Familiar Themes Emerge in the Top Performing Bank Stocks Year-to-Date
At the mid-point of a rollercoaster 2025, we decided it would be a good time to see which bank stocks have achieved the greatest returns for their shareholders year-to-date and what, if any, lessons we can learn from these strong performances.
The top performers — Old Point Financial, Guaranty Bancshares, and Isabella Bancorp — exhibit themes that will be familiar to seasoned bank investors, including M&A, expanding net interest margin, and low/stable credit costs. However, the devil is in the details, and each story has some unique attributes we think could be useful to bankers and investors alike moving forward.
But First, Some Important Context …
The overall state of the investment market for banks remains challenged. With limited access to new capital, most of the investment community is still underweight in the sector. A slowdown in capital markets activity has persisted since tariff headlines took hold earlier this year. And while there has been some M&A activity, it is slowly building back to normalized consolidation levels.
The KBW Regional Banking Index (KRX) is down -6% year-to-date, currently trading at median valuation multiples of approximately 1.5x TBV and 10-11x forward consensus earnings. Generally, consensus expectations include stable credit quality, with a median ROE in the 13-14% range and rising capital levels in 2026 compared to 2025.
Overall, the banking sector feels shy on catalysts, with some looming and stubborn uncertainties (rates, CRE, impact of technology/innovation, future growth rates) lowering the ceiling on valuations relative to historical averages.
Despite some of these macro challenges, not all banks have seen a depreciating value in 2025. We looked at the top 3 performing bank stocks in the U.S. year-to-date (minimum of $200 million market capitalization) to see what the numbers reveal about their respective strategies.
So, Who Are the Top 3 Performing Bank Stocks YTD? Quick Snapshots Below:
Old Point Financial (OPOF); +51% year-to-date – Old Point is a $1.5 billion-in-asset bank headquartered in Hampton, VA operating with14 branches. In early April, it was announced that Old Point was selling to $17.5 billion-in-asset TowneBank (TOWN) in a $204 million deal.
Guaranty Bancshares Inc. (GNTY); +23% year-to-date –Guaranty is a $3.2 billion-in-asset bank headquartered in Addison, TX operating 34 branches. Guaranty has shown impressive net interest margin expansion over the past four quarters while operating in several desirable Texas markets including Dallas, Austin, and Houston. On June 24th, Guaranty announced it was selling to $28 billion-in-asset Glacier Bancorp (GBCI) for virtually no market premium. The deal marks GBCI’s entrance into the Texas market.
- Is
abella Bancorp (ISBA); +22% year-to-date – Isabella is a $2.1 billion-in-asset bank headquartered in Mount Pleasant, MI, operating with 31 branches. In May, the company completed its uplisting to Nasdaq with management citing increased visibility and credibility, access to capital for growth, liquidity, and marketability as reasons for the change.
Several themes stand out when you analyze the attributes of these banks. The most obvious is M&A, which remains one of the fastest ways for community bank shareholders to unlock value and see increased liquidity.
Theme 1: M&A Still King in Bank-land
Old Point’s stock closed at $29.95 on April 1, 2025, but shot up immediately upon the announcement of its acquisition by TowneBank for $204 million. Today, the shares are trading at $39.27 relative to their tangible book value of $22.61 as of March 31, 2025, or 1.7x – which is well above the peer median. The two banks await regulatory approval for the pending transaction, which was initially targeted to be closed in the second half of 2025.
On the surface, this combination seems to be a deal centered on the strong margin and deposit attributes Old Point brings to Towne, with OPOF’s net interest margin of 3.63% up from 3.45% a year ago. Aiding this critical metric is the ~30% of deposits that are non-interest bearing, built on Old Point’s strong deposit market share and >100-year heritage in their core markets.
But that isn’t the only story here, as Old Point also has:
- An elevated efficiency ratio despite the strong absolute net interest margin which we’d imagine TOWN plans to address. The expenses are subtly mentioned in the deal press release, where G. Robert Aston, Jr., Executive Chairman of TowneBank, commented about “…substantial synergies that will generate top tier financial performance for our shareholders while helping our communities grow and prosper.”
- Really strong credit metrics with low levels of non-performing loans and good credit performance history.
The success of a deal can’t be measured before it even closes. But, on paper, it is easy to see why this deal made sense for all shareholders. For Old Point, embedded risk pertaining to limited liquidity and future growth are potentially answered by the merger into a larger entity. The take-out premium also clearly factors in Old Point’s strong margin, deposits and credit position — all of which are extremely valuable in the current environment.
For TOWN, this deal will help battle industry-wide margin pressures with the infusion of a great deposit base, while also providing the bank with substantial opportunities to drive earnings accretion through targeted cost savings over time.
On June 24th, $28 billion-in-asset Glacier Bancorp (GBCI) announced its second M&A transaction of 2025, entering the state of Texas through an agreement to acquire Guaranty. Interestingly, this was a no-premium transaction, with virtually all of Guaranty’s 23% appreciation in 2025 occurring before the deal announcement earlier this week. The no-premium deal value of ~$476 million likely reflects some of this outperformance, as Guaranty was already trading at significant premium to peers before the announcement (about 35% on P/TBV basis and 19% on forward P/E basis).
M&A is inherently a difficult investing strategy for bank investors. Buyers’ stocks tend to under-perform after deal announcement, and the vast majority of the take-out premium for the seller is recognized immediately (unless you have an arbitrage strategy with leverage.) But there is something to be said about investing in desirable bank franchises at reasonable valuations in the hope of a more normalized M&A environment in future periods, which typically helps increase floor-level valuations for banks.
I believe that is at least partly why the increased liquidity has had such a significant impact on Isabella’s share price. Isabella is a good-sized bank at just over $2.0 billion in assets, improving net interest margin, and good market share in “less competitive” markets in central Michigan (which generally is considered a business-friendly state).
More specifically, the bank has about 22% non-interest bearing deposits as a percentage of their total. 18% of total loans are in Commercial & Industrial (C&I), which is impressively high for a bank this size. And Isabella has a growing wealth business with about $700 million of assets under management/administration. It would be very difficult to organically replicate this type of franchise (similar to Guaranty’s franchise), and with increased liquidity and scarcity, the bank’s valuation clearly responded in-kind over the past few months.
Theme 2: True Margin Expansion is Liquid Gold
The community bank ecosystem in the U.S. is still heavily dependent on spread income, with net interest income accounting for 85-90% of total revenues (or more) for most banks sub $10 billion-in-assets. So, it goes without saying that Core margin expansion is always a key metric in terms of the future direction of profitability for community banks. All three banks on this list have steady margin expansion stories over the past twelve plus months and, in Guaranty’s case, significant expansion.
Guaranty had a margin of 3.70% in 1Q25, up from 3.16% a year ago, as deposit costs have continued to move lower while earning asset yields have expanded. When you take into consideration that the bank has accomplished this level of margin expansion in well-known, attractive Texas metro markets such as Dallas, Austin, and Housten — and with very low levels of non-performing assets (0.15% relative to total assets) — it is easy to see why the stock has performed so well recent deal announcement aside. A strong balance sheet had also permitted Guaranty’s board to accelerate capital deployment, with a recent increase to its dividend and share repurchase activity.
Isabella has also seen its net interest margin grow to 3.06% from 2.83% in 4Q23, representing steady expansion over the trailing six quarters. While generating core deposits is difficult, it still stands out as a significant way to generate higher valuations even if it doesn’t immediately translate to higher profitability.
None of these three banks are generating top quartile profitability today, but all are trading at premium multiples on tangible book value despite not generating above-average return on average equity. This is because they are building or maintaining valuable parts of their franchise — such as core deposits or fee income — that are expected to contribute to building earnings and profitability in future periods whether organically or through an M&A transaction.
Theme 3: Geography Can’t Always be Immediately Addressed, but Is Important Nonetheless
Geography is not always a fair discussion for banks, and there is clearly increased demand for banks in business-friendly states with better demographics and economic growth (e.g., Texas, Florida, Michigan, etc.). The Guaranty acquisition is proof in point; as based on Glacier’s remarks about the transaction, entrance into the business-friendly state of Texas is clearly a huge driving factor in addition to the cultural alignments identified.
For banks located in lower growth areas or states with higher income taxes, we do believe it makes sense to reasonably explore all options for growth and geographic diversity.
Providing specific examples, we’d prefer to see banks headquartered in Illinois expanding in Michigan or Indiana, while metro New York banks would be better off moving south or west (i.e. into Pennsylvania or Delaware) than doubling down on a competitive, CRE concentrated market. We’ve also seen some banks opt to move their headquarters to more tax-friendly states in some cases, which has also helped them attract talent.
There are always exceptions, but valuations clearly show certain areas of the country supporting higher bank valuations than others., With technology and digital channels more readily available, we think pragmatic views on footprint/operating markets are worthwhile conversations to have at the executive and board level moving forward.
Three banks don’t always make a trend, particularly in this type of market. But if we aren’t trying to reasonably learn from those having success – can we truthfully be fulfilling our fiduciary responsibilities?
For more information or to discuss bank strategy, reach out directly to Michael Perito at mperito@travilliangroup.com.
Michael leads Bank Strategy at Travillian, advising banks and fintechs with over 13 years of experience. A former senior equity research analyst at KBW and trusted voice on digital banking, he brings deep insight to every conversation.
