In this article, we are going to discuss the 10 best bank penny stocks to buy now. You can also check out the 10 Best Cloud Computing Stocks to Buy Now here.
The US banking sector in 2024 faces various challenges and opportunities. Although the industry has recovered from the bank failures of early 2023, it now deals with a slower economy, tighter regulations, and the possibility of interest rate cuts, all of which present risks for the sector.
In the past year, the US banking sector observed the collapse of a couple of well-known banks, which led to uncertainty in regional bank stocks. When considering the broader context, last year’s bank closures were not particularly notable in terms of quantity. The year’s total of five closures pales in comparison to 2009 and 2010, which saw 140 and 157 closures, respectively. However, 2023 stood out due to the substantial total assets of the affected institutions, primarily driven by the significant sizes of First Republic Bank, Silicon Valley Bank, and Signature Bank.
The banks were also heavily funded by uninsured deposits, as a significant portion of their customers held deposits exceeding the FDIC insurance limit of $250,000. This increased their risk during sector volatility. Despite these closures and the following instability, many bank stocks regained stability and ended 2023 with positive returns.
The economic outlook indicates slower growth and the possibility of a rate cut in 2024. This may result in a dip in bank profitability, although it is expected to remain strong, with an anticipated return on common equity ranging from 10% to 11%. Moreover, asset quality is predicted to weaken but should remain manageable, with strong pre-provision earnings providing support.
There are economic risks to consider, including the potential for a recession if the Federal Reserve is not careful enough with rate cuts, as well as the persistent threat of inflation that could result in prolonged high rates. Moreover, credit card charge-offs are anticipated to rise. However, banks with more diversified deposit bases and fewer uninsured deposits are less likely to face high risks as compared to those with more uninsured deposits. Regulatory changes, including the finalization of new capital and resolution requirements, may be implemented in 2024 in response to the banking failures of the previous year.
Despite these challenges, the banking sector is expected to maintain strong profitability and capital buildup, aided by a potentially more favorable rate environment later in the year. Moreover, there are potential investment opportunities in regional banks perceived as undervalued. With this context in mind, let’s take a look at the best bank penny stocks to buy now.
A person using a bank ATM to access current and savings accounts.
Our Methodology
To compile a list of the 10 best bank penny stocks to buy, we conducted an in-depth analysis. Our first step was to identify banks with share prices below $5. To assess their investment potential, we examined the number of hedge fund investors in these banks during Q1 2024. We used Insider Monkey’s database of over 900 hedge funds to rank the best bank penny stocks according to the hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Bank Penny Stocks to Buy Now
10. OptimumBank Holdings, Inc. (NASDAQ:OPHC)
Number of Hedge Fund Holders: 2
OptimumBank Holdings, Inc. (NASDAQ:OPHC), established in 2000 and headquartered in Fort Lauderdale, Florida, serves as a holding company for OptimumBank. It specializes in a wide range of consumer and commercial banking solutions for individuals and businesses throughout South Florida. The bank’s approach blends the traditional community banking experience with the ease of modern online services.
OptimumBank Holdings, Inc. (NASDAQ:OPHC) reported a successful first quarter of 2024, with net earnings rising 106% year-over-year to $2.38 million. The company’s loan portfolio saw substantial growth of 50.4%, and it strategically issued new shares to support future expansion. Moreover, OptimumBank Holdings launched a new SBA loan program aimed at small businesses and is actively working to increase deposits through both existing customers and potential prospects.
Analysts are optimistic about OptimumBank Holdings, Inc.’s (NASDAQ:OPHC) future with a consensus 12-month price target of $5.25. This represents a potential upside of over 22% from the current price levels, making it one of the best bank penny stocks to buy now.
9. AmeriServ Financial, Inc. (NASDAQ:ASRV)
Number of Hedge Fund Holders: 3
AmeriServ Financial, Inc. (NASDAQ:ASRV), established in 1983 and headquartered in Johnstown, Pennsylvania, acts as a bank holding company for AmeriServ Financial Bank. It caters to both individuals and businesses, offering a comprehensive suite of financial products and services. Moreover, AmeriServ offers specialized investment options for union pension funds.
AmeriServ Financial, Inc. (NASDAQ:ASRV) reported positive first-quarter results for 2024, highlighting a 25.7% increase in net income to $1.9 million compared to the same period in 2023. Earnings per share also rose to $0.11 from $0.09. This improvement can be credited to the company’s cost-cutting measures and strong performance in the wealth management business segment. AmeriServ Financial, Inc. (NASDAQ:ASRV) announced a dividend of $0.03 per share in April end. The company’s forward annual dividend yield stands at 5.31%.
As of Q1 2024, 3 hedge funds are bullish on AmeriServ Financial, Inc. (NASDAQ:ASRV). Tontine Asset Management was the leading hedge fund investor in the company, with a stake worth over $3.5 million. The hedge fund increased its stake in AmeriServ Financial, Inc. (NASDAQ:ASRV) by 10% during the quarter.
8. SHF Holdings, Inc. (NASDAQ:SHFS)
Number of Hedge Fund Holders: 3
SHF Holdings, Inc. (NASDAQ:SHFS), a Colorado-based company founded in 2021, specializes in financial services for the cannabis industry. It connects cannabis businesses with traditional banking solutions and financing options.
SHF Holdings, Inc. (NASDAQ:SHFS) reported impressive results for the first quarter of 2024. Net income rose by 245% year-over-year, reaching approximately $2.0 million, reversing a net loss of $1.4 million in Q1 2023. While revenue remained steady at around $4.1 million compared to the previous year, operating expenses saw a significant 35.8% decrease to $3.7 million. This focus on efficiency, coupled with strong growth in adjusted EBITDA, which jumped 165.3% year-on-year to $1.1 million from $410,000, paints a clear picture of SHF Holdings, Inc.’s (NASDAQ:SHFS) trajectory towards profitability.
Based on analyst ratings and forecasts, the consensus rating for SHF Holdings, Inc. (NASDAQ:SHFS) stock is “Buy” with an average target price of $1.5. The target suggests a potential upside of over 160% from its current price levels. SHF Holdings, Inc. (NASDAQ:SHFS) ranks highly among the best bank penny stocks to invest in.
7. Riverview Bancorp, Inc. (NASDAQ:RVSB)
Number of Hedge Fund Holders: 6
A prominent part of Pacific Northwest communities since 1923, Riverview Bancorp, Inc. (NASDAQ:RVSB) of Vancouver, WA serves small businesses, professionals, and individuals through Riverview Bank. The company’s focus lies in commercial banking, and it offers a broad range of deposit accounts, loans, and wealth management services. Riverview Bank’s reach extends across Washington cities like Camas and Vancouver as well as in Oregon locations including Portland and Gresham.
Riverview Bancorp, Inc. (NASDAQ:RSVB) announced during its Q4 FY2024 results that it had successfully completed its balance sheet restructuring. The company’s asset quality remained exceptional, with minimal non-performing assets and no credit loss provisions for the quarter.
Loan and deposit levels were stable, with loans at $1.02 billion and deposits at $1.23 billion. Liquidity also improved, with access to a significant borrowing capacity of nearly $500 million. Moreover, capital ratios remained strong, exceeding regulatory requirements.
Analysts are bullish on Riverview Bancorp, Inc. (NASDAQ:RVSB) with a unanimous “Outperform” rating. The company’s 12-month price target average sits at $5.25, representing a potential upside of over 30% from the current price levels.
6. Grupo Aval Acciones Y Valores S.A. (NYSE:AVAL)
Number of Hedge Fund Holders: 6
Grupo Aval Acciones Y Valores S.A. (NYSE:AVAL), a Colombian financial giant founded in 1994 by Luis Carlos Sarmiento Angulo, offers a diverse range of financial services and products through its subsidiaries like Banco de Bogota and Porvenir, along with other banking, insurance, and investment arms. The company’s headquarters are located in Bogota, Colombia.
In its first quarter 2024 results, Grupo Aval Acciones Y Valores S.A. (NYSE:AVAL) reported a net income of Ps 113.7 billion ($27.288 million). Both loans and deposits grew compared to the previous quarter and the same period last year. Moreover, the company improved its cost-to-assets ratio.
According to analysts, Grupo Aval Acciones Y Valores S.a. (NYSE:AVAL), is poised for a financial rebound, led by inflation falling and Colombia’s economy on the upswing in 2024. The company is being considered among the best bank penny stocks to buy now. Hence, analysts have given Grupo Aval Acciones Y Valores S.a. (NYSE:AVAL) a “Buy” rating, with a price target of $3.
5. Mizuho Financial Group, Inc. (NYSE:MFG)
Number of Hedge Fund Holders: 10
A financial giant rooted in Japan since 1864, Mizuho Financial Group, Inc. (NYSE:MFG) offers a vast range of financial services through its subsidiaries. From personal banking to real estate and investment solutions, Mizuho Bank, Mizuho Trust & Banking, and Mizuho Securities cater to individuals, corporations, and public institutions.
Mizuho Financial Group, Inc. (NYSE:MFG) outperformed expectations in its fourth-quarter earnings report, achieving a net profit of 36.7 billion yen ($235 million), compared to 12.3 billion yen ($76 million) in the prior year. This growth was driven by strong performance in its overseas business and continued loan demand within Japan. The company also has an optimistic outlook for the current financial year, projecting a profit of 750 billion yen ($4.66 billion), up from 678.99 billion yen ($4.22 billion) last year.
Analysts’ price targets for Mizuho Financial Group, Inc. (NYSE:MFG) are clustered closely, with a high of $4.79 and a low of $4.12, suggesting a strong consensus about the stock’s potential future value. The average price target is $4.52, indicating a potential upside.
4. Lloyds Banking Group plc (NYSE:LYG)
Number of Hedge Fund Holders: 12
A prominent U.K. financial institution since 2009, Lloyds Banking Group plc (NYSE:LYG) offers a comprehensive suite of banking and financial services. Through dedicated divisions, the company serves individuals and businesses of all sizes. Retail customers get everyday banking solutions, while Commercial Banking caters to mid-sized and larger companies. Meanwhile, Insurance & Wealth helps clients with financial planning, and the “Other” segment covers trading activities and one-time gains.
Lloyds Banking Group plc’s (NYSE:LYG) Q1 2024 results met expectations despite a slight dip in profitability. The company’s other income rose by 7% due to increased activity and strategic initiatives. Asset quality remained strong with a low impairment charge. Loans and deposits experienced minor reductions.
Lloyds Banking Group is expected to generate an additional 300 million pounds ($380 million) in annual revenue from its UK business banking unit by 2026, according to CEO Charlie Nunn. This forecast comes as corporate confidence in Britain rises despite existing challenges.
Analysts’ price targets for Lloyds Banking Group plc (NYSE:LYG) stock are clustered around $3, with a high of $3.53 and a low of $2.49. This suggests an upside potential from the current price levels. Moreover, 9 analysts have given a rating of “Buy” to Lloyds Banking Group plc (NYSE:LYG) stock.
Of the 920 funds being tracked by Insider Monkey at the end of Q1 2024, 12 reported owning a stake in Lloyds Banking Group plc (NYSE:LYG). English Capital Management was the leading hedge fund investor letter in the company.
3. Banco Santander, S.A. (NYSE:SAN)
Number of Hedge Fund Holders: 13
A global banking company since 1857, Banco Santander, S.A. (NYSE:SAN) offers comprehensive financial services through dedicated regional divisions. From core European operations to ventures in North and South America, the company caters to individuals, companies, and institutions.
The company has further expanded its reach with a digital consumer banking segment, covering online banking and consumer finance solutions. This diverse approach solidifies Banco Santander, S.A.’s (NYSE:SAN) position as a key player in the international financial arena.
Banco Santander, S.A. (NYSE:SAN) delivered a stellar Q1 2024 with net profit rising 11% year-over-year, driven by customer growth across all regions and strong performances in each of their global businesses. Revenue nearly reached double-digit growth, while the efficiency ratio recorded an improvement of 1.4 percentage points to 42.6%. The company’s strong balance sheet and focus on technology position it well to achieve its 2024 targets.
Banco Santander, S.A.’s (NYSE:SAN) stock price targets range from a high estimate of $6.96 to a low of $4.61, with an average price target of $6.01, indicating potential upside from current price levels. Moreover, analyst ratings reflect positive sentiment, with 15 analysts currently rating the stock as a “Buy.”
2. Banco Bradesco S.A. (NYSE:BBD)
Number of Hedge Fund Holders: 19
Since 1943, Banco Bradesco S.A. (NYSE:BBD) has grown into a Brazilian financial giant, offering banking and insurance services to individuals and businesses. Banco Bradesco S.A. (NYSE:BBD) ranks highly among the best bank penny stocks to invest in.
Banco Bradesco S.A.’s (NYSE:BBD) Q1 2024 results, highlighted steady profitability with net income of BRL 4.2 billion, reflecting an increase of 46% year-over-year (YoY). Loan growth showed positive signs, increasing 1.2% YoY and 1.4% quarter-over-quarter, indicating a reversal of the previous declining trend.
This growth was particularly notable in segments like real estate mortgages (up 5.8% YoY) and personal loans (up 1.8% YoY). Credit card loans remained flat due to higher risk considerations. The company also maintained well-controlled operating expenses. Overall, these results align with Banco Bradesco S.A.’s (NYSE:BBD) plan for gradual growth throughout 2024.
Banco Bradesco S.A. (NYSE:BBD) has received a consensus rating of “Buy”, with an average price target of $4.5. At the end of the first quarter of 2024, 19 funds reported owning a stake in Banco Santander, S.A. (NYSE:SAN).
1. New York Community Bancorp, Inc. (NYSE:NYCB)
Number of Hedge Fund Holders: 28
Established in 1859, New York Community Bancorp, Inc. (NYSE:NYCB) is a holding company for Flagstar Bank, a leading provider of financial services in the US. The bank caters to individuals, small businesses, and professional groups, offering a vast range of products: deposit accounts, mortgages, commercial real estate loans, and various consumer loans. The company further enhances its services with cash management solutions, investment and insurance options, and convenient online and mobile banking.
Highlighting a promising future during its last earnings call, New York Community Bancorp, Inc. (NYSE:NYCB) revealed that it had secured over $1 billion in new equity and implemented a solid credit risk strategy. The company aims to achieve a Return on Average Assets (ROAA) of 1%, a Return on Tangible Common Equity (ROTCE) of 11-12%, and a Common Equity Tier 1 (CET1) ratio of 11-12% by the end of 2026.
According to 15 analysts’ forecasts for New York Community Bancorp, Inc. (NYCB), the average 12-month price target sits at $5.39, reflecting a potential upside of over 60%. The forecasts range from a low of $3 to a high of $12. Overall, 28 funds reported owning a stake in New York Community Bancorp, Inc. (NYSE:NYCB), making it one of the top bank penny stocks to buy now.
While we acknowledge the potential of New York Community Bancorp, Inc. as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than New York Community Bancorp but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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