10 Tiny Banks With Double-Digit Revenue Growth

NEW YORK (TheStreet) -- As we saw last week when Morgan Stanley (MS) popped 12%, investors are eager to invest in banks that are growing revenue, which isn't easy in the midst of a weak economic recovery.

TheStreet has identified 10 small-cap community banks that posted second-quarter revenue numbers rising in the double digits from a year earlier.

At this point in the credit cycle, bottom-line earnings performance for many of the best-known banking names have been boosted by the release of loan loss reserves. To get to the real the revenue picture, SNL Financial looks at pre-provision net revenue, defined as a bank's tax-adjusted net interest income plus its non-interest income, net of non-credit-related expenses.

To come up with our list, we isolated bank holding companies with market capitalization of less than a billion, showing double-digit year-over-year increases in pre-provision net revenue for the second quarter, while also showing revenue improvements from the previous quarter.

Of course, our list is limited to companies that reported through last Friday. We have featured the 10 names meeting the criteria that are the most actively traded.

All of these names were profitable during the second quarter. Some have grown revenue through mergers. Some have seen a vast revenue improvement, but are still working through problem loans. Some are priced cheaply to forward earnings. Some have already seen shares shoot up and look expensive. Two of them feature attractive dividend yields.

Four of them still owe federal bailout funds received through the Troubled Assets Relief Program, or TARP, or have converted the TARP preferred shares held by the government to new preferred shares that will potentially cost less, by participating in the Small Business Lending Fund.

This is why an investor has to carefully consider each pick.

Here are our 10 small-cap banks with rising revenue, in ascending order by year-over-year increases in pre-provision net revenue. Data was provided by SNL Financial and supplemented with company filings: