There is a lot of excitement about the economy and stocks now that the election is over. It’s just hard to ignore that stocks are basically at all-time highs after that post-election rally. And all investors have to admit that it seems really hard to find bargains in the stock market now. Banks stocks surged even more than the general stock market, but there has been some tempering of those gains after the first week.
Oggonomics went on a value hunt for banks to see if there are any that remain under their stated book value. It turns out that there are actually still some bargain bank stocks out there if you look hard enough.
This list is getting smaller now that the regional bank scare is 18 months old and now that the overhang from commercial real estate is becoming less of an unknown threat. Some of the banks from the same screen in September are now well above their book value again. Still, investors have hopes of lower regulations and some think M&A will be back in favor under President Trump versus President Biden.
To make this list of banks that were screened as still valued under their stated Book Value (BVPS) several issued had to be in play. There had to be a floor of a $1 billion market value. Each bank has to be profitable (P/E) on a normalized/adjusted earnings basis and it has to pay a dividend to avoid any financial restructuring situations. These banks all have to be domiciled in the U.S. and preferably not just in a single township location for an overconcentration of risk. And lastly, they have to have some recognized analyst coverage with some target above the current share price in recent months.
Please be advised that there is frequently a remarkable difference between banks’ stated book values and their tangible book values. Any discount to book value herein refers to each bank’s stated book value rather than their tangible book value.
DISCLAIMER
Oggonomics ran this screen using Finviz data and using the latest earnings releases for additional data. All price targets and ratings mentioned herein are from the brokerage firms issuing those calls. All other data is from press releases and each bank’s own releases. Oggonomics does not have its own price targets nor does it have any formal ratings on the stocks mentioned in this report.
Oggonomics is not making any recommendation to buy or sell securities and this information is not intended to be investment advice. The decision to buy or sell (or hold, avoid or even short-sell) is up to each investor individually and that decision should be made with a financial advisor. All investments, even banks under their book values, come with the risk of financial loss.
5 BANKS STILL UNDER BOOK VALUE
Citigroup
0.68 Price/Book Ratio
$130 Billion Market Cap
3.1% Dividend Yield
Citigroup Inc. (NYSE: C) is continually the one money-center bank that always has a huge discount to book value. It is not as much of a traditional bank for consumers but is huge in commercial banking and investment banking activities. It also has a very large international presence that contributes to its sub-book value. Citi has so many operations and units that can be spun-out, sold off or wound down that many Citigroup investors have a harder time knowing what they compared to investors in Wells Fargo, BofA, JPMorgan Chase and smaller banks. And the bank seems to have been in a steady reset and restructuring. The bank might not be the first choice for investors looking for bargains because it’s already so large, but even after a 34% gain YTD and nearly 10% gain in the last month its $69.00 share price is at a discount to the $77.25 consensus price target with a forward P/E ratio of 9.5 that are both published by Finviz. Wells Fargo just raised its target to $95 from $85 and Oppenheimer raised its target to $107 from $91 a week before that.
Citizens Financial
0.91 Price/Book Ratio
$20 Billion Market Cap
3.6% Dividend Yield
Citizens Financial Group Inc. (NYSE: CFG) dates back about 200 years now and is based in Rhode Island, although its IPO was just about ten years ago as the largest commercial bank IPO. Citizens has also embarked on multiple acquisitions in the last decade. Its shares are up about 10% since the election, and that’s up 40% YTD and up 70% from a year ago. With about 1,000 branches and 3,100 ATMs it spread over 14 states (and D.C.) the bank is not small with about $220 billion in assets. While shares are at $46.75 and the consensus analyst price target from Finviz is $47.85, this was briefly a $55 stock in 2022 before the Fed’s interest rate hike campaign went into overdrive. Barclays recently raised its target to $47 from $40 and DA Davidson recently raised its target to $48 from $46′ and Morgan Stanley lifted its target to $50 from $41 back in August.
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FNB
0.95 Price/Book Ratio
$5.9 Billion Market Cap
2.9% Dividend Yield
F.N.B. Corp. (NYSE: FNB) operates mostly in Pennsylvania and caters to consumer and commercial customers in the Northeast. FNB has locations in Ohio, Maryland, Virginia and West Virginia, North and South Carolina, and in Delaware. It also engages in wealth management, insurance and specialty lending. Its book value of $17.38 did rise from the year before but the bank’s main focus is on its tangible book value in the earnings reports. At $16.47 its consensus analyst target price is $17.50 and forward P/E ratio is 11.6 per Finviz. The firm Stephens recently raised its price target to $18 from $16. Its shares are up 12% over the last month, mostly from a post-election bounce, and up about 20% YTD.
Origin
0.93 Price/Book Ratio
$1.06 Billion Market Cap
1.8% Dividend Yield
Origin Bancorp, Inc. (NYSE: OBK) now has over 100 years to its roots, and the Louisiana-based bank operates from over 60 locations covering Dallas/Fort Worth, East Texas, Houston, North Louisiana, Mississippi, South Alabama and also in Florida’s panhandle. Its latest book value per common share was $36.76 and tangible book value per common share was $31.37 in its last earnings report, both up (4.3% and 5.4%, respectively) from a year ago. With a share price of $34 and with shares still down 4% YTD (but up almost 10% from just before the election) the brokerage firm Stephens recently raised its price target to $38 from $37, although DA Davidson more recently lowered its price target to $38 from $41.
Valley National
0.80 Price/Book Ratio
$5.6 Billion Market Cap
4.30% Dividend Yield
Valley National Bancorp (NYSE: VLY) caters to businesses and consumers alike and has almost 100 years of operating history. It now counts some $62 billion in assets and has over 200 locations spread over New Jersey, New York, Florida, Alabama, California and Illinois. The bank recently raised nearly $400 million in an equity offering and $150 million in preferred securities to be used for the typical “general corporate purposes” but it also showed the use of proceeds for investments in Valley National Bank as regulatory capital. The bank does have higher exposure to the commercial real estate market that has been under pressure and that has pressured 2024 earnings into a 40% decline that is expected to mostly recover in 2025. Its valuation is less than 10-times trailing year earnings. JPMorgan raised VLY to Overweight from Neutral and raised its price target to $11 from $10.50 in a November 11 upgrade. In prior months, both Barclays in Morgan Stanley raised their ratings to Equal-Weight from Underweight.
