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Banks have given consumers plenty of reasons to hate them over the years, but I'm talking about the 10 banks investors hate the most. These aren't necessarily mutually exclusive lists, but there's still a difference between the two. While the former is based on subjective customer service ratings, the latter is objectively quantifiable.

When it comes to investing, people's feelings toward a stock are reflected in their optimism or pessimism about its future. Investors buy stocks that they think will go up and sell the ones that they believe will go down. And if you feel particularly confident that a stock will fall, you can even short it -- that is, sell it now and buy it back at a (hopefully) lower price later.

Shorting a stock isn't intuitive. After all, how can you sell a stock that you don't own? The answer is that you borrow someone else's shares. Doing so isn't free, as you have to pay interest, but it allows you to sell the shares now and then buy them later from yet another person, to return them to the original person you borrowed them from.

With this in mind, you can probably get a sense for how to gauge which bank stocks are hated more than others. Namely, you look at the percentage of their outstanding shares that are sold short -- the larger the percentage, the higher the dislike toward the stock.

So, what are the 10 most hated banks in America? You can see them in the following table, which draws from the 24 members on the KBW Bank Index and is topped by Cullen/Frost Bankers (NYSE:CFR) and People's United Financial (NASDAQ:PBCT):


Percent of Shares Sold Short

Cullen/Frost Bankers


People's United Financial


New York Community Bancorp


Huntington Bancshares


Zions Bancorp


Commerce Bancshares






Fifth Third Bancorp


State Street


Data source:

Based in Texas, Cullen/Frost is struggling against fallout from the impact of low energy prices on its customers and the surrounding community. As my colleague Brian Feroldi notes here, its non-performing assets more than tripled in the first quarter. It accordingly had to set aside $20 million more than it did in the year-ago period to cover anticipated loan losses. Its return on assets responded in kind, falling to 0.96%, which is below the 1% threshold that banks generally strive to exceed.

In fairness to Cullen/Frost, it's not as if the 148-year-old bank hasn't been through this before. "Our corporate culture and philosophy have guided our company through ups and downs since 1868," said CEO Phil Green in remarks about the first quarter. "We will control the things that we can, which we believe will keep Frost a safe, sound place for our customers to do business."

Yet, a bank's age is far from a guarantee that it won't run into existential problems. After all, Lehman Brothers was founded in 1850, meaning that it was 10 years older than Cullen/Frost when the New York-based investment bank failed during the financial crisis. And Barings Brothers, the once mighty U.K. bank, failed in 1995 after 232 years in operation.

People's United Financial, meanwhile, is suffering from a ratings downgrade by Moody's. The move reflected People's United's below-average profitability, commercial real estate concentration, and lagging capital ratios, the ratings service noted. The net result, as Bloomberg's Michael Regan points out here, is that none of the dozen analysts who follow People's United believe that investors buy its stock -- seven say to hold it, while the other five say to sell it.

None of this should be interpreted to mean that these are bad stocks to own. To the Cullen/Frost CEO's point, both could very well see their fortunes may very well improve in the quarters and years ahead. One or both of them could also be acquired by competitors at premiums to their current stock prices. If either were to happen, the shorts would be squeezed into a corner, forcing them to participate in any future rally by buying the shares in order to return them to the original owner. This is a long-shot scenario, but it's certainly possible.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.