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The commmunity bank market is surprisingly efficient (or overpriced if you'd prefer)for a number of reasons. One of the main ones is that there are a good number of investment banks that serve only community banks, many of which are willing to serve microcap clients. So they tell them to buy back there stock, raise divideds, all the little tricks to boost the stock in a slow growth industry. Also, there are a number of small hedge funds devoted just to investing in community banks and or taking hostile stakes in underperforming banks.
M&A has also been quite robust lately, and the banks alightly bigger than community banks are trading at pretty full multiples, so that pulls up everything beneath them.

The fact that they have to report to the FDIC keeps they accounting pretty clean and easy to interpret - so screens will pick up anything that is cheap.

It used to be that recently converted thrifts were can't miss cheap stocks. (Lynch wrote an article about this.) But with professional depsitors running around now, most of the juice has been sucked out of that too.

It seems to be a place where value will be found now is when the industry as a whole gets it cheap, like it was in 2000 when things were selling at 7-8x eps. Those were the days.
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