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 8.7% over the past six months, almost identical to the S&P 500.
Regardless of these results, investors must exercise caution as many banks are sensitive to interest rate fluctuations and economic cycles. Keeping that in mind, here are three bank stocks that may face trouble.
FirstSun Capital Bancorp (FSUN)
Market Cap: $1.66 billion
Tracing its roots back to 1892 when it first opened its doors in Kansas, FirstSun Capital Bancorp (NASDAQ: FSUN) operates Sunflower Bank, providing commercial and consumer banking services to businesses and individuals across the Southwest region.
Why Are We Hesitant About FSUN?
- Annual revenue growth of 7.4% over the last five years was below our standards for the banking sector
- Estimated tangible book value per share decline of 2.8% for the next 12 months implies a challenging profitability environment
- Below-average return on equity indicates management struggled to find compelling investment opportunities
At $35.54 per share, FirstSun Capital Bancorp trades at 0.9x forward P/B. If you’re considering FSUN for your portfolio, see our FREE research report to learn more.
Bank of Hawaii (BOH)
Market Cap: $3.08 billion
Founded in 1897 as a financial anchor for the newly annexed Hawaiian territory, Bank of Hawaii (NYSE: BOH) is a financial institution providing banking, investment, and insurance services primarily to customers in Hawaii, Guam, and other Pacific Islands.
Why Does BOH Worry Us?
- Annual net interest income growth of 2.8% over the last five years was below our standards for the banking sector
- Inferior net interest margin of 2.4% means it must compensate for lower profitability through increased loan originations
- Earnings growth underperformed the sector average over the last five years as its EPS grew by just 2.4% annually
Bank of Hawaii is trading at $77.89 per share, or 1.9x forward P/B. To fully understand why you should be careful with BOH, check out our full research report (it’s free).
Ellington Financial (EFC)
Market Cap: $1.71 billion
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE: EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Why Do We Steer Clear of EFC?
- Incremental sales over the last five years were less profitable as its 4.8% annual earnings per share growth lagged its revenue gains
- Products and services are facing significant credit quality challenges during this cycle as tangible book value per share has declined by 5.7% annually over the last five years
- Low return on equity reflects management’s struggle to allocate funds effectively
Ellington Financial’s stock price of $13.66 implies a valuation ratio of 1x forward P/B. Dive into our free research report to see why there are better opportunities than EFC.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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.
