GNB Financial Services (GNBF) started in 1934, and they waited 72 years to open a second branch — both were in East Central, Pennsylvania, explains Doug Hughes, regional bank sector specialist and editor of BankNewsletter.

This bank earned almost $5.00 a share in 2018. Earnings will be more than $5.50 a share in 2019 yet trades, at only a P/E of 10. That will drop in 2020 to a P/E multiple of 9 or less. This is one of the most profitable banks I have ever followed.

Loan growth is robust at 8.5% in this market; they do a great job and always seem to make good money.

In 1996 they had $24 million in loans, today they have over $243 million. They show one of the best returns on average assets that you will see in today's banking world.

GNBF is a money machine. I have followed hundreds of banks over the past 20 years; this is one the best, hands down. They are in the sweet spot for earnings today and could fetch at least two times book maybe 2.20 times with their stellar earnings power.

Banks like this also usually get a P/E of like 20 in a deal, so you get to a $95 to $105 price — or a 100% premium from today's levels. The book value should also grow by about 5%-10% per year, depending on the dividends paid out.

While we know such thinly traded stocks can be bought and sold at discounts, this one is just so mis-priced.

It has limited downside risk and 90% or more upside — odds we will take all day long.

The stock offers a stable 2% yield; management just raised the cash dividend to $0.028 up from $0.025. They just earned $1.21 a share in the latest quarter, a 9% increase from the same period last year. The bank also loves to pay stock splits the last one was a 25% stock dividend in 2016.

This is the second largest holding in our model portfolio, and I believe the stock has the best risk-reward that I have seen in the past five years. Insiders own about 25% of the stock and should be ready to retire. But if they don’t sell the bank this year, you will make 12% on your money year in and year out until they do sell.

There are just 777,543 shares outstanding so please buy slowly and use limits. You never have to watch, keep buying it any time you see shares for sale at a fair price. I would put this stock away for any non-trading account and hold it till they sell.

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