Regional banks: two new names join the podium
2026-07-07 · By Lubin Danilo, founder of Lubin Investment
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Pinnacle Financial Partners and Commerce Bancshares, two US regional banks, pass 9 of the 10 criteria in my screener and both trade below 7 times their free cash flow. They join Banner Corp and First Financial Bankshares, already flagged as quality exceptions in a regional banking sector I generally treat as a special case.
Key takeaways
- Pinnacle Financial (PNFP) and Commerce Bancshares (CBSH) each pass 9 of the 10 criteria in my screener.
- Both banks trade below 7 times their free cash flow: 6.9x for Pinnacle, 6.8x for Commerce Bancshares.
- They report earnings on July 22 (Pinnacle) and July 16 (Commerce Bancshares).
- They join Banner Corp and First Financial Bankshares, already flagged on my site as exceptions in a regional banking sector where few institutions pass my criteria.
Why regional banks are rarely well rated
I've already explained on my site why the US regional banking sector rarely passes my financial criteria: banking runs on leverage by construction (customer deposits are, in accounting terms, a form of debt), which distorts the standard reading of criteria like net debt relative to cash flow. I had identified Banner Corp (BANR) and First Financial Bankshares (FFIN) as two notable exceptions. Pinnacle Financial and Commerce Bancshares now join them.
Chart comparison
| Bank | Ticker | P/FCF | Earnings |
|---|---|---|---|
| Pinnacle Financial Partners | PNFP | 6.9x | July 22 |
| Commerce Bancshares | CBSH | 6.8x | July 16 |
| Banner Corp (already covered) | BANR | N/A | N/A |
| First Financial Bankshares (already covered) | FFIN | N/A | N/A |
Pinnacle Financial: a fast-expanding regional bank
Pinnacle Financial Partners is a regional bank based in the southeastern United States (Tennessee and surrounding states), which built its growth by hiring experienced bankers from larger banks and giving them more autonomy to develop their local client base. This model has let Pinnacle gain market share where national banks are less agile serving mid-sized businesses.
Commerce Bancshares: caution as a model
Commerce Bancshares, based in Missouri, has a reputation for conservative credit risk management, a valuable trait in a sector where default cycles can hit the most aggressive lenders hard. That caution translates into a stable valuation and relative resilience during economic stress.
The common thread: a valuation that stays reasonable
Both banks trade below 7 times their annual free cash flow, a level that's nothing extreme for financial institutions of this quality. The regional banking sector as a whole has historically traded cautiously, partly due to credit cycle risk that can materialize quickly during an economic slowdown.
The risk not to ignore
The main risk for a regional bank remains the quality of its loan book in an economic downturn: a sudden slowdown can push delinquencies up faster than expected, regardless of an institution's historical discipline. That's a sector-wide risk weighing on all regional banks, not just those that pass my criteria less well.
What I take away from this
Pinnacle Financial and Commerce Bancshares confirm that the regional banking sector, despite its structural constraints, harbors quality exceptions that the right analysis grid can spot. This ranking will keep evolving as I discover new names that deserve to join it.
FAQ
Why do regional banks rarely pass my criteria?
Banking runs on leverage by construction, which distorts the standard reading of criteria like net debt relative to cash flow.
When do Pinnacle Financial and Commerce Bancshares report earnings?
Pinnacle Financial on July 22 and Commerce Bancshares on July 16, 2026.
What other regional banks are already on this ranking?
Banner Corp (BANR) and First Financial Bankshares (FFIN), already flagged as quality exceptions in this sector.
Are these two banks expensive on the stock market?
No, both trade below 7 times their free cash flow, a reasonable level for institutions of this quality.
What is the main risk for a regional bank?
The quality of its loan book in an economic downturn, which can push delinquencies up quickly regardless of historical management discipline.
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About the author
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).