiting the banking industry’s gains to 8.9% over the past six months. This return lagged the S&P 500’s 23.8% climb.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Keeping that in mind, here are two resilient bank stocks at the top of our wish list and one we’re swiping left on.
One Bank Stock to Sell:
Dime Community Bancshares (DCOM)
Market Cap: $1.15 billion
With roots dating back to 1910 and a name that evokes the historic "dime savings banks" of America's past, Dime Community Bancshares (NASDAQ: DCOM) is a New York-based bank holding company that provides commercial banking and financial services to businesses and consumers throughout Greater Long Island.
Why Does DCOM Worry Us?
- Annual revenue growth of 1.4% over the last two years was below our standards for the banking sector
- Net interest margin of 2.7% is well below other banks, signaling its loans aren’t very profitable
- Earnings per share fell by 16.1% annually over the last two years while its revenue grew, showing its incremental sales were much less profitable
At $26.17 per share, Dime Community Bancshares trades at 0.8x forward P/B. If you’re considering DCOM for your portfolio, see our FREE research report to learn more.
Two Bank Stocks to Watch:
OFG Bancorp (OFG)
Market Cap: $1.70 billion
Originally founded in 1964 as a federal savings and loan institution, OFG Bancorp (NYSE: OFG) provides banking and financial services including commercial and consumer lending, wealth management, insurance, and trust services primarily in Puerto Rico and the U.S. Virgin Islands.
Why Do We Like OFG?
- Efficiency ratio improvement of 14 percentage points over the last five years demonstrates its ability to scale effectively
- Share buybacks catapulted its annual earnings per share growth to 7.5%, which outperformed its revenue gains over the last two years
- Annual tangible book value per share growth of 12.1% over the past five years was outstanding, reflecting strong capital accumulation this cycle
OFG Bancorp’s stock price of $38.47 implies a valuation ratio of 1.2x forward P/B. Is now the right time to buy? See for yourself in our full research report, it’s free for active Edge members.
Banner Bank (BANR)
Market Cap: $2.10 billion
Founded in 1890 in Walla Walla, Washington, and evolving through more than a century of economic cycles, Banner Corporation (NASDAQ: BANR) operates Banner Bank, providing commercial banking services, loans, and financial products to individuals and businesses across Washington, Oregon, California, Idaho, and Utah.
Why Are We Fans of BANR?
- Sound unit economics and 3.8% net interest margin allow for higher marketing budgets versus competitors
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Impressive 16.1% annual tangible book value per share growth over the last two years indicates it’s building equity value this cycle
Banner Bank is trading at $61.08 per share, or 1.1x forward P/B. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
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