4 Small Banks Paying Dividends and Near 52-Week Highs

 |  Includes: BMRC, CFNB, HIFS, UNB
by: The Keating Letter

When the market is tough, as it’s been the last few weeks, the 52-week high list becomes scarce and the 52-week low list plentiful. Banks have been particularly hard hit. Big banks like Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and Wells Fargo (NYSE:WFC) are all at or near 52-week lows. On the other end of the spectrum are these four micro-cap banks hitting new 52-week highs. A note of caution: Volume is light on these, so make sure you use limit orders.

Bank of Marin Bancorp (NASDAQ:BMRC): This $205 million market cap bank’s claim to fame was being one of the first banks to return TARP money. It had taken $28 million from the government. Nowadays it continues to be in a strong capital position. It's had steady, stable, and growing earnings and is on pace to earn substantially more than last year. It's currently trading at a price to book (P/B) ratio of 1.6. Shares yield 1.7% and there is room for continued dividend growth, especially since this year is shaping up to have more growth than last year.

Hingham Institution for Savings (NASDAQ:HIFS): This uniquely named bank has a market cap of $115 million and is based out of Massachusetts. Its history takes it back to 1834 and it currently operates nine branches. It sports a P/B ratio of 1.5 and a dividend yield of 1.8%. Its payout ratio is low, meaning there is room for a larger dividend hike in the future.

Union Bankshares (NASDAQ:UNB): This bank operates 17 branches and one loan center and is headquartered in Vermont. The market cap is very small, just $88 million. It's got a great 5.1% dividend yield and trades at a P/B of 2.1. It appears that the dividend is holding up this stock price, otherwise I’d say there are cheaper opportunities elsewhere. Its dividend has been decreasing over the last three years and its payout ratio is high, so be careful if you’re just looking for yield. Like Hingham, Union Bankshares has been around a long time. It was founded in 1891.

California First National Bancorp (NASDAQ:CFNB): This bank also has a great dividend yield, although it appears this consisted fully of a special dividend at the end of 2010. Its market cap is $163 million and it operates two businesses: The traditional bank and a “leasing company specializing in financing high-technology capital assets.” The stock trades at a P/B ratio of 0.8. This is in line with its historical valuation.

Disclosure: I am long BAC.