By Max Levin



)--Small banks with limited capital and utilities are found throughout the country.

Because of the large overhead, lack of locations, employees, exposure, and business the bank produces, these small, family-owned companies are falling rapidly. Mainstream banks including (BAC) Bank of America Corp., (TD) Toronto-Dominion Bank, (WFC) Wells Fargo, and (JPM) JP Morgan Chase are monopolizing their current district.

While massive corporations are gaining financial power, they are transitioning toward acquiring smaller banks instead of opening new locations from scratch. By doing this, the banks save allocated funding and time.

As investors, our job is to find these docile banks, purchase the stock and hold until they are acquired. Unfortunately, it is hard to gather stock from certain banks, because of the small amount of shares that are traded per month or even year. Most of the time, the mass of the stock is owned by family members, relatives or investors who have had a position for years. When putting an order in for a stock of this nature, usually only small increments can be obtained.

For any young or new investor, buying small cap banks is a great long-term investment. Although very risky, these types of investments could raise capital beyond belief for your portfolio. To equate the long-term holding of capital, there is a usual annual dividend payed to shareholders.

Below are some banks to get your research and investigation off to a good start

  • (ALBY) Community Capital Bancshares Inc. has a current share price of $0.58 and a market cap of 1.9 million. ALBY only has 3 million shares outstanding yet pays no regular dividends. The bank is located in Albany, Georgia where it was founded in 1998.
  • (BVA) Cordia Bancorp Inc. Is a relatively new company that has a current share price of $4.10 and a market cap of $11.10 million with only 2.8 million shares outstanding. It are located in Washington, D.C. where it was founded in 2009.
  • (CART) Carolina Trust Bank was founded in 2000 with its headquarters in Lincolnton, N.C. CART has a market cap of $13.4 million followed by an outstanding share count of 4.6 million. The current share price falls at $2.85.
  • (PATD) Patapsco Bancorp Inc. has a current market price of $3.40 with 2 million shares outstanding. It has a low market cap of 6.5 million with very low volatility. PATD was founded in 1910 with headquarters in Dundalk, Maryland.
  • (CECB) Cecil Bancorp Inc. has a current stock price of $0.64 with an outstanding share count of 7.4 million. CECB has a market cap of 3 million. It was founded in 1959 and is located in Elkton, Maryland.

The most cost effective way of expanding within the banking sector is to acquire other banks that already have a customer base. A simple scenario of this nature is used most often. If someone was to use a local bank his whole life, and suddenly a Bank of America moved in, that person is not going to switch banks. But if the Bank of America buys that local bank instead of opening up a brand new location, the Bank of America would acquire all of the local bank's past customers plus the new business from the surrounding areas. By taking advantage of this financial opportunity, an investors outcome could be huge. All it takes is buying stock in a small bank one day and having a large commercial bank buying the company the next.