Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Banks Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Banks industry for Friday, February 20, 2026. 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.

Amalgamated Financial Corp.’s Value Grade

Value Grade:

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services in the United States. The company accepts various deposit products, including non-interest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, time deposits, and certificates of deposit. It also provides residential real estate mortgage, commercial and industrial, commercial real estate, multifamily mortgage, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, safe deposit box rentals, debit card, and ATM card services; and trust, custody, and investment management services, including asset safekeeping, corporate actions, income collections, proxy services, account transition, asset transfers, and conversion management; investment products, such as index and actively-managed funds, which include equity, fixed-income, real estate, and alternative investments; and investment, brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.

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.

Amalgamated Financial Corp. has a Value Score of 70, which is considered to be undervalued.

When you look at Amalgamated Financial Corp.’s price-to-sales ratio at 3.97 compared to the industry median at 3.44, this company has a higher price relative to revenue compared to its peers. This could make Amalgamated Financial Corp.’s stock less attractive for value investors.

Amalgamated Financial Corp.’s price-earnings ratio is 12.00 compared to the industry median at 13.20. This means it has a lower share price relative to earnings compared to its peers. This could make Amalgamated Financial Corp. more 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. Amalgamated Financial Corp.’s shareholder yield is higher than its industry median ratio of 2.40%. 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. Amalgamated Financial Corp.’s price-to-book ratio is higher than its industry median ratio of 1.20. This could make Amalgamated Financial Corp. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Amalgamated Financial Corp.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Amalgamated Financial Corp.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 16.45. This could make Amalgamated Financial Corp. more attractive because the lower P/FCF ratio indicates that Amalgamated Financial Corp. is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Muncy Columbia Financial Corporation’s Value Grade

Value Grade:

Muncy Columbia Financial Corporation operates as the bank holding company for Journey Bank that provides banking and financial products and services to individual, business, and government customers in Pennsylvania. It offers deposit services, including noninterest-bearing and interest-bearing checking, savings, repo sweep, individual retirement, and money market accounts; demand and time deposits, as well as certificates of deposit. The company also provides commercial, consumer, and mortgage loans; commercial real estate loans comprising commercial mortgages and student housing; residential real estate loans; multifamily loans; and industrial and other loans. In addition, it offers trust services, including administration of various estates, pension plans, self-directed IRA’s, and other services; personal, corporate, pension, and fiduciary services; stocks, bonds, and other non-insured financial products; and remote capture, internet banking, telephone and mobile banking, and automated teller machine services, as well as investment and insurance products. The company was formerly known as CCFNB Bancorp, Inc. and changed its name to Muncy Columbia Financial Corporation in November 2023. Muncy Columbia Financial Corporation was founded in 1926 and is headquartered in Bloomsburg, Pennsylvania.

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.

Muncy Columbia Financial Corporation has a Value Score of 75, which is considered to be undervalued.

Muncy Columbia Financial Corporation’s price-earnings ratio is 9.8 compared to the industry median at 13.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Muncy Columbia Financial Corporation more attractive for value investors.

Muncy Columbia Financial Corporation’s price-to-book ratio is lower than its peers. This could make Muncy Columbia Financial Corporation fairly attractive for value investors when compared to the industry median at 1.20.

You can read more about Muncy Columbia Financial Corporation’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.

Farmers & Merchants Bancorp’s Value Grade

Value Grade:

Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals in the United States. The company offers deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also provides a range of lending products, such as commercial, commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides specialized services that include credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. Farmers & Merchants Bancorp was founded in 1916 and is headquartered in Lodi, California.

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.

Farmers & Merchants Bancorp has a Value Score of 85, which is considered to be undervalued.

Farmers & Merchants Bancorp’s price-earnings ratio is 9.0 compared to the industry median at 13.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Farmers & Merchants Bancorp more attractive for value investors.

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

You can read more about Farmers & Merchants Bancorp’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 Merchants Corporation’s Value Grade

Value Grade:

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides commercial and consumer banking services. The company offers a range of financial services, including checking, savings, and deposit products; debit and credit cards; mortgages, home equity lending, vehicle loans, and personal loans; and local commercial lending, asset-based lending solutions, agricultural lending, commercial real estate solutions, debt capital markets, practice finance, public finance, small business administration lending, and sponsor finance services. It also provides personal and commercial wealth management services, trust services, retirement planning, brokerage, investment management, private banking, fiduciary estate, and financial planning services. The company operates banking locations in Indiana, Ohio, and Michigan counties. It offers its services through electronic and mobile delivery channels. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, 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.

First Merchants Corporation has a Value Score of 81, which is considered to be undervalued.

First Merchants Corporation’s price-earnings ratio is 10.5 compared to the industry median at 13.2. This means that it has a lower price relative to its earnings compared to its peers. This makes First Merchants Corporation more attractive for value investors.

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

You can read more about First Merchants Corporation’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.

Mechanics Bancorp’s Value Grade

Value Grade:

Mechanics Bancorp operates as the holding company for Mechanics Bank that provides banking services in California, Oregon, Washington, and Hawaii. It offers various checking and savings accounts. The company also provides home loans, auto loans, term loans and lines of credit, owner occupied real estate lending services, SBA loans, multi-family lending services, commercial real estate loans, equipment financing services, and trade services and letters of credit. In addition, it offers debit and credit cards; online and mobile banking, digital wallet, overdraft, and money management services; payable and receivable solutions, and fraud prevention and cash management services; merchant and payroll services, workplace benefit plans, and loan payoff demand services; and industry solutions. Further, the company provides trust and estate, investment management, specialty asset management, and retirement plan services; and private banking and brokerage services. Mechanics Bancorp was founded in 1905 and is headquartered in Walnut Creek, California.

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.

Mechanics Bancorp has a Value Score of 69, which is considered to be undervalued.

Mechanics Bancorp’s price-earnings ratio is 16.9 compared to the industry median at 13.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Mechanics Bancorp less attractive for value investors.

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

You can read more about Mechanics Bancorp’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.

Northeast Community Bancorp, Inc.’s Value Grade

Value Grade:

Northeast Community Bancorp, Inc. operates as the holding company for NorthEast Community Bank that provides financial services for individuals and businesses. It accepts various deposits, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts, as well as certificates of deposits. The company also offers construction, commercial and industrial, multifamily and mixed-use real estate, non-residential real estate loans, and consumer loans. In addition, it invests in various types of liquid assets, including U.S. Treasury obligations, municipal securities, deposits at the Federal Home Loan Bank of New York, and certificates of deposit of federally insured institutions, as well as securities of various federal agencies, and state and municipal governments. Further, the company offers life insurance products and fixed rate annuities. It operates full service branches located in Bronx, New York, Orange, Rockland, and Sullivan Counties in New York, Essex, Middlesex, and Norfolk Counties in Massachusetts; and loan production offices located in White Plains, New York, and New City counties in New York, Danvers, and Massachusetts. Northeast Community Bancorp, Inc. was founded in 1934 and is headquartered in White Plains, New York.

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.

Northeast Community Bancorp, Inc. has a Value Score of 88, which is considered to be undervalued.

Northeast Community Bancorp, Inc.’s price-earnings ratio is 7.3 compared to the industry median at 13.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Northeast Community Bancorp, Inc. more attractive for value investors.

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

You can read more about Northeast Community 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.

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 6 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.

• Amalgamated Financial Corp. stock has a Value Grade of B.
• Muncy Columbia Financial Corporation stock has a Value Grade of B.
• Farmers & Merchants Bancorp stock has a Value Grade of A.
• First Merchants Corporation stock has a Value Grade of A.
• Mechanics Bancorp stock has a Value Grade of B.
• Northeast Community Bancorp, Inc. stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Banks Stocks for Friday, February 20
• Is Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) Overvalued?
• Is Banco Santander, S.A. (SAN) Overvalued?
• Is Bank of America Corporation (BAC) Overvalued?

AAII Disclaimer

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