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3 Community Bank Stocks to Buy on a Sector Surge

These three community banks are emerging strongly from the credit crisis.

Community banking is not an exciting business at its core. These smaller banks do not have trading desks or create exotic financial products. Community banks simply take in deposits and lend them back out to local consumers and businesses.

However, as the credit crisis fades, many of these local banks are now back on strong paths to profits, and Portfolio Grader has highlighted them as stocks to buy.

Stonegate Bank (SGBK)

Stonegate Bank (SGBK) is a 14-branch bank with locations in southern and western Florida. Founded in 2005, Stonegate has set its sights on becoming the premier private bank for business in Florida.

Stonegate has been taking advantage of currently weak pricing in the banking industry and just announced the purchase of Broward Bank to continue expanding. Earlier this year, Stonegate closed on the purchase of Florida Shores Bancorp and its two subsidiary banks, Florida Shores Bank-Southeast and Florida Shores Bank. Stonegate’s asset base will grow from $551 million to over $2 billion in the next five years when the Broward acquisition finalizes.

SGBK stock just crossed the one-year mark last year, and Portfolio Grader’s first ranking for Stonegate is an “A.” SGBK stock is a “strong buy” at the current price.

Beneficial Mutual Bancorp (BNCL)

Beneficial Mutual Bancorp (BNCL) has 35 branches in the Philadelphia and Bucks County Pennsylvania markets and 25 in the southern New Jersey market. Beneficial is just an ordinary bank, but it’s really good at what it does. Beneficial posted a 50% increase in earnings last quarter and exceed the analysts’ estimates by 50% as well.

Wall Street raised the Beneficial estimates for 2014 and 2015, and Portfolio Grader noted the continued improvement in the fundamentals of Beneficial. Last month, Portfolio Grader upgraded Beneficial to an “A,” and BNCL stock is a “strong buy” right now.

LNB Bancorp (LNBB)

LNB Bancorp (LNBB) does its business way off Wall Street’s radar screen. LNB operates 20 retail-banking locations and 28 ATMs in Lorain, eastern Erie, Cuyahoga, and Summit counties of Pennsylvania, Ohio, and New York. Only a few analysts follow LNB stock, but Portfolio Grader has picked up on what Wall Street is missing.

As the fundamentals of LNB have continued to improve all year, Portfolio Grader upgraded LNB stock back in June to an “A.” LNB stock is “strong buy” at the current price.

Community banks are not the most exciting companies in the world, but the money you can make in owning them as sector conditions improve is exciting.