Merchants Bancorp (NASDAQ:MBIN – Get Rating) and First National (NASDAQ:FXNC – Get Rating) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.
Dividends
Merchants Bancorp pays an annual dividend of $0.32 per share and has a dividend yield of 1.4%. First National pays an annual dividend of $0.60 per share and has a dividend yield of 4.0%. Merchants Bancorp pays out 7.2% of its earnings in the form of a dividend. First National pays out 22.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Merchants Bancorp has raised its dividend for 6 consecutive years and First National has raised its dividend for 8 consecutive years. First National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a summary of current ratings for Merchants Bancorp and First National, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Merchants Bancorp | 0 | 0 | 1 | 1 | 3.50 |
| First National | 0 | 0 | 1 | 0 | 3.00 |
Volatility and Risk
Merchants Bancorp has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, First National has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.
Profitability
This table compares Merchants Bancorp and First National’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Merchants Bancorp | 36.21% | 24.65% | 1.94% |
| First National | 27.07% | 16.22% | 1.20% |
Institutional & Insider Ownership
23.1% of Merchants Bancorp shares are held by institutional investors. Comparatively, 33.8% of First National shares are held by institutional investors. 40.8% of Merchants Bancorp shares are held by company insiders. Comparatively, 16.5% of First National shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Merchants Bancorp and First National’s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Merchants Bancorp | $606.77 million | 1.69 | $219.72 million | $4.47 | 5.29 |
| First National | $62.04 million | 1.50 | $16.80 million | $2.68 | 5.54 |
Merchants Bancorp has higher revenue and earnings than First National. Merchants Bancorp is trading at a lower price-to-earnings ratio than First National, indicating that it is currently the more affordable of the two stocks.
Summary
Merchants Bancorp beats First National on 12 of the 17 factors compared between the two stocks.
About Merchants Bancorp
Merchants Bancorp is a bank holding company, which specializes in multiple lines of business in banking and finance. It operates through the following segments: Multi-Family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-Family Mortgage Banking segment engages in mortgage banking, specializing in originating and servicing loans for multi-family rental housing and healthcare facility financing, particularly for senior living properties. The Mortgage Warehousing segment funds agency eligible loans for non-depository financial institutions from the date of origination or purchase until the date of sale to an investor. The Banking segment refers to financial products and services to consumers and businesses, including commercial, commercial real estate, mortgage, and other consumer loan products, and letters of credit and various types of deposit products, including checking, savings and time deposit accounts. The company was founded by Michael Petrie and Randall D. Rogers in 1990 and is headquartered in Carmel, IN.
About First National
First National Corp. operates as a bank holding company, which engages in the provision of consumer and business banking services through its subsidiary. It offers savings, checking, mortgage lending, home equity, treasury management, construction loan, commercial mortgage, and rental properties. The company was founded on September 7, 1983 and is headquartered in Strasburg, VA.
Receive News & Ratings for Merchants Bancorp Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Merchants Bancorp and related companies with MarketBeat.com's FREE daily email newsletter.
