The S&P 500 just reached a new all-time high, and many stocks look expensive right now. But there are still some bargains to be found, and that's especially true in the financial sector. Here are two bank stocks that recently reported earnings, and why they could be excellent choices for long-term investors at their current prices.
The largest all-digital U.S. bank
Ally Financial (ALLY +0.76%) is one of the most interesting bank stocks in the market. It was spun out of General Motors (GM +1.85%) in the wake of the financial crisis and, not surprisingly, specializes in auto loans. In fact, it is the largest auto lender in the U.S. that isn't owned by an automaker. Ally is also the largest online-only bank in the United States with $144 billion in retail deposits.
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A few quarters ago, Ally made the strategic decision to exit certain non-core businesses (like credit cards) and focus on what it does best-auto loans, insurance, and consumer banking.
Recent results have been impressive. In 2025, Ally received the most consumer auto applications in its history, originated $43.7 billion in loans, and set an all-time high for written insurance premiums. Despite having high credit quality (43% of borrowers are in the top credit tier), Ally's average loan has an interest rate of 9.74%. With a 1.97% charge-off rate, Ally has a 3.43% net interest margin, while most banks are in the 2%-3% range.
NYSE: ALLY
Key Data Points
Despite strong results and profitability, Ally trades for just eight times forward earnings and is one of the few major banks that trade below book value. If gradually falling interest rates result in a surge in auto financing, Ally could be a big winner in 2026 and beyond.
A beaten-down bank that deserves a closer look
We're not even a full month into 2026, and Capital One (COF +0.10%) is already down by about 12% for the year.
There are a couple of reasons for this. First, as a bank that focuses heavily on credit cards, Capital One investors are nervous about President Trump's push to cap credit card interest rates at 10%. Then, the bank reported earnings, and while the results were generally strong, investors seemed skeptical about the plan to acquire fintech company Brex in a $5.15 billion deal.
However, it's important for investors to realize that the 10% cap is unlikely to become a reality and that the bank is producing excellent results. Credit card, auto, and commercial loans all increased in the fourth quarter, and Capital One's 8.26% net interest margin is several times what the average big bank produces. With a valuation of about 10.6 times forward earnings and synergies from the Discover merger yet to be fully realized, Capital One could be an excellent bank stock to buy at a discount, while much of the stock market is near all-time highs.
