It's no secret that bank stocks have been absolutely crushed during the recession. Through the end of May, the financial sector within the S&P 500 lost 12.8% per year on average over the previous five years versus a 2% annualized decline for the S&P 500 overall. Following such a sharp decline, there are always good long-term values.

So which banks should you buy?

Motley Fool Pro analyst Todd Wenning says to avoid "too big to fail" banks Bank of America (NYSE: BAC) and Citigroup (NYSE: C) if you're a long-term-focused investor. Not only are the underlying businesses of these goliaths difficult to get your head around -- let alone value -- but the extremely high volume of their stocks makes them ideal for speculation and day trading rather than investing.

One area of the banking sector that Todd and the Motley Fool Pro team have been watching -- and buying -- for some time is smaller regional banks. A number of these banks avoided getting mired in the derivatives trading or subprime lending that has plagued larger institutions, and they have more intimate knowledge of the local markets they serve.

For instance, Bank of Hawaii (NYSE: BOH) and Valley National (NYSE: VLY) were strong enough to maintain their dividend payouts through the credit crisis. Two other regional banks, Hudson City Bancorp (Nasdaq: HCBK) and People's United Financial (Nasdaq: PBCT), didn't take TARP funds.

All of these names are holdings of the SPDR KBW Regional Banking ETF (NYSE: KRE), which holds roughly 50 smaller banks from across the United States. With an expense ratio of just 0.35%, it offers a low-cost way to spread your bets across the sector. But that's just one reason why the Pro team bought shares of this ETF for their $1 million real-money portfolio. In this video, Todd gives more reasons why the Pro team likes this ETF so much. Watch it here:

Fool analyst Todd Wenning does not own shares of any company mentioned. The Fool owns shares of SPDR KBW Regional Banking ETF and has a disclosure policy.