3 Finance Stocks to Sell Before the Next Banking Crisis


  • Though bank deposits may be insured by the FDIC, publicly traded bank stocks present real risks when liquidity bottoms out.
  • New York Community Bancorp (NYCB): A recent rebrand and cash infusion has only muddied the waters more for NYCB in 2024.
  • Meridian Corporation (MRBK): Several slipping metrics and a lack of growth trajectory bring Meridian Bank’s future into question.
  • BV Financial (BVFL): With recent regional economic pressures and an increase in operating costs, BV Financial’s banking could be getting riskier.
Finance Stocks to Sell Before the Next Crisis - 3 Finance Stocks to Sell Before the Next Banking Crisis

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Banking crises may seem catastrophic when they hit the news cycle but they have become common in the 21st Century. As significant disruptions to the financial system, these failures are characterized by a loss of banking confidence and decreasing earnings. If left unchecked, these events can have severe consequences for the broader economy and retail investors. Thus investors with holdings in certain banking corporations should look out for finance stocks to sell before the next crisis.

The most common failures occur when depositors withdraw funds due to hardship or distrust in a bank, draining its liquidity. Thus one indicator for insolvency is a bank’s earnings from the deposits it has invested. Should these earnings drop dramatically, credit freezes could follow, stifling lending and essentially bottoming out a bank’s stock price. Ultimately, it all comes down to bank management, and even one bad year could spell disaster for a portfolio.

New York Community Bancorp (NYCB)

Person holding cellphone with logo of US company New York Community Bancorp Inc. (NYCB) in front of business webpage. Focus on phone display. Unmodified photo.
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For New Yorkers, the recent rebrand of New York Community Bancorp (NYSE:NYCB) to Flagstar is certainly confusing. Currently, NYCB remains the parent company that operates on the stock market. It specializes in the New York metropolitan area and offers a range of personal, small business, commercial, and private banking services.

The bank is currently navigating a sharp 75% drop in its stock prices following a dismal fourth-quarter 2023 earnings update. Even with external support, many doubts linger over its ability to recover within the next year. These troubles began with the acquisition of Flagstar in 2022, as it navigated through that year’s regional bank runs essentially untouched. 

However, its Q4 2023 earnings revealed a dividend cut to fortify finances amidst regulatory scrutiny and mounting loan issues. Now with CEO changes and a $1 billion cash infusion failing to reassure Wall Street, investors should steer clear. 

Meridian Corporation (MRBK)

A customer makes a transaction at a bank
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Most investors may not know Meridian Bank, which is listed on the stock market as Meridian Corporation (NASDAQ:MRBK). The bank serves the Mid-Atlantic region of the US, with services including loans for small to medium-sized businesses, wealth management, and traditional deposit accounts. This specificity in region and offerings would typically make a bank like Meridian a successful recommendation, however there’s a catch.

Despite decent past performance and dedication to local communities, the company ended 2023 with several key metrics in the red. Losses included revenue down 20.72%, net income down 87.5%, and a net profit margin loss of 84.24%. This end to 2023 resulted in a 23.75% loss in value in just one year for investors. 

The most concerning of all these metrics is the substantial drop in net profit margins for Meridian Bank. Profit margins are the lifeblood of a bank’s ability to re-invest money and MRBK is starting to look anemic.

BV Financial (BVFL)

Illustration of the inside of a bank. Bank stocks.
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Another regional banking stalwart, BV Financial, (NASDAQ:BVFL) has been operating in Maryland since the late 1800s. Through standard banking services, the bank has maintained a respected and stable position throughout many financial upheavals. However, as seen with First Republic Bank and Silicon Valley Bank last year, reputation can do little to assuage a liquidity crisis.

With the recent collapse of the Francis Scott Key bridge, BVFL and Baltimore are experiencing unique regional pressure. Moreover, the bank reported a 5.16% drop in revenue and a 25.42% loss in operating income in Q4 2023. This has already impacted the share price for investors, but it raises a long-term management concern for shareholders.

The decrease in these metrics either suggests an increase in operating expenses or a pure decrease in revenue generation. As such, investors consider BVFL among finance stocks to sell before the next crisis.

On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.

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