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 12.5% gain over the past six months, beating the S&P 500 by 2.9 percentage points.
Nevertheless, investors should tread carefully as many banks are cyclical due to their exposure to credit risk and regulatory changes. With that said, here is one bank stock poised to generate sustainable market-beating returns and two we’re steering clear of.
Two Bank Stocks to Sell:
OceanFirst Financial (OCFC)
Market Cap: $1.07 billion
Tracing its roots back to 1902 when it began serving coastal New Jersey communities, OceanFirst Financial (NASDAQ:OCFC) operates as a regional bank holding company that provides commercial and consumer banking services primarily in New Jersey and surrounding metropolitan areas.
Why Should You Sell OCFC?
- Net interest income trends were unexciting over the last five years as its 2.9% annual growth was below the typical banking firm
- Sales were less profitable over the last two years as its earnings per share fell by 10.4% annually, worse than its revenue declines
- Capital generation is forecasted to stall as its estimated tangible book value per share for the next 12 months is flat
OceanFirst Financial’s stock price of $18.62 implies a valuation ratio of 0.7x forward P/B. If you’re considering OCFC for your portfolio, see our FREE research report to learn more.
Franklin BSP Realty Trust (FBRT)
Market Cap: $850.3 million
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE:FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Why Do We Steer Clear of FBRT?
- Net interest income trends were unexciting over the last five years as its 9.4% annual growth was below the typical banking firm
- Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 39.7% annually
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 6.8% annually over the last five years
At $10.42 per share, Franklin BSP Realty Trust trades at 0.7x forward P/B. Check out our free in-depth research report to learn more about why FBRT doesn’t pass our bar.
One Bank Stock to Watch:
Amalgamated Financial (AMAL)
Market Cap: $1.16 billion
Founded in 1923 by labor unions seeking a financial institution aligned with worker values, Amalgamated Financial (NASDAQGM:AMAL) operates a values-oriented bank that provides commercial banking, trust services, and investment management to socially responsible organizations and individuals.
Why Does AMAL Stand Out?
- Net interest margin expanded by 18.7 basis points (100 basis points = 1 percentage point) over the last two years, providing additional flexibility for investments
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.9% exceeded its revenue gains over the last five years
- Balance sheet strength has increased this cycle as its 9.5% annual tangible book value per share growth over the last five years was exceptional
Amalgamated Financial is trading at $39.09 per share, or 1.2x 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 6 Stocks for this week. 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.
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