US bank stocks outperform in November

Investors favored small- and medium-capitalization US bank stocks following the third-quarter 2025 earnings season.

The 208 banks in an S&P Global Market Intelligence analysis recorded a median total return of 5.4% in November, surpassing the 2.0% gain of the market-cap weighted S&P US BMI Banks index and the 0.2% gain of the S&P 500. Only seven of the banks had negative monthly returns.

Sixteen banks, 15 of which had market caps of less than $3.5 billion at Nov. 28, posted double-digit percentage gains. Uniondale, New York-based Flushing Financial Corp., with a market cap of $554.3 million at the end of November, led the group with a 20.0% gain.

The median price-to-adjusted tangible book value (TBV) of the banks included in the analysis was 136.8% as of Nov. 28.

S&P Global Market Intelligence analyzed US banks trading on the Nasdaq, NYSE or NYSE American with total assets of more than $3 billion. The analysis excludes banks in the mutual holding company ownership structure and other operating subsidiaries.

Adjusted tangible book value is calculated as the sum of tangible common equity, loss reserves and unrealized gain or loss from held-to-maturity securities, tax-adjusted at the 21% corporate rate, less nonperforming assets and loans 90 or more days past due but still accruing interest, divided by common shares outstanding.

Least expensive banks

For the second consecutive month, First Internet Bancorp was the least expensive bank based on price-to-adjusted TBV ratio. It ended November priced at 48.6% of adjusted TBV, up from 42.7% at Oct. 31.

Dallas-based First Foundation Inc., the second least expensive bank, announced in October that it had agreed to merge with Denver-based FirstSun Capital Bancorp, which ranked 15th on the list.

In an investor presentation, FirstSun projected that the transaction would be 14.3% dilutive to TBV on a GAAP basis, resulting in an earnback period of 3.3 years. On a cash basis, the estimate was a TBV accretion of 7%. FirstSun also disclosed that it plans to restructure First Foundation's balance sheet.

The banking subsidiaries of First Foundation and FirstSun reported notable nondepository financial institution (NDFI) exposure for the third quarter. Loans to one NDFI segment, business credit intermediaries, accounted for 7.7% of First Foundation Bank's gross loans and leases, the ninth highest ratio across the US banking industry. FirstSun unit Sunflower Bank NA reported that its NDFI delinquency ratio spiked 247 basis points, representing the fourth-largest quarter-over-quarter increase among banks with more than $5 billion in total assets at Sept. 30.

Bethesda, Maryland-based Eagle Bancorp Inc., the third least expensive bank, is grappling with credit and management succession issues. It had the fifth-highest monthly return in the analysis at 13.3%.

First Guaranty Bancshares Inc., ranked sixth, was the weakest market performer in November. Its total return for the month was negative 27.0%, which was almost 25 percentage points worse than any other bank in the analysis.

The Hammond, Louisiana-based bank posted a net loss available to common shareholders of $45.6 million for the third quarter, following a $7.9 million net loss in the second quarter and a $6.7 million net loss in the first quarter. First Guaranty's third-quarter results included a $31.3 million sequential increase in the provision for credit losses and a $12.9 million goodwill impairment.

First Guaranty disclosed in its third-quarter Form 10-Q that $39.8 million of the $47.9 million provision was associated with one commercial lease relationship. The company has a $52.0 million credit exposure associated with commercial lease financing to entities related to an auto parts manufacturer that declared Chapter 11 bankruptcy during the third quarter, according to the filing.

The credit exposure consists of one $17.2 million commercial lease, which was past due on its payments and placed on nonaccrual as of Sept. 30, and three commercial leases totaling $34.8 million that were current on payments and remained on accrual status as of Sept. 30. First Guaranty has downgraded all four lease credits to substandard and impaired status.

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Most expensive banks

Among the 20 most expensive banks by price to adjusted TBV, only The Bancorp Inc. and Wells Fargo & Co. recorded negative returns for November. The Bancorp had a return of negative 2.0%, while Wells Fargo logged a return of negative 0.8%.

Still, The Bancorp remained the highest-valued bank for the fifth month in a row. Its price-to-adjusted TBV ratio was 413.8% as of Nov. 28, down 8 percentage points from the end of October but more than 70 percentage points higher than any other bank in the analysis.

Wells Fargo, ranked 13th, reduced outstanding exposure to office and retail commercial real estate (CRE) loans during the third quarter. On the other hand, it added to the institutional and industrial/warehouse CRE categories. Overall, the bank's CRE loans declined 1.7% quarter over quarter, according to a Form 8-K filed Oct. 14.