7 Banks to Dump Now Before They Go Bust in 2023 (2024)

While Uncle Sam again got quickly in front of the collapse of First Republic (OTCMKTS:FRCB) – the third bank failure of the year so far – investors might want to take heed of the worst bank stocks 2023. From there, they’ll probably want to steer clear until circ*mstances substantively improve.

As an op-ed from MarketWatch stated, the recent financial implosions may just be the start of a lengthy banking crisis according to historical trends. Intuitively, this makes sense. After all, banks don’t just fail without reason, especially in a modern economy. Just as a common-sense strategy, concerned investors may want to identify certain bank stocks to sell.

Finally, the federal government cannot indefinitely support these so-called bank bailout stocks. Arguably, policymakers made the right decision regarding the early list of bank failures in 2023. However, authorities don’t want to push their luck too much. With that, below are bank firms you’ll probably want to avoid.

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SHF Holdings



Citizens Financial Services






Western Alliance



ECB Bancorp



PacWest Bancorp



First Foundation


SHF Holdings (SHFS)

7 Banks to Dump Now Before They Go Bust in 2023 (1)

Source: Shutterstock

Even before diving into the details, shares of SHF Holdings (NASDAQ:SHFS) trade hands at 51 cents a pop. Just from that alone, SHFS stands on this list of worst bank stocks 2023. Frankly, it’s going to be difficult for the enterprise to regain credibility. Beyond that sticking point, since the beginning of this year, SHFS gave up more than 65% of its equity value.

According to investment resource Gurufocus, SHF has a 50% probability of financial distress (based on its metrics/attributes screener). If a coin toss can determine success or failure, that’s not exactly a confidence booster. Also, while we’re on the topic of the financials, the company only carries middling strengths in the balance sheet. For example, its equity-to-asset ratio sits at 0.05, ranked worse than 88% of other banks.Also, SHF focuses on cannabis banking solutions, representing a volatile and legally ambiguous arena. Again, it just doesn’t do much for confidence, probably making SHFS one of the bank stocks to sell now.

Citizens Financial Services (CZFS)

Source: Shutterstock

Headquartered in Mansfield, Pennsylvania, Citizens Financial Services (NASDAQ:CZFS) doesn’t immediately strike investors as ranking within the bank stock crash of 2023 list. Although CZFS cratered in March when the banking crisis initially erupted, it recovered quite nicely. Since the beginning of this year, CZFS gained over 14% of its equity value. And in the past 365 days, it’s up nearly 29%.

Nevertheless, Citizens Financial seems problematic because of its vulnerable balance sheet. Right now, its cash-to-debt ratio sits at 0.11. This stat ranks worse than 92.31% of sector players, dubiously earning its inclusion within the worst bank stocks 2023 list. Also, its debt-to-equity ratio comes in unfavorably high at 1.35, worse than 70.64% of its peers.Also, the market prices CZFS at a forward multiple of 12.78. This stat ranks worse than 94.36% of the competition. Thus, it might be flirting with a future list called bank failures 2023.

HomeStreet (HMST)

7 Banks to Dump Now Before They Go Bust in 2023 (3)

Source: Shutterstock

Based in Seattle, Washington, HomeStreet (NASDAQ:HMST) provides financial services to clients primarily on the west coast: Washington, Oregon and California. It also has a presence in Hawaii. Right off the bat, HMST potentially ranks among future bank bailout stocks. Since the start of the year, HMST gave up more than 77% of its equity value. In the trailing one-year period, it’s down 84%.

Financially, HomeStreet may suffer from the same circ*mstance underlying Citizens Financial Services above; namely, a vulnerable balance sheet. Presently, HomeStreet’s cash-to-debt ratio sits at 0.18 times, ranked worse than 88.25% of other financial institutions. Also, its equity-to-asset ratio only managed to reach 0.06 times. In contrast, the sector median stands at 0.09 times.

To be fair, HMST seems incredibly undervalued. For instance, the market prices shares at a trailing multiple of 2.31. Supposedly, this stat ranks better than 97.43%. However, with HomeStreet’s top line shrinking recently, the company could be a value trap. Thus, it might make the list of worst bank stocks 2023.

Western Alliance (WAL)

Source: Shutterstock

Hailing from Phoenix, Arizona, Western Alliance (NYSE:WAL) is a regional bank concentrated in western states. Per its public profile, the company is one of the largest financial institutions in the nation. However, it’s risking a dubious entry to the worst bank stocks 2023 list. Since the start of this year, WAL gave up almost 54% of equity value. In the past 365 days, it’s down more than 65%.

Financially, Gurufocus identifies three red flags: asset growth accelerates faster than revenue growth, it suffers from a low Piotroski F-Score (implying poor business operation) and also ails from poor financial strength. For the latter, a high debt load may be the culprit. Indeed, with a cash-to-debt ratio of 0.22 (worse than 86% of the competition), WAL has a credibility challenge.To be fair, the enterprise enjoys strong long-term revenue growth and excellent net margin. Nevertheless, with the company’s first-quarter sales fading conspicuously, WAL could be one of the bank stocks to sell now.

ECB Bancorp (ECBK)

7 Banks to Dump Now Before They Go Bust in 2023 (5)

Source: Shutterstock

Headquartered in Engelhard, North Carolina, ECB Bancorp (NASDAQ:ECBK) hasn’t suffered as badly in the charts as other candidates for worst bank stocks 2023. Nevertheless, the red ink presents a garish profile. Since the Jan. opener, ECBK gave up 31% of its equity value. Now, in the trailing year, it mitigated the loss, down “only” about 21%. Still, it’s probably a name you’ll want to avoid.

As with other possible bank bailout stocks, ECB Bancorp suffers from a vulnerable balance sheet. In particular, its debt-to-EBITDA ratio pings at 6.95. That’s well above the sector median stat of 1.79, which is unfavorable. As well, Gurufocus warns that ECBK incurs poor financial strength and poor quality of earnings.Further, ECBK trades at 34.97-times trailing earnings. This stat ranks worse than 95.74% of the competition. Given the vagaries of the broader financial and economic environment, investors should probably steer clear of this challenged enterprise.

PacWest Bancorp (PACW)

7 Banks to Dump Now Before They Go Bust in 2023 (6)

Source: Shutterstock

While it’s always difficult to predict major developments such as enterprise-level implosions, PacWest Bancorp (NASDAQ:PACW) flirts with extreme danger. Here’s the deal. On May 6, PACW gained nearly 82% of equity value. On surface level, that would seem a massive breakthrough. However, for last week, shares lost slightly over 43%. That’s how much PACW has fallen.

Moreover, since the beginning of this year, PACW gave up almost 75% of market value. Basically, the company’s on life support. If shares fail to pop above the $10 resistance barrier quickly, they could easily rank among the worst bank stocks 2023.Financially, PacWest has significant vulnerabilities in the balance sheet. Notably, its equity-to-asset ratio sits at 0.06, worse than 80.33% of sector rivals. Also, its debt-to-equity stands at an unsightly 4.6 times. In sharp contrast, the sector median is only 0.75 times.Also, with below-average revenue growth and a trailing-year net margin of 70.84% below zero, you could see PACW on a future list of bank failures 2023.

First Foundation (FFWM)

7 Banks to Dump Now Before They Go Bust in 2023 (7)

Source: Shutterstock

Founded in 1990, First Foundation (NASDAQ:FFWM) is a regional enterprise offering various services, including banking, trusts, financial planning, investment management and estates, among others. Sadly, a feel-good story won’t save FFWM from potentially falling into the worst bank stocks 2023 list. Since the start of the year, shares plunged 68% and continues to accelerate lower. Just last week, FFWM gave up 27% of equity value.

In the past 365 days, FFWM fell a staggering 79%. Therefore, only investors with crystal balls should bother even thinking about First Foundation. Again, a similar narrative to other bank stocks to sell now arises: vulnerabilities in the balance sheet. Here, the debt-to-equity ratio soared to 2.02 times, ranking worse than 83.62% of sector players.

As well, Gurufocus warns that FFWM is a possible value trap. While the market prices shares at a trailing multiple of only 2.94, it might be deceptive. In Q1 of this year, First Foundation’s revenue was $53.7 million. In contrast, in Q1 2022, the company posted sales of $88.1 million.You should probably get out while you have the chance.

On the date of publication, Josh Enomoto 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.comPublishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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7 Banks to Dump Now Before They Go Bust in 2023 (2024)


What banks are on the verge of collapse 2023? ›

The unexpected collapses of three banks - Silicon Valley and Signature in March 2023 and First Republic in May - put a spotlight on how lenders managed risks to assets and liquidity as the Federal Reserve raised interest rates aggressively to bring surging inflation under control.

Which bank is least likely to go bust? ›

Summary: Safest Banks In The U.S. Of April 2024
BankForbes Advisor RatingLearn More CTA text
Chase Bank5.0Learn More
Bank of America4.2
Wells Fargo Bank4.0Learn More
1 more row
Jan 29, 2024

What banks are in danger of failing? ›

7 Banks to Dump Now Before They Go Bust in 2023
SHFSSHF Holdings$0.50
WALWestern Alliance$27.32
ECBKECB Bancorp$11.24
PACWPacWest Bancorp$5.97
FFWMFirst Foundation$4.35
2 more rows
May 8, 2023

Is Capital One bank safe from collapse? ›

Your money is safe at Capital One

The FDIC insures balances up to $250,000 held in various types of consumer and business deposit accounts.

How many US banks are at risk? ›

Recently, a report posted on the Social Science Research Network found that 186 banks in the United States are at risk of failure or collapse due to rising interest rates and a high proportion of uninsured deposits.

Which 4 banks are in trouble? ›

About the FDIC:
Bank NameBankCityCityClosing DateClosing
Heartland Tri-State BankElkhartJuly 28, 2023
First Republic BankSan FranciscoMay 1, 2023
Signature BankNew YorkMarch 12, 2023
Silicon Valley BankSanta ClaraMarch 10, 2023
56 more rows

What banks are most at risk right now? ›

These Banks Are the Most Vulnerable
  • First Republic Bank (FRC) . Above average liquidity risk and high capital risk.
  • Huntington Bancshares (HBAN) . Above average capital risk.
  • KeyCorp (KEY) . Above average capital risk.
  • Comerica (CMA) . ...
  • Truist Financial (TFC) . ...
  • Cullen/Frost Bankers (CFR) . ...
  • Zions Bancorporation (ZION) .
Mar 16, 2023

Who is the number 1 bank in America? ›

Chase Bank

Is Wells Fargo in trouble? ›

US eases restrictions on Wells Fargo after years of strict oversight following scandal. NEW YORK (AP) — The Biden administration eased some of the restrictions on banking giant Wells Fargo, saying the bank has sufficiently fixed its toxic culture after years of scandals.

What banks are failing in 2024? ›

2024 in Brief

There are no bank failures in 2024. See detailed descriptions below. For more bank failure information on a specific year, select a date from the drop down menu to the right or select a month within the graph.

Is Citizens Bank in trouble 2023? ›

On Friday, November 3, 2023, Citizens Bank was closed by the Iowa Division of Banking.

Where should I put my money if banks fail? ›

If your bank is federally insured
  • Stocks.
  • Bonds.
  • Mutual funds.
  • Annuities.
  • Life insurance policies.
  • Safe deposit boxes.
  • US Treasury bills, bonds or notes.
  • Municipal securities.
Apr 11, 2024

Do people lose money when banks fail? ›

For the most part, if you keep your money at an institution that's FDIC-insured, your money is safe — at least up to $250,000 in accounts at the failing institution. You're guaranteed that $250,000, and if the bank is acquired, even amounts over the limit may be smoothly transferred to the new bank.

Where is the best place to put money if banks fail? ›

Where to put money during a recession. Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.

What big banks are in trouble in 2023? ›

2023 Summary by Month
Bank NamePress ReleaseClosing Date
November Back to Top
Heartland Tri-State Bank, Elkhart, KSPR-058-2023July 28, 2023
May Back to Top
First Republic Bank, San Francisco, CAPR-034-2023May 1, 2023
5 more rows

What is the safest bank 2023? ›

Global Top 100
RankNameFitch Rating
2Zuercher KantonalbankAAA
35 more rows
Nov 10, 2023

How many banks are expected to close in 2023? ›

The result: A net 1,409 bank branches closed in 2023, compared with 1,854 in 2022, according to the S&P Global data. Both years were down notably from the all-time high in 2021.

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