In this article, we will look at the 10 Oversold Bank Stocks To Buy Right Now.
Is the Banking Sector Embarking On a Two-Year Growth Cycle?
On January 13, Tom Michaud, KBW CEO, joined CNBC for an interview to discuss his analysis of the banking sector earning season. Michaud is bullish on the sector, he mentioned that the market has had two years of down earnings per share, however, the banking sector is turning the corner on various fronts. Michaud thinks the industry is embarking on a two-year growth cycle and his conviction lies with the biggest banks, which are expected to grow earnings by 15% in 2025. While explaining his conviction, the CEO pointed out the yield curve is no longer inverted, there is positive growth in the loans, and regulations are expected to be positive which will have a material impact on larger as well as smaller banks. Michaud acknowledged the concerns regarding “higher for longer” interest rates, however, he suggested that this calls for more narrowed stock selection for investment.
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Tom Michaud, further elaborated his bullish sentiment by elaborating what kind of banking stocks he likes. One of the top picks by the CEO includes asset-sensitive banks, he thinks as the underlying expectations for the sector are positive, therefore banks with asset sensitivity would perform positively. Michaud also likes the investment banking industry. He thinks that the investment banking cycle is gearing up as investment banking revenue grew more than 25% during 2024. To conclude his top picks, KBW CEO remains inclined towards large banks as they tend to be both asset sensitive and also generate substantial non-interest income.
On the other hand, Michaud is also not bearish on the small and regional banks. As per his analysis, the small and regional banks are also expected to grow but at a slower rate compared to big banks. Michaud estimates these banks will grow earnings at around 6% during 2025, mainly due to weaker non-interest earning capabilities. However, some of the small banks are expected to benefit from the regulation tailwinds. Therefore, Michaud thinks the current concern regarding interest rates can be an opportunity to selectively buy some banking stocks.
With that let’s take a look at the 10 oversold bank stocks to buy right now.
A customer walking into a bank branch, expressing the convenience of consumer banking services.
Our Methodology
To curate the list of 10 oversold bank stocks to buy right now we used the Finviz Stock Screener and CNN. Using the screener, we compiled an initial list of banking stocks that have lost around 10% to 30% over the past 6 months but analysts expect double the upside. We checked the analyst upside potential from CNN and ranked the stocks in ascending order. Please note that the data was recorded on February 3rd, 2025. Also, note that we checked both Diversified and Regional banks while compiling the list.
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10 Oversold Bank Stocks To Buy Right Now
10. HomeStreet, Inc. (NASDAQ:HMST)
6-Month Performance: -24.91%
Analysts Upside Potential: 14.20%
HomeStreet, Inc. (NASDAQ:HMST) is a financial services company that primarily operates in the Western United States and Hawaii. The company provides commercial banking, mortgage banking, and commercial & retail banking services for both individuals and businesses.
Management has implemented a new strategic plan which revolves around selling $990 million in multifamily loans. HomeStreet, Inc. (NASDAQ:HMST) completed the sale on December 30 to improve its financial stability and liquidity position. As per the fiscal fourth-quarter earnings call of 2024 proceeds were used to pay off more expensive debt, specifically Federal Home Loan Bank advances and broker deposits, which had a higher average interest rate of 4.65%.
Looking ahead, HomeStreet, Inc. (NASDAQ:HMST) anticipates returning to profitability in the first half of 2025 due to the strategic repositioning of its balance sheet and expected reductions in interest rates. The company plans to manage expenses effectively and expects continuous growth in earnings, driven by the repricing of remaining loans and further reductions in borrowings. It is one of the oversold bank stocks to buy right now.
9. Banco Santander (Brasil) S.A. (NYSE:BSBR)
6-Month Performance: -8.52%
Analysts Upside Potential: 22.52%
Banco Santander (Brasil) S.A. (NYSE:BSBR) operates as a subsidiary of the international financial company Banco Santander. It operates in Brazil with key services in Retail and Wholesale banking. The bank also provides asset management and other insurance-related plans for its clients.
Banco Santander (Brasil) S.A. (NYSE:BSBR) is focusing on a customer-centric strategy to become a primary bank for its clients. It aims to centralize its services around customer needs, which is reflected in its metric, the Net Promoter Score (NPS). The bank has seen improvements in NPS across various segments, including individual and business accounts, demonstrating its commitment to enhancing the customer experience.
Moreover, the bank is committed to diversifying its revenue streams and is heavily focused on advancing the use of technology to enhance user experience. Its fiscal third-quarter 2024 results show that the bank has grown its availability of digital features by more than 13 percentage points, which resulted in more than double AI chatbot-to-user interaction year-over-year. Management expects to continue improving its profitability and has set a target of around 20% in ROE by 2025. Banco Santander (Brasil) S.A. (NYSE:BSBR) is one of the oversold bank stocks to buy right now.
8. Princeton Bancorp, Inc. (NASDAQ:BPRN)
6-Month Performance: -12.17%
Analysts Upside Potential: 27.79%
Princeton Bancorp, Inc. (NASDAQ:BPRN) is the parent company of The Bank of Princeton, a community bank based in New Jersey. It operates over 34 branches across the United States, with 27 branches in New Jersey, 5 in Philadelphia, and 2 branches in New York City. The bank significantly focuses on commercial real estate and community banking.
In November 2024, Hovde Group initiated coverage on Princeton Bancorp, Inc. (NASDAQ:BPRN) with a Market Perform rating and a price target of $40. The fiscal fourth quarter of 2024 marked the 17th year of its operations. The bank crossed the $2 billion mark in total assets after delivering 22.11% year-over-year growth to reach $2.34 billion. Moreover, the bank delivered a net income of $5.2 million, which was significant as it demonstrated a recovery from the previous quarter’s net loss of $4.5 million. The management attributed this recovery to a decrease in non-interest expenses, a reduction in the provision of credit losses, and an increase of 900,000 in net interest income. It is one of the oversold bank stocks to buy right now.
7. Columbia Financial, Inc. (NASDAQ:CLBK)
6-Month Performance: -10.85%
Analysts Upside Potential: 31.85%
Columbia Financial, Inc. (NASDAQ:CLBK) is a financial company that operates the Columbia Bank, which is situated in New Jersey. The bank provides a range of traditional banking services such as deposits from individuals and businesses. It also provides various kinds of loans including residential loans, commercial loans, and consumer loans.
During the fiscal fourth quarter of 2024, Columbia Financial, Inc. (NASDAQ:CLBK) reported a net loss of $21.2 million, which is significantly low compared to the net income of $6.6 million in the same quarter last year. As per the management, the losses were mainly due to lower income from non-loan activities and costs associated with restructuring its financial assets. To manage the losses the bank has executed a significant repositioning strategy, involving the sale of $352.3 million in debt securities and prepaying higher-cost borrowings amounting to $200 million. The strategy is aimed at enhancing future earnings and expanding net interest margins. It is one of the oversold bank stocks to buy right now.
6. RBB Bancorp (NASDAQ:RBB)
6-Month Performance: -10.43%
Analysts Upside Potential: 32.91%
RBB Bancorp (NASDAQ:RBB) is a financial company operating as a bank holding company. The holding company oversees two subsidiaries Royal Business Bank and RBB Asset Management Company. The company provides various services mainly aimed at small and medium-sized businesses. It operates branches in several regions, including California, Nevada, New York, Illinois, New Jersey, and Hawaii.
The company recently released its fiscal fourth quarter results for 2024. RBB Bancorp (NASDAQ:RBB) reported a net income of $4.4 million, translating to $0.25 diluted earnings per share. The net income declined quarter-over-quarter as the company generated $7.0 million in net income during the third quarter of 2024. The decline was attributed to an increase in non-performing assets during the quarter, which resulted in credit losses growing from $3.3 million in the previous quarter to $6 million in the fourth quarter.
On the bright side, RBB Bancorp (NASDAQ:RBB) reported a growth in net interest income from $24.5 million in Q3 to $26.0 million. This was boosted by a $130,000 increase in interest income and a $1.3 million decrease in interest expense. It is one of the oversold bank stocks to buy right now.
5. Inter & Co, Inc. (NASDAQ:INTR)
6-Month Performance: -15.37%
Analysts Upside Potential: 34.26%
Inter & Co, Inc. (NASDAQ:INTR) is a Brazilian bank, which has transitioned to become a digital multi-service bank over the years. Its super app is one of the differentiating factors, the app allows users to shop online, book travel tickets, and manage investments, while providing them with traditional banking services.
As per the company’s fiscal third quarter 2024 earnings call, the app has attracted over 35 million clients and is logged in more than 15 million times a day. Management of Inter & Co, Inc. (NASDAQ:INTR) has been consistently upgrading the app with the latest technology, for instance, its AI-powered Inter Shop Concierge is anticipated to be launched soon, which will help enhance monetization and also lead to more e-commerce traffic.
On January 26, Morgan Stanley raised the price target to $4.5 from the previous target of $4. The firm believes the company’s 5-year plan presents a significant upside. However, INTR has an Underweight rating as analysts at Morgan Stanley are skeptical regarding the management’s ability to deliver the plan. Inter & Co, Inc. (NASDAQ:INTR) is one of the 10 oversold bank stocks to buy right now.
4. Live Oak Bancshares, Inc. (NYSE:LOB)
6-Month Performance: -10.92%
Analysts Upside Potential: 35.25%
Live Oak Bancshares, Inc. (NYSE:LOB) is a bank holding company that operates primarily through its subsidiary, Live Oak Banking Company. The banking company focuses on providing loans and deposit services specifically for small businesses across the United States. It differentiates due to its diversified portfolio. The company lends to small businesses in over 35 different industries, including healthcare and renewable energy.
Live Oak Bancshares, Inc. (NYSE:LOB) is entering 2025 with strong momentum in its business operations, particularly in small business lending. Management noted that there is an increase in activity within the small business, which will prove beneficial for the company. Moreover, management is also focusing on initiatives like Live Oak Express, which offers small-dollar loans backed by the SBA (Small Business Administration), and is expanding checking account relationships with customers.
In 2024, the bank achieved record loan production of $5.16 billion, alongside a strong deposit growth of $1.49 billion. This reflects its effective lending strategy and market presence. During the fiscal fourth quarter of 2024, the bank reported a 9% year-over-year increase in net income, while also reducing noninterest expenses by 3%. The company is confident about its growth trajectory for 2025, driven by ongoing improvements in small business sentiment and a robust loan pipeline.
Diamond Hill Small Cap Fund stated the following regarding Live Oak Bancshares, Inc. (NYSE:LOB) in its Q3 2024 investor letter:
“On an individual holdings basis, among our top Q3 contributors were Live Oak Bancshares, Inc. (NYSE:LOB), First Advantage Corp. and United States Lime & Minerals. Shares of regional bank Live Oak rose in sympathy with the broader financial sector as investors anticipated the beginning of a rate-cut cycle. Broader rally aside, we like Live Oak for its solid balance sheet, which we believe is well-positioned relative to those of its peers as we enter a new interest-rate environment.”
3. First Foundation Inc. (NYSE:FFWM)
6-Month Performance: -20.52%
Analysts Upside Potential: 45.63%
First Foundation Inc. (NYSE:FFWM) is a financial services company that provides a range of services through its subsidiaries. It provides personal banking, business banking, wealth management, and Philanthropy Services. It has two main segments namely the Banking segment, which is managed by First Foundation Bank, and the Wealth Management segment which is managed by First Foundation Advisors.
On January 31, Gary Tenner, an analyst at D.A. Davidson maintained his Buy rating on the stock, while keeping his price target at $9. Management of First Foundation Inc. (NYSE:FFWM) has been focused on diversifying its loan portfolio and aims to reduce its reliance on commercial real estate due to its low yield. To achieve this the company sold $489 million in multifamily loans during the fiscal fourth quarter of 2024. The company still holds multifamily loans worth $1.4 billion, which it plans to sell in the near future. Moreover, First Foundation Inc. (NYSE:FFWM) improved its net interest margin from 1.50% in the previous quarter to 1.58%, the growth was aided by the Federal Reserve’s rate cuts. It is one of the oversold bank stocks to buy right now.
2. Shinhan Financial Group Co., Ltd. (NYSE:SHG)
6-Month Performance: -11.41%
Analysts Upside Potential: 48.04%
Shinhan Financial Group Co., Ltd. (NYSE:SHG) is one of the largest financial conglomerates in South Korea. The group engages in providing various financial services including banking credit cards, investment, and insurance services. The group has faced some challenges recently, particularly within the securities division. During the fiscal third quarter of 2024, Shinhan Financial Group Co., Ltd. (NYSE:SHG) reported a loss of KRW 135.7 billion, due to the issues of trading operations at Shinhan Securities. Management has assured that they are working closely in diagnosing the root cause of the losses to improve oversight.
On the bright side, the group has been focused on improving qualitative growth through return on assets and return on equity. Polaris Global Equity Strategy in their Q3 2024 investor letter mentioned that Shinhan Financial Group Co., Ltd. (NYSE:SHG) was one of the top contributors and also noted that management has committed to return 50% of earnings to investors through dividends and buybacks by 2027. Their short-term goal as identified during the earnings call for the fiscal third quarter is to reach a return on equity of 13% by 2025. It is one of the oversold bank stocks to buy right now.
Polaris Global Equity Strategy stated the following regarding Shinhan Financial Group Co., Ltd. (NYSE:SHG) in its Q3 2024 investor letter:
“On the backdrop of interest rate cuts, financials shined on expectations for loan demand and cheaper cost of capital; in fact, all sector holdings were in absolute positive territory. Shinhan Financial Group Co., Ltd. (NYSE:SHG) was the top contributor, with a second-quarter earnings beat on better non-interest income with credit costs under control. An enhanced shareholder return policy was a pleasant upside surprise, as Shinhan committed to returning 50% of earnings to investors through dividends and share buybacks by 2027.”
1. Banco Bradesco S.A. (NYSE:BBD)
6-Month Performance: -11.72%
Analysts Upside Potential: 113.27%
Banco Bradesco S.A. (NYSE:BBD) is a major Brazilian bank, which operates as a commercial bank. The bank provides various services including checking accounts, saving accounts, loans, and credit cards. On January 13, HSBC upgraded its rating to Buy from Neutral, while reducing the price target to $2.8 from $3.1.
During the fiscal third quarter of 2024, Banco Bradesco S.A. (NYSE:BBD) is focusing on improving its digital presence and also closing down some of its physical branches to allocate more resources to digital operations. The bank generated a revenue of R$30.6 billion in revenue, which was up 3.7% quarter-over-quarter. The growth was driven by strong growth in loan portfolio which improved 3.5% during the same time. Management is diversifying the loan portfolio to individuals, SMEs, and large corporations. SMEs took the lead with a 17% growth in loans during the third quarter. Banco Bradesco S.A. (NYSE:BBD) is the most oversold bank stock to buy right now.
While we acknowledge the potential of Banco Bradesco S.A. (NYSE:BBD) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BBD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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