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 Tuesday, June 20, 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.

Atlantic Union Bankshares Corp’s Value Grade

Value Grade:

Atlantic Union Bankshares Corporation is a financial holding company and bank holding company. The Company provides a range of financial services and products through its wholly owned subsidiary Atlantic Union Bank (the Bank). Its segments include Wholesale Banking, Consumer Banking and Corporate Other. The Wholesale Banking segment provides loan and deposit services, as well as treasury management and capital market services to wholesale customers primarily throughout Virginia, Maryland, North Carolina, and South Carolina. The Consumer Banking segment provides loan and deposit services to consumers and small businesses throughout Virginia, Maryland, and North Carolina. Corporate Other includes its Corporate Treasury functions, such as management of the investment securities portfolio, long-term debt, short-term liquidity and funding activities, balance sheet risk management, and other corporate support functions, as well as intercompany eliminations.

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.

Atlantic Union Bankshares Corp has a Value Score of 74, which is considered to be undervalued.

When you look at Atlantic Union Bankshares Corp’s price-to-sales ratio at 2.94 compared to the industry median at 2.18, this company has a higher price relative to revenue compared to its peers. This could make Atlantic Union Bankshares Corp’s stock less attractive for value investors.

Atlantic Union Bankshares Corp’s price-earnings ratio is 10.11 compared to the industry median at 8.01. This means it has a higher share price relative to earnings compared to its peers. This could make Atlantic Union Bankshares Corp less attractive for value investors.

Now, let’s assess Atlantic Union Bankshares Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 8.3, when compared to the industry median of 5.7, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. Atlantic Union Bankshares Corp’s shareholder yield is higher than its industry median ratio of 3.90%. 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. Atlantic Union Bankshares Corp’s price-to-book ratio is higher than its industry median ratio of 0.89. This could make Atlantic Union Bankshares Corp fairly attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Atlantic Union Bankshares Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Atlantic Union Bankshares Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 7.87. This could make Atlantic Union Bankshares Corp less attractive because the higher P/FCF ratio indicates that Atlantic Union Bankshares 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.

Chino Commercial Bancorp (CA)’s Value Grade

Value Grade:

Chino Commercial Bancorp serves as the holding company for Chino Commercial Bank (The Bank), which is a nationally chartered bank. The Bank offers personal banking and business banking services. The Bank's personal banking services, such as personal checking and savings, individual retirement account, online banking, mobile banking, Cash on delivery, debit cards, direct deposit, e-statements, electronic tax payment services, night depository, notary services and savings bonds. Its business banking offers business checking and savings, business loans, online cash management, business mobile banking, remote deposit capture, merchant services and medical professionals. Its Commercial loan products include lines of credit, letters of credit, term loans and equipment loans, commercial real estate loans, accounts receivable financing, factoring, equipment leasing and other working capital financing. Its Financing products include home improvement lines of credit and MasterCard debit cards.

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.

Chino Commercial Bancorp (CA) has a Value Score of 71, which is considered to be undervalued.

Chino Commercial Bancorp (CA)’s price-earnings ratio is 7.3 compared to the industry median at 8.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Chino Commercial Bancorp (CA) more attractive for value investors.

Chino Commercial Bancorp (CA)’s price-to-book ratio is lower than its peers. This could make Chino Commercial Bancorp (CA) more attractive for value investors when compared to the industry median at 0.89.

You can read more about Chino Commercial Bancorp (CA)’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.

Financial Institutions Inc’s Value Grade

Value Grade:

Financial Institutions, Inc. is a financial holding company. The Company provides a full range of banking and related financial services to consumer, commercial and municipal customers through its bank and nonbank subsidiaries. It offers a range of deposit, lending and other financial services to individuals, municipalities and businesses in Western and Central New York through its banking subsidiary, Five Star Bank. Its indirect lending network includes relationships with franchised automobile dealers in Western and Central New York, the Capital District of New York, and Northern and Central Pennsylvania. It offers insurance services through its subsidiary, SDN Insurance Agency, LLC. It offers customized investment advice, wealth management, investment consulting and retirement plan services through its subsidiaries Courier Capital, LLC and HNP Capital, LLC. It also offers banking as a service and financial technology solutions through its subsidiary Corn Hill Innovation Labs, LLC.

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.

Financial Institutions Inc has a Value Score of 98, which is considered to be undervalued.

Financial Institutions Inc’s price-earnings ratio is 4.9 compared to the industry median at 8.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Financial Institutions Inc more attractive for value investors.

Financial Institutions Inc’s price-to-book ratio is higher than its peers. This could make Financial Institutions Inc less attractive for value investors when compared to the industry median at 0.89.

You can read more about Financial Institutions 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 Savings Financial Group Inc’s Value Grade

Value Grade:

First Savings Financial Group, Inc. is a holding company for First Savings Bank (the Bank). The Company?s principal business activity is the ownership of the outstanding common stock of First Savings Bank. Its segments include core banking, Small Business Administration (SBA) lending, and mortgage banking. The core banking segment originates residential, commercial and consumer loans and attracts deposits from its customer base. The SBA lending segment originates loans guaranteed by the SBA, subsequently selling the guaranteed portion to outside investors. The mortgage banking segment originates residential mortgage loans and sells them in the secondary market. The Bank operates as a community-oriented financial institution, which offers traditional financial services to consumers and businesses in its primary market area. The Company provides a variety of banking services to individual and business customers through approximately 16 locations in southern 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 Savings Financial Group Inc has a Value Score of 96, which is considered to be undervalued.

First Savings Financial Group Inc’s price-earnings ratio is 8.1 compared to the industry median at 8.0. This means that it has a higher price relative to its earnings compared to its peers. This makes First Savings Financial Group Inc less attractive for value investors.

First Savings Financial Group Inc’s price-to-book ratio is higher than its peers. This could make First Savings Financial Group Inc less attractive for value investors when compared to the industry median at 0.89.

You can read more about First Savings Financial Group 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.

PRIME MERIDIAN HOLDING CO’s Value Grade

Value Grade:

Prime Meridian Holding Company is a bank holding company for Prime Meridian Bank (the Bank). The Company?s operation consists of owning the stock of the Bank. The Bank provides a range of consumer and commercial banking services to individuals and businesses. Its electronic banking services include mobile banking, remote deposit, mobile deposit, Apple Pay, Bank-to-Bank transfers and online banking. The Bank offers basic services that include demand interest-bearing and noninterest-bearing accounts, savings accounts, money-market deposit accounts, health savings accounts (HSA), negotiable order of withdrawal (NOW) accounts, time deposits, safe deposit services, wire transfers, foreign exchange services, escrow accounts, debit cards, direct deposits, notary services, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, banking by mail, credit cards through a third party, and merchant card services with a third party.

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.

PRIME MERIDIAN HOLDING CO has a Value Score of 80, which is considered to be undervalued.

PRIME MERIDIAN HOLDING CO’s price-earnings ratio is 7.1 compared to the industry median at 8.0. This means that it has a lower price relative to its earnings compared to its peers. This makes PRIME MERIDIAN HOLDING CO more attractive for value investors.

PRIME MERIDIAN HOLDING CO’s price-to-book ratio is lower than its peers. This could make PRIME MERIDIAN HOLDING CO more attractive for value investors when compared to the industry median at 0.89.

You can read more about PRIME MERIDIAN HOLDING CO’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.

SouthState Corp’s Value Grade

Value Grade:

SouthState Corporation is a financial holding company. The Company offers a range of banking services and products to its customers through its wholly owned bank subsidiary, South State Bank, National Association (the Bank). The Bank provides consumer, commercial, mortgage and wealth management solutions. The Bank's loan portfolio includes commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans. It also offers its customers a variety of deposit products and services, including checking accounts, savings accounts, other deposit accounts and treasury and merchant services, through multiple channels, including its network of approximately 251 full-service branches and online, mobile and telephone banking platforms. Through Corporate Billing, LLC, the Bank provides factoring, invoicing, collection, and accounts receivable management services to transportation companies and automotive parts and service providers.

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.

SouthState Corp has a Value Score of 63, which is considered to be undervalued.

SouthState Corp’s price-earnings ratio is 10.1 compared to the industry median at 8.0. This means that it has a higher price relative to its earnings compared to its peers. This makes SouthState Corp less attractive for value investors.

SouthState Corp’s price-to-book ratio is lower than its peers. This could make SouthState Corp more attractive for value investors when compared to the industry median at 0.89.

You can read more about SouthState Corp’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.

West Bancorporation, Inc.’s Value Grade

Value Grade:

West Bancorporation, Inc. is a financial holding company. The Company owns West Bank (the Bank), which is a business-focused community bank. The Bank provides full-service community banking and trust services to customers. The Bank offers a range of deposit services, including checking, savings and money market accounts and time certificates of deposit. The Company operates in the markets, including central Iowa, which is generally the greater Des Moines metropolitan area; eastern Iowa, which includes the area surrounding Iowa City and Coralville, and southern Minnesota, which includes the cities of Rochester, Owatonna, Mankato and St. Cloud. It also offers online banking, mobile banking and treasury management services, which help to meet the banking needs of its customers. It offers many types of credit to its customers, including commercial, real estate and consumer loans. It also offers trust services, including the administration of estates, conservatorships and agency accounts.

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.

West Bancorporation, Inc. has a Value Score of 61, which is considered to be undervalued.

West Bancorporation, Inc.’s price-earnings ratio is 8.2 compared to the industry median at 8.0. This means that it has a higher price relative to its earnings compared to its peers. This makes West Bancorporation, Inc. less attractive for value investors.

West Bancorporation, Inc.’s price-to-book ratio is lower than its peers. This could make West Bancorporation, Inc. more attractive for value investors when compared to the industry median at 0.89.

You can read more about West Bancorporation, 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.

• Atlantic Union Bankshares Corp stock has a Value Grade of B.
• Chino Commercial Bancorp (CA) stock has a Value Grade of B.
• Financial Institutions Inc stock has a Value Grade of A.
• First Savings Financial Group Inc stock has a Value Grade of A.
• PRIME MERIDIAN HOLDING CO stock has a Value Grade of B.
• SouthState Corp stock has a Value Grade of B.
• West Bancorporation, 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 Tuesday, June 20
• 6 Undervalued Banks Stocks for Monday, June 19
• 4 Undervalued Banks Stocks for Friday, June 16
• Which Is a Better Investment, Atlantic Union Bankshares Corp or Banco Itau Chile (ADR) Stock?

AAII Disclaimer

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