Small Banks, Big Payoffs

As we move into the final weekend of 2012, I will offer up my final idea for 2013. You will be shocked to know that it is not a lot different than my first idea for this year. The trade of the decade in small banks is still very much alive and many of these stocks are still cheap enough to buy. We saw some signs of the start of the long-awaited mergers-and-acquisitions (M&A) wave and it will accelerate over the next 12 months. A whole slew of new regulations, along with attendant compliance costs, are set to take effect in the next year, and small banks will find it easier to sell to larger institutions that try to comply.

I recently had a chance to talk with an old friend who has been around the banking business for decades. He is currently on the board of one small bank and owns stakes in several others. He said that he was getting tired of active involvement in banking. Small bankers have gone from respected pillars of the community to pariahs who caused the financial meltdown and foreclosed on friends and relatives. This attitude is pervasive among consumers and it makes for weary bankers. In addition, making solid earnings gains is going to be difficult, if not impossible, under the new regulations;  therefore, many bankers are looking to sell and move on....584 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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