Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Banks industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Banks Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Banks industry for Friday, February 03, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Banks industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Cib Marine Bancshares Inc’s Value Grade

Value Grade:

CIB Marine Bancshares, Inc. (CIB Marine) is a bank holding company, which provides a full range of banking and related services through its banking subsidiary, CIBM Bank (the Bank). Its segments include mortgage, banking and corporate. The Bank offers a full array of traditional banking services, including a range of loan products, such as commercial loans, commercial real estate loans, commercial and residential construction loans, government guaranteed loans, one-to-four family residential real estate loans, home equity loans, consumer loans, and commercial and standby letters of credit; consumer and commercial deposit accounts, including savings, checking, and time deposits; trust services; cash management; repurchase agreements, and other traditional community banking services. The Bank operates approximately 10 banking offices and two mortgage loan offices in Illinois, Wisconsin and Indiana.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Cib Marine Bancshares Inc has a Value Score of 66, which is considered to be undervalued.

When you look at Cib Marine Bancshares Inc’s price-to-sales ratio at 1.51 compared to the industry median at 3.08, this company has a lower price relative to revenue compared to its peers. This could make Cib Marine Bancshares Inc’s stock more attractive for value investors.

Cib Marine Bancshares Inc’s price-earnings ratio is 14.61 compared to the industry median at 10.35. This means it has a higher share price relative to earnings compared to its peers. This could make Cib Marine Bancshares Inc less attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Cib Marine Bancshares Inc’s shareholder yield is lower than its industry median ratio of 3.23%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Cib Marine Bancshares Inc’s price-to-book ratio is lower than its industry median ratio of 1.20. This could make Cib Marine Bancshares Inc more attractive to investors looking for a new addition to their portfolio.

First Foundation Inc’s Value Grade

Value Grade:

First Foundation Inc. is a financial services company. The Company provides a platform of financial services to individuals, businesses and other organizations. The Company conducts its operations through its subsidiaries, First Foundation Advisors (FFA) and First Foundation Bank (FFB), and FFB’s wholly owned subsidiaries, First Foundation Insurance Services (FFIS), First Foundation Public Finance (FFPF) and Blue Moon Management, LLC. It operates through two segments: Banking and Wealth Management. Its Banking segment includes the operations of FFB, FFIS, FFPF, and Blue Moon Management LLC and Wealth Management segment includes the operations of FFA. FFB offers a range of loan products, deposit products, treasury management products and services, and trust services. FFA provides investment advisory and wealth management services primarily to individuals and their families, family businesses and other affiliated organizations. It operates in California, Nevada, Florida, and Hawaii.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

First Foundation Inc has a Value Score of 69, which is considered to be undervalued.

First Foundation Inc’s price-earnings ratio is 8.4 compared to the industry median at 10.3. This means that it has a lower price relative to its earnings compared to its peers. This makes First Foundation Inc more attractive for value investors.

First Foundation Inc’s price-to-book ratio is higher than its peers. This could make First Foundation Inc less attractive for value investors when compared to the industry median at 1.20.

You can read more about First Foundation Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

First Bancorp Inc’s Value Grade

Value Grade:

The First Bancorp, Inc. is a bank holding company of First National Bank (the Bank). The Company, through its Bank, provides a range of banking services to individual and corporate customers from seventeen offices in coastal and eastern Maine. The Company, through First National Wealth Management, a division of the Bank, offers private banking, financial planning, investment management and trust services to individuals, businesses, non-profit organizations, and municipalities. The Company’s investment securities are classified into three categories: securities available for sale, securities to be held to maturity and restricted equity securities. The Company offers a range of loans, including commercial real estate loan, commercial construction loans, commercial other loan, municipal loans, residential real estate term loan, residential real estate construction loan, and home equity line of credit, consumer loan and construction loans.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

First Bancorp Inc has a Value Score of 74, which is considered to be undervalued.

First Bancorp Inc’s price-earnings ratio is 8.6 compared to the industry median at 10.3. This means that it has a lower price relative to its earnings compared to its peers. This makes First Bancorp Inc more attractive for value investors.

First Bancorp Inc’s price-to-book ratio is lower than its peers. This could make First Bancorp Inc more attractive for value investors when compared to the industry median at 1.20.

You can read more about First Bancorp Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Landmark Bancorp Inc’s Value Grade

Value Grade:

Landmark Bancorp, Inc. is a financial holding company. The Company’s business consists of the ownership of Landmark National Bank (the Bank) and Landmark Risk Management, Inc, which are wholly-owned subsidiaries of the Company. The Bank is principally engaged in the business of attracting deposits from the general public and using such deposits, together with borrowings and other funds, to originate one-to-four family residential real estate, construction and land, commercial real estate, commercial, agriculture, municipal and consumer loans. The Bank also invests in certain investment and mortgage-related securities, using deposits and other borrowings as funding sources. The Bank originates one-to-four family residential real estate loans with both fixed and variable rates. Landmark Risk Management, Inc. is a captive insurance company, which provides property and casualty insurance coverage to the Company and the Bank.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Landmark Bancorp Inc has a Value Score of 80, which is considered to be undervalued.

Landmark Bancorp Inc’s price-earnings ratio is 12.1 compared to the industry median at 10.3. This means that it has a higher price relative to its earnings compared to its peers. This makes Landmark Bancorp Inc less attractive for value investors.

Landmark Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Landmark Bancorp Inc less attractive for value investors when compared to the industry median at 1.20.

You can read more about Landmark Bancorp Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Mid Penn Bancorp Inc’s Value Grade

Value Grade:

Mid Penn Bancorp, Inc. is a financial holding company. The Company operates through its wholly owned subsidiary, Mid Penn Bank (the Bank). The Company's primary business consists of attracting deposits and loans from the Bank’s network of community banking offices. The Bank is engaged in full-service commercial banking and trust business, making available to the community a range of financial services, including mortgage and home equity loans, secured and unsecured commercial and consumer loans, lines of credit, construction financing, farm loans, community development and local government loans and various types of time and demand deposits. In addition, the Bank provides a full range of trust and retail investment services. The Bank also offers other services, such as online banking, telephone banking, cash management services, automated teller services and safe deposit boxes. The Bank has approximately 60 full-service retail banking locations in Pennsylvania counties.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Mid Penn Bancorp Inc has a Value Score of 61, which is considered to be undervalued.

Mid Penn Bancorp Inc’s price-earnings ratio is 9.3 compared to the industry median at 10.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Mid Penn Bancorp Inc more attractive for value investors.

Mid Penn Bancorp Inc’s price-to-book ratio is higher than its peers. This could make Mid Penn Bancorp Inc less attractive for value investors when compared to the industry median at 1.20.

You can read more about Mid Penn Bancorp Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

NASB Financial, Inc.’s Value Grade

Value Grade:

NASB Financial, Inc. is a unitary thrift holding company for North American Savings Bank, F.S.B. (the Bank). The Bank is engaged in providing an array of personal banking, investment and lending products in the Kansas City metro area. The Bank offers residential and commercial mortgages. It offers banking solutions including checking accounts, savings accounts, certificates of deposits (CDs), money market accounts, mortgage loans and commercial loans. Its lending activities include home loans, mortgage refinances, mortgage programs and mortgage customer service. Its investment real estate lending includes commercial real estate loans, construction and development loans, individual retirement account lending and investment property loan. Its branches are located in Grandview, Lee's Summit, Independence, Harrisonville, Kansas City, Platte City, Excelsior Springs, St. Joseph and Lexington, Missouri.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

NASB Financial, Inc. has a Value Score of 82, which is considered to be undervalued.

NASB Financial, Inc.’s price-earnings ratio is 10.3 compared to the industry median at 10.3. This means that it has a higher price relative to its earnings compared to its peers. This makes NASB Financial, Inc. fairly attractive for value investors.

NASB Financial, Inc.’s price-to-book ratio is higher than its peers. This could make NASB Financial, Inc. less attractive for value investors when compared to the industry median at 1.20.

You can read more about NASB Financial, Inc.’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

South Plains Financial Inc’s Value Grade

Value Grade:

South Plains Financial Inc. is a bank holding company for City Bank (the Bank). The Company, through its wholly owned subsidiary, City Bank, provides a range of commercial and consumer financial services to small and medium-sized businesses and individuals in its market areas. Its principal business activities include commercial and retail banking, along with insurance, investment, trust and mortgage services. The Company operates through two segments: community banking, which includes City Bank, its sole banking subsidiary, and insurance, which includes Windmark Insurance Agency, Inc. The Bank operates approximately 25 full-service banking locations across seven geographic markets and approximately 15 loan production offices. The Company’s loan portfolio includes commercial loans, commercial real estate loans, construction loans and consumer loans. Its loans to consumers include 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

South Plains Financial Inc has a Value Score of 79, which is considered to be undervalued.

South Plains Financial Inc’s price-earnings ratio is 8.7 compared to the industry median at 10.3. This means that it has a lower price relative to its earnings compared to its peers. This makes South Plains Financial Inc more attractive for value investors.

South Plains Financial Inc’s price-to-book ratio is lower than its peers. This could make South Plains Financial Inc more attractive for value investors when compared to the industry median at 1.20.

You can read more about South Plains Financial Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Banks Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Banks stocks as well as other industrys.

Choosing Which of the 7 Best Banks Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Cib Marine Bancshares Inc stock has a Value Grade of B.
• First Foundation Inc stock has a Value Grade of B.
• First Bancorp Inc stock has a Value Grade of B.
• Landmark Bancorp Inc stock has a Value Grade of B.
• Mid Penn Bancorp Inc stock has a Value Grade of B.
• NASB Financial, Inc. stock has a Value Grade of A.
• South Plains Financial Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 7 undervalued stocks in the Banks industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Banks Stocks

Want to learn more about Banks stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Banks Stocks for Friday, February 03
• Which Is a Better Investment, East West Bancorp Inc or Mitsubishi UFJ Financial Group Inc (ADR) Stock?
• 7 Undervalued Banks Stocks for Thursday, February 02
• Which Is a Better Investment, Ameris Bancorp or BancFirst Corp Stock?

AAII Disclaimer

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