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As the market wrapped up Wednesday, some new stocks neared their 52-week lows. I want to look at six small bank stocks that are down in the dumps. Before buying into these stocks, you’ll have to do more research, so treat this list as an idea generator. If you already own them, now is a good time to double-check your thesis. When banks are this cheap they often are on the brink of failure, so be careful. On the other hand, if a small bank as cheap as some of these are can survive, the returns are often in the multiples.

I’ll start off with two banks in the $100 million market cap range. The following four are tiny. Volume is often light, so limit orders are a must.

Porter Bancorp (NASDAQ:PBIB): Porter Bancorp is a $102 million Kentucky-based bank. Shares dropped after the bank reported a loss of $0.77 per share. Until this past year, the bank had been solidly profitable through the crisis. The bank had made $1 a share in 2009, but because of Q4, the full year 2010 EPS loss was $0.60. Interestingly enough, and leading to the recent price drop, the bank issued a 5% stock dividend on December 14. This appears to be some compensation due to the cash dividend cut down to a penny per quarter. Even with the drop, analyst KBW has an $11 price target for the shares.

Home Federal Bancorp (NASDAQ:HOME): This $164 million bank serves Idaho and Oregon. This bank isn’t at risk of failure, like some of the banks below. Here, shares dropped after a disappointing earnings report on January 28. Management has been expending their resources integrating LibertyBank, which it acquired through an FDIC-assisted transaction last year. Going forward, it appears the bank's net interest margin will be increasing and the bank expects to be generating new loans. The bank pays a 2.1% dividend and its P/B is 0.9.

Bank of the Carolinas (BCAR): Compared to the two banks above, Bank of the Carolinas and the other banks below are tiny. BCAR is a $10 million Nasdaq-traded bank whose shares have been crushed ahead of an earnings release last week. Q4 2010 and full year earnings were poor after some hope that things were improving through the year. 2010 marked three straight years of losses with the 2010 full year EPS loss being $0.92. The bank exceeds the regulatory capital requirements, but loans are declining and non-performing assets and net charge offs jumped from a year ago.

Carolina Trust Bank (CART): Carolina Trust is an $8 million North Carolina-based bank. Shares have declined because of a dilutive stock offering on December 30. The offering raised $6.3 million for the bank and was priced at $3. Shares are trading higher today than at the offering price. Although the bank lost money in Q4 2010, the bank was positive for the full year before preferred stock dividends. The bank seems to be headed in the right direction, but a much closer look would be required before committing money to the stock.

Community Capital Corp. (NASDAQ:CPBK): Community Capital is slightly bigger than the above two names, clocking in with a market cap of $26 million. A few weeks ago the bank reported a full year 2010 net loss of $0.70 per share. Although net interest margin increased nicely and loans past due 30-89 days are low, the company added a significant amount to its loan loss reserves in Q4, leading to the loss. That being said, Community Capital is ramping up its Wealth Management Group and increased assets there by more than 8% in the last quarter.

HMN Financial (NASDAQ:HMNF): This $10.8 million bank announced earnings on January 26. The bank is heading in the wrong direction on most metrics. Provisions for loan losses increased, non-performing assets increased, assets decreased, and its full year EPS loss was $8.17. The bank deferred its next TARP payment as well. If you own HMN, be wary.

Source: Six Small Banks Hitting New Lows