Although the big advantage to investing in these stocks is the much higher yield than a passbook account, the significant risks should be considered. First, if interest rates rise, the profit margins on their fixed loans will be squeezed. Second, most banks issued a substantial number of ‘risky’ loans [high loan to equity, low credit quality, etc] over the last few years. In addition, a continued drop in housing prices would lead to more foreclosures. One other important factor to be careful of with regards to many of these bank stocks, is the lack of liquidity. For example, NB&T Financial Group Inc. (NBTF) hasn’t traded since December 12. And because of the illiquidity, the bid and asked spread can be very wide.