Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. Furthermore, economic conditions have supported loan growth and fee income, a trend that has enabled the banking industry to return 14.2% over the past six months, almost identical to 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. 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:
WesBanco (WSBC)
Market Cap: $3.76 billion
Tracing its roots back to 1870 in West Virginia, WesBanco (NASDAQ: WSBC) is a bank holding company that provides retail and commercial banking, trust services, insurance, and investment products through its subsidiaries across several Midwestern and Mid-Atlantic states.
Why Is WSBC Not Exciting?
- Net interest margin of 3.5% reflects its high servicing and capital costs
- Performance over the past five years shows its incremental sales were less profitable as its earnings per share were flat
- Flat tangible book value per share over the last five years suggests it must find different ways to enhance shareholder value during this cycle
At $39.19 per share, WesBanco trades at 1x forward P/B. To fully understand why you should be careful with WSBC, check out our full research report (it’s free).
First Busey (BUSE)
Market Cap: $2.49 billion
Tracing its roots back to 1868 during America's post-Civil War reconstruction era, First Busey (NASDAQ: BUSE) is a bank holding company that provides commercial and retail banking, wealth management, and payment technology solutions across Illinois, Missouri, Florida, and Indiana.
Why Are We Wary of BUSE?
- Net interest margin of 3.5% reflects its high servicing and capital costs
- Incremental sales over the last five years were less profitable as its 1.6% annual earnings per share growth lagged its revenue gains
- Estimated tangible book value per share decline of 4.8% for the next 12 months implies a challenging profitability environment
First Busey’s stock price of $30.15 implies a valuation ratio of 1.1x forward P/B. Read our free research report to see why you should think twice about including BUSE in your portfolio.
One Bank Stock to Watch:
Old Second Bancorp (OSBC)
Market Cap: $1.27 billion
Dating back to 1871 as one of the Chicago area's longest-standing financial institutions, Old Second Bancorp (NASDAQ: OSBC) is an Illinois-based community bank offering deposit services, commercial and consumer loans, wealth management, and mortgage products through its 53 branch locations.
Why Could OSBC Be a Winner?
- Annual net interest income growth of 29.2% over the last five years was superb and indicates its market share increased during this cycle
- High-yielding loan book and low cost of funds lead to a best-in-class net interest margin of 5%
- Non-interest operating profits increased over the last five years as the firm gained some leverage on its fixed costs and became more efficient
Old Second Bancorp is trading at $24.78 per share, or 1.3x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
