3 Bank Stocks We’re Skeptical Of

Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. Furthermore, economic conditions have supported loan growth and fee income, a trend that has enabled the banking industry to return 12.5% over the past six months. At the same time, the S&P 500 was up 6.7%.

Nevertheless, investors should tread carefully as many banks are cyclical due to their exposure to credit risk and regulatory changes. Taking that into account, here are three bank stocks best left ignored.

OFG Bancorp (OFG)

Market Cap: $1.82 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 Does OFG Worry Us?

1. Annual net interest income growth of 8.3% over the last five years was below our standards for the banking sector
2. Net interest income is projected to tank by 2.2% over the next 12 months as demand evaporates
3. Concessions to defend its market share have ramped up over the last two years as its net interest margin decreased by 77.7 basis points (100 basis points = 1 percentage point)

OFG Bancorp’s stock price of $42.08 implies a valuation ratio of 1.2x forward P/B. If you’re considering OFG for your portfolio, see our FREE research report to learn more.

Arbor Realty Trust (ABR)

Market Cap: $1.45 billion

With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust (NYSE:ABR) is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.

Why Do We Steer Clear of ABR?

1. Products and services are facing significant end-market challenges during this cycle as sales have declined by 14.8% annually over the last two years
2. Sales were less profitable over the last two years as its earnings per share fell by 26% annually, worse than its revenue declines
3. Annual tangible book value per share declines of 4% for the past two years show its capital management struggled during this cycle

Arbor Realty Trust is trading at $7.47 per share, or 0.6x forward P/B. Dive into our free research report to see why there are better opportunities than ABR.

JPMorgan Chase (JPM)

Market Cap: $832.8 billion

Tracing its roots back to 1799 when its earliest predecessor was founded by Aaron Burr, JPMorgan Chase (NYSE:JPM) is a leading financial services company offering investment banking, consumer banking, commercial banking, and asset management services globally.

Why Are We Wary of JPM?

1. Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 6.9% over the last two years was below our standards for the banking sector
2. Inferior net interest margin of 2.6% means it must compensate for lower profitability through increased loan originations
3. Projected 2.8 percentage point efficiency ratio increase over the next year signals its day-to-day expenses will rise

At $308.87 per share, JPMorgan Chase trades at 2.3x forward P/B. To fully understand why you should be careful with JPM, check out our full research report (it’s free).

High-Quality Stocks for All Market Conditions

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here 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-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.