We recently compiled a list of the 13 Best Performing Bank Stocks So Far In 2025. In this article, we are going to take a look at where Flagstar Financial, Inc. (NYSE:FLG) stands against the other bank stocks.
The banking sector seems to be performing well in 2025 as the economy has been stronger than expected. Banking and financial services companies are taking more chances and investing in growth, especially in AI. At the same time, central banks around the world continue to lower interest rates, which is further helping the banks.
READ ALSO: 10 Unrivaled Stocks of the Next 5 Years and 10 Best Low Priced Technology Stocks To Buy Now.
In December 2024, Seana Smith, the anchor of Yahoo Finance’s morning show, pointed out that it might be a good time to buy bank stocks. Heading into 2025, that was the overwhelming consensus among well-known strategists. The reasons for optimism around bank stocks included a strong economy, expected deregulation under President-elect Donald Trump, attractive stock prices, and lower interest rates.
Brian Belski, Chief Investment Strategist and leader of the Investment Strategy Group at BMO Capital Markets, noted in his 2025 outlook that financial stocks are still “drastically unloved,” despite compelling valuations and strong earnings growth expectations. Aadil Zaman from Wall Street Alliance Group mentioned that the Federal Reserve’s expected drop in interest rates would result in greater investment banking activity.
Another reason for the sky-high enthusiasm was that historically, financial stocks have performed well under Republican administrations because of expectations for looser regulation, which creates a more favorable environment for banks.
Methodology
To compile our list of the 13 best-performing bank stocks so far in 2025, we used the Finviz stock screener to look for bank companies with the best year-to-date performance. We narrowed down our list by looking for the best-performing stocks with a market capitalization of more than $2 billion. The 13 best-performing bank stocks so far in 2025 were then ranked in ascending order based on their year-to-date performance as of February 14, 2025.
Additionally, we mentioned the hedge fund sentiment surrounding the best-performing stocks, which was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An ATM machine in a street corner highlighting the accessibility of the banking services.
Flagstar Financial, Inc. (NYSE:FLG)
Year-to-Date Performance: 39.94%
Number of Hedge Fund Holders: N/A
Flagstar Financial, Inc. (NYSE:FLG) is a bank holding company for Flagstar Bank, one of the largest regional banks in the United States. Headquartered in Hicksville, New York, the company operates more than 400 Flagstar Bank branches. It has a significant presence in the Northeast and Midwest and also has locations in high-growth markets in the Southeast and West Coast. Additionally, to serve the needs of high-net-worth individuals and businesses, the Flagstar Bank has private banking teams in more than 10 cities in the metropolitan New York City region and on the West Coast. Flagstar Financial, Inc. (NYSE:FLG) ranks among the best-performing stocks in the banking sector.
The company is focused on becoming a top-tier regional bank and as a result, it is undergoing a significant transformation. In 2024, Flagstar Financial, Inc. (NYSE:FLG) strengthened its capital position with a $1.05 billion capital infusion and the sale of several non-core businesses. In November 2024, the company announced the completion of the sale of its residential mortgage servicing and third-party origination business to Mr. Cooper Group for approximately $1.3 billion in cash. This transaction is expected to improve Flagstar Financial, Inc.’s (NYSE:FLG) CET1 capital ratio by 60 basis points. This move is part of a broader strategy of simplifying the business model and transforming Flagstar Financial, Inc. (NYSE:FLG) into a regional bank that specializes in Retail Banking, Commercial and Private Banking, and Commercial Real Estate lending.
Overall, FLG ranks 1st on our list of the best-performing bank stocks so far in 2025. While we acknowledge the potential of FLG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FLG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
