3 Bank Stocks with Warning Signs Anthony Lee Wed, October 7, 2026 at 4:40 AM EDT 3 min read TOWN -1.20% ^GSPC +0.58% WAFD -0.83% CFG -0.34% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Banks play a critical role in the financial system, providing everything from commercial loans to wealth management and payment processing services. 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 2.5% return has trailed the S&P 500 by 15 percentage points.
Investors should tread carefully as many of these banks are also cyclical, and any misstep can have you catching a falling knife. Taking that into account, here are three bank stocks best left ignored.
Founded in 1998 with a commitment to community-centered banking in the Hampton Roads region, TowneBank (NASDAQ:TOWN) is a community-focused financial institution providing banking, lending, and wealth management services to individuals and businesses in Virginia and North Carolina.
Sales trends were unexciting over the last five years as its 5.6% annual growth was below the typical banking company
Day-to-day expenses have swelled relative to revenue over the last five years as its efficiency ratio increased by 16.1 percentage points
Performance over the past five years shows its incremental sales were less profitable, as its 1.3% annual earnings per share growth trailed its revenue gains
TowneBank is trading at $35.41 per share, or 1.1x forward P/B. Dive into our free research report to see why there are better opportunities than TOWN.
Tracing its roots back to 1828 as a community-focused institution, Citizens Financial Group (NYSE:CFG) is a regional bank that provides retail and commercial banking services to individuals, small businesses, and large corporations across 14 states.
6.6% annual net interest income growth over the last five years was slower than its banking peers
Earnings per share were flat over the last five years while its revenue grew, showing its incremental sales were less profitable
Annual tangible book value per share growth of 2.3% over the last five years was below our standards for the banking sector
At $63.63 per share, Citizens Financial Group trades at 1.1x forward P/B. To fully understand why you should be careful with CFG, check out our full research report (it's free).
Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ:WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.
Muted 7.4% annual net interest income growth over the last five years shows its demand lagged behind its banking peers
Incremental sales over the last two years were less profitable as its earnings per share were flat while its revenue grew
Estimated tangible book value per share decline of 2.8% for the next 12 months implies a challenging profitability environment
WaFd Bank's stock price of $29.94 implies a valuation ratio of 0.8x forward P/B. If you're considering WAFD for your portfolio, see our FREE research report to learn more.
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.
