Banks serve as the backbone of the economy, facilitating lending, deposits, and financial services that keep businesses and consumers moving forward. But worries about an economic slowdown and potential credit deterioration have kept sentiment in check, and over the past six months, the banking industry’s 9.7% return has trailed the S&P 500 by 4.4 percentage points.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Keeping that in mind, here is one bank stock poised to generate sustainable market-beating returns and two that may face trouble.

Two Bank Stocks to Sell:

Independent Bank (INDB)

Market Cap: $3.63 billion

Tracing its roots back to 1907 and serving as a financial cornerstone in New England for over a century, Independent Bank Corp. (NASDAQ: INDB) operates as the holding company for Rockland Trust, providing banking, investment, and financial services across Eastern Massachusetts and Rhode Island.

Why Do We Think Twice About INDB?

1. Annual revenue growth of 1.6% over the last two years was below our standards for the banking sector
2. Performance over the past two years shows its incremental sales were much less profitable, as its earnings per share fell by 6.9% annually
3. Muted 4.6% annual tangible book value per share growth over the last two years shows its capital generation lagged behind its banking peers

At $73.26 per share, Independent Bank trades at 1x forward P/B. Dive into our free research report to see why there are better opportunities than INDB.

First Hawaiian Bank (FHB)

Market Cap: $3.09 billion

Dating back to 1858 as Hawaii's oldest bank with deep roots in the Pacific island communities, First Hawaiian (NASDAQ: FHB) operates a full-service community bank providing deposit accounts, commercial and consumer loans, credit cards, and wealth management services across Hawaii, Guam, and Saipan.

Why Do We Steer Clear of FHB?

1. 3.8% annual net interest income growth over the last five years was slower than its banking peers
2. Earnings per share fell by 1.9% annually over the last two years while its revenue was flat, showing each sale was less profitable
3. Tangible book value per share was flat over the last five years, indicating it’s failed to build equity value this cycle

First Hawaiian Bank’s stock price of $24.99 implies a valuation ratio of 1.1x forward P/B. To fully understand why you should be careful with FHB, check out our full research report (it’s free for active Edge members).

One Bank Stock to Buy:

Pathward Financial (CASH)

Market Cap: $1.61 billion

Formerly known as Meta Financial until its 2022 rebranding, Pathward Financial (NASDAQ: CASH) provides banking-as-a-service solutions and commercial finance products, enabling partners to offer financial services like prepaid cards, payment processing, and lending options.

Why Will CASH Outperform?

1. Unique value proposition resonates with borrowers, as seen in its above-market 13.6% annual net interest income growth over the last five years
2. Differentiated product suite leads to a Strong performance of its loan book is reflected in its High-yielding loan book and low cost of funds result in a best-in-class net interest margin of 7%
3. Share repurchases over the last five years enabled its annual earnings per share growth of 25.6% to outpace its revenue gains

Pathward Financial is trading at $72.22 per share, or 1.7x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.

Stocks We Like Even More

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 5 Growth Stocks for this month. 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 Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today

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