RJR’s Top-Rated Banks for Q1 2025

We analyze our group of 27 banks across a number of performance and market-related metrics and use a proprietary scoring algorithm to assign ratings to individual banks within three industry segments -- Super Regional, Regional and Super Community. The definitions of these sectors and a listing of the banks we follow can be found on our homepage. The derived score is based on both absolute and relative performance and is used to rank each company relative to its industry sector and to inform our valuation estimates and projections. Every quarter and at the end of the year we name our top-rated banks in each sector and an overall champion. And now that first quarter reports are in and analyzed, we can report the long-anticipated results.

All of our top-rated companies have consistently made the list over the past couple of years. The only new addition this quarter is Atlantic Union (AUB), which came in as our runner up in the Regional category, edging out perennial winner, Western Alliance (WAL). The consistency achieved by these top-rated banks is a tribute to their management teams who have shown the ability to deliver top-tier results throughout a variety of economic cycles. We’ve also identified our lowest rated banks. However, because we choose to accentuate the positive, the ranking of all the banks we cover is only available to subscribers of our in-depth reports.

What Do They Do Well?

All of these top-rated banks have several factors in common – they run traditional business models, perform extremely well on the basics, and deliver consistent and sustained results through a variety of economic cycles. The exception being Atlantic Union, which has generally underperformed relative to peers over time.  In our view, the key attribute that connects these companies is focus – they know what they do well and don’t get distracted or dissipate resources by chasing hobby businesses or unfamiliar markets. This is a testament to what we consider to be strong, experienced, and effective management teams in all of these banks. While performance on various metrics varies, each of these companies is ranked at or above average on every metric we analyze and leads their sector in a few key categories, including Net Interest Margin. It is also not surprising that they all rank either first or second on the Efficiency ratio. Both show that they manage their balance sheet mix and expense structures rigorously.

Highest Ranked Metrics

Does the Market Care?

In a perfect world and with an efficient market, we would expect our ratings and rankings to translate into higher market multiples and stronger market performance. And, often it does, but not always. We use our scoring algorithms and proprietary valuation model to set a target price for each of our companies’ stock. We don’t really expect to call the price with precision, but we use it to assess whether we believe the company is overvalued, undervalued or fully valued relative to the banking sector and market as a whole. At the beginning of the year, we identified MTB, EWBC and OZK as undervalued, COLB and RF as fully valued, and AUB as overvalued. As the charts show, each of these companies took different paths recently with EWBC, OZK, and MTB performing at or above peers and RF, AUB, and COLB underperformed by a significant margin. (Note: Because of its relatively high ranking but low market performance and valuation, AUB is currently ranked as our #1 acquisition target.) Columbia’s market performance was likely driven by its announced $2.13 billion acquisition of Pacific Premier Bancorp. We expect these performance trends to continue as some of our best performing banks still have relatively low market valuations based on both their PE and P/B ratios while others are at or above peer valuations.

Equity Prices as of 5/9/25

Want to Know More?

Our recently published Fourth Quarter report is now available for our members and contains in-depth data and information on all of the banks we cover, including our target prices and valuation estimates. To become a member just hit the Subscribe button below. It’s fun, it’s fast, but it ain’t free.