Four undervalued bank stocks below book value that pay dividends

 

In the current tumultuous landscape of the banking industry, particularly for regional banks, marked by the repercussions of the Federal Reserve's interest rate hikes and the unsettling collapse of Silicon Valley Bank, numerous bank stocks have been severely battered and are now trading at significantly reduced valuations compared to the start of the year.

Considering this situation, it begs the question: Could some of these bank stocks be potential value investments? While there is no definitive answer, employing a screening methodology inspired by Benjamin Graham's principles reveals a compelling selection of four bank stocks that might just fit the bill.

One such bank stock is HSBC Holdings (NYSE: HSBC), an esteemed London-based institution with a rich global presence since its establishment in 1865. Currently, HSBC is available for purchase at a mere 72% of its book value, showcasing an impressive 19% year-on-year increase in earnings and a commendable 6.30% growth over the past five years. Remarkably, its price-earnings ratio stands at a modest 6.69, while the Schiller price-earnings ratio for the broader Standard & Poor's 500 index sits at a lofty 28.91. Additionally, HSBC rewards its investors with a substantial dividend yield of 5.60%. With a market capitalization of $143.91 billion, HSBC exudes stability and potential.

To further illustrate its performance, please refer to the accompanying daily price chart:

[Insert daily price chart here]

In the realm of regional banking, New York Community Bancorp (NYSE: NYCB) has caught the attention of astute investors, showing remarkable potential with its current market performance. Trading with a price-earnings ratio of 8, this bank presents an enticing opportunity, particularly considering its attractive 35% discount from its book value.

Examining the bank's recent financials, the most recently reported earnings per share for the last 12 months demonstrate a noteworthy 5.10% increase, indicating a positive trajectory in profitability. Furthermore, over the past five years, New York Community Bancorp has exhibited a commendable EPS growth of 9.10%, highlighting its consistent upward momentum.

But that's not all. Investors who opt for New York Community Bancorp can also benefit from its generous dividend yield of 6.74%, a substantial return that further enhances the appeal of this regional bank as an investment opportunity.

Taking a broader view, New York Community Bancorp boasts a market capitalization of $6.88 billion, underlining its significant presence and stability in the market.

All things considered, this comprehensive analysis positions New York Community Bancorp as an intriguing prospect for investors seeking value and growth in the banking sector.

The daily price chart is here:

Penns Woods Bancorp (NASDAQ: PWOD) emerges as a compelling opportunity in the realm of smaller regional banks, exhibiting promising market dynamics that should not be overlooked. With a modest market capitalization of $159 million, this bank headquartered in Williamsport, Pennsylvania presents a unique proposition for investors seeking untapped potential.

Despite its smaller size, Penns Woods Bancorp demonstrates resilience and stability, as evidenced by its listing on the NASDAQ exchange. Although lightly traded, the stock's current price-earnings ratio of 8.74 reveals an undervalued position in the market, hovering at an enticing 96% of its book value.

The bank's recent financial performance further bolsters its investment appeal. Notably, earnings for this year have surged by an impressive 8.70%, indicative of a strong growth trajectory. Moreover, over the past five years, Penns Woods Bancorp has exhibited consistent earnings growth of 6.90%, underscoring its ability to generate sustainable profits.

Investors can also take solace in the fact that Penns Woods Bancorp offers a substantial dividend yield of 5.59%, a testament to the bank's commitment to providing attractive returns to its shareholders.

Considering the broader context, Penns Woods Bancorp's modest market capitalization of $159 million signifies its nimble nature, presenting an opportunity for investors to capitalize on the potential growth prospects of a smaller regional bank.

All in all, Penns Woods Bancorp emerges as an intriguing choice, blending stability, growth potential, and a compelling dividend yield, making it an attractive option for investors seeking diversification and value in the banking sector.

The daily price chart looks like this:

Republic Bancorp (NASDAQ: RBCAA), headquartered in Louisville, Kentucky, stands out as a compelling investment opportunity within the realm of lightly traded NASDAQ stocks. Distinct from First Republic Bank, Republic Bancorp showcases promising market dynamics that warrant attention from astute investors.

Trading at a price-earnings ratio of 8.60, Republic Bancorp presents an intriguing valuation proposition, currently trading at a discounted price of 9% below its book value. This undervalued position signifies a potential opportunity for investors to acquire shares at an advantageous price, leveraging the bank's intrinsic worth.

Furthermore, Republic Bancorp's recent financial performance enhances its investment appeal. Notably, the bank has experienced a remarkable 7.40% increase in earnings this year, indicating its ability to drive sustainable growth. Building on this success, over the past five years, Republic Bancorp has achieved a noteworthy earnings per share (EPS) growth rate of 12.90%, reflecting its commitment to delivering consistent and robust financial results.

In terms of market capitalization, Republic Bancorp boasts a value of $740 million, positioning it as a notable player in the financial industry. This market presence further adds to the bank's stability and potential for long-term growth.

Moreover, investors can benefit from Republic Bancorp's dividend program, which offers a respectable yield of 3.82%. This dividend payout demonstrates the bank's commitment to rewarding shareholders while providing an additional avenue for generating returns on investment.

Considering the unique blend of factors—such as the bank's lightly traded nature, attractive valuation metrics, robust earnings growth, significant market capitalization, and dividend payout—Republic Bancorp presents itself as an enticing investment prospect in the NASDAQ market.

With its strong financial performance, prudent valuation, and commitment to shareholder returns, Republic Bancorp offers investors the opportunity to participate in the growth story of a distinctive bank operating out of Louisville, Kentucky.

Here’s the daily price chart:

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