5 of the Cheapest Bank Stocks for 2026

• (0:30) - Where Should Value Investors Be Looking Right Now?
• (9:00) - Top Stocks To Keep On Your Radar
• (27:50) - Episode Roundup: TFC, FRME, VLY, SFNC, PB

Welcome to Episode #423 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.

With growth stocks still dominating in 2025, value investors are wondering, where do they find good quality value stocks for 2026? Are there any?

There are always industries that are out of favor, such as energy. But the key is to find an out-of-favor industry which also has rising earnings estimates. Value investors still want to see earnings growth.

And if you’re looking for earnings growth, energy is not the place to be.

But there’s a second out-of-favor industry that investors shouldn’t dismiss: the banks.

How to Find Value in a Bank

When looking for cheap banks, investors can’t simply use the price-to-earnings (P/E) ratio. It doesn’t tell the whole picture with banks.

Bank analysts use the price-to-book (P/B) ratio instead. Bank analysts often say that investors should buy a bank when the P/B ratio is 1.0 and sell when it is 2.0.

Tracey ran a screen with the banks and a P/B ratio under 2.0. There were hundreds of “cheap” banks with one bank having a P/B ratio as low as 0.09.

We Love the Big Banks but Hate the Small Banks

I know you’re thinking that JPMorgan Chase and Bank of America have both broken out to new all-time highs in 2025. How can they be “hated” or out of favor?

The mega-cap banks are back in favor but, after the 2025 rallies, they aren’t cheap. JPMorgan Chase now trades with a P/B ratio of 2.4, which is well above the “sell at 2.0” recommendation by bank analysts.

That’s why value investors should look to regional banks and even community banks to find real value.

Wall Street is ignoring this group of stocks. Investors should not.

5 of the Cheapest Bank Stocks for 2026

1. Truist Financial Corp. (TFC)

Truist Financial is one of the bigger banks to make this screen. Headquartered in Charlotte, it’s a top 10 US commercial bank which also does investment banking and wealth management. Truist has a market cap of $56.7 billion.

Earnings are expected to rise 6.5% in 2025 and another 13.2% in 2026. Truist is shareholder friendly and pays a dividend yielding 4.7%.

Truist is cheap, with a P/B ratio of just 0.95.

Should Truist be on your 2026 short list?

2. First Merchants Corp. (FRME)

First Merchants is a central Indiana bank with 111 banking centers in Indiana, Michigan, and Ohio. It has a market cap of $2 billion, so that makes it a small bank.

First Merchants is expected to grow earnings by 11.5% in 2025 and another 7% in 2026. It is a Zacks Rank #2 (Strong Buy) stock.

First Merchants is shareholder friendly and is paying a dividend yielding 4.1%.

Should a Midwest bank like First Merchants be on your short list?

3. Valley National Bancorp (VLY)

Valley National Bancorp is the holding company of Valley National Bank. Headquartered in New Jersey, Valley National Bancorp has operations in New York, Florida, Alabama, California, and Illinois. It’s a mid-cap bank with a market cap of $5.8 billion.

Earnings for Valley National Bancorp are expected to soar 54.8% this year and another 28.1% in 2026. It has a P/B ratio of just 0.8. That makes it a cheap bank with big growth.

Valley National Bancorp is a Zacks Rank #2 (Buy) stock.

Should a Northeast bank like Valley National Bancorp be on your short list?

4. Simmons First National Corp. (SFNC)

Simmons First National was founded in 1903 and is headquartered in Arkansas. Simmons First National is extremely proud that it has returned capital to shareholders through cash dividends for 116 consecutive years. It has a market cap of $2.5 billion, with 220 branches in Arkansas, Kansas, Missouri, Oklahoma, Tennessee, and Texas.

Simmons First National’s dividend is now yielding a juicy 4.9%.

Earnings are expected to jump 19.9% this year and another 13.6% next year. Simmons First National is also dirt cheap, with a P/B ratio of 0.75.

Should a Southern bank like Simmons First National be on your short list?

5. Prosperity Bancshares, Inc. (PB)

Prosperity Bancshares is headquartered in Houston, TX and has 284 locations in Texas and Oklahoma. It’s a larger bank with a market cap of $6.2 billion.

Earnings are expected to jump 11.2% in 2025 and another 9.3% in 2026. It’s cheap. Prosperity has a P/B ratio of only 0.8.

Prosperity is also shareholder friendly. It pays a dividend currently yielding 3.5%.

Should a Texas bank like Prosperity Bancshares be on your short list?

What Else Should You Know About the Smaller Banks?

Tune into this week’s podcast to find out.

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This article originally published on Zacks Investment Research (zacks.com).

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