Head-To-Head Contrast: VersaBank (NASDAQ:VBNK) versus Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL)

VersaBank (NASDAQ:VBNK) and Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.

Earnings and Valuation

This table compares VersaBank and Farmers & Merchants Bank of Long Beach’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VersaBank	$113.38 million	2.49	$31.26 million	$1.32	8.23
Farmers & Merchants Bank of Long Beach	$431.97 million	1.32	$70.01 million	$485.58	9.78

Farmers & Merchants Bank of Long Beach has higher revenue and earnings than VersaBank. VersaBank is trading at a lower price-to-earnings ratio than Farmers & Merchants Bank of Long Beach, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for VersaBank and Farmers & Merchants Bank of Long Beach, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VersaBank	0	0	1	0	3.00
Farmers & Merchants Bank of Long Beach	0	0	0	0	N/A

VersaBank presently has a consensus target price of $10.00, suggesting a potential downside of 8.00%. Given VersaBank’s higher probable upside, research analysts plainly believe VersaBank is more favorable than Farmers & Merchants Bank of Long Beach.

Profitability

This table compares VersaBank and Farmers & Merchants Bank of Long Beach’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VersaBank	17.02%	12.26%	1.11%
Farmers & Merchants Bank of Long Beach	13.71%	4.57%	0.50%

Institutional & Insider Ownership

56.9% of VersaBank shares are held by institutional investors. Comparatively, 7.6% of Farmers & Merchants Bank of Long Beach shares are held by institutional investors. 12.8% of Farmers & Merchants Bank of Long Beach shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

VersaBank has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bank of Long Beach has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Dividends

VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.6%. Farmers & Merchants Bank of Long Beach pays an annual dividend of $112.00 per share and has a dividend yield of 2.4%. VersaBank pays out 5.3% of its earnings in the form of a dividend. Farmers & Merchants Bank of Long Beach pays out 23.1% 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.

Summary

VersaBank beats Farmers & Merchants Bank of Long Beach on 9 of the 15 factors compared between the two stocks.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

About Farmers & Merchants Bank of Long Beach

Farmers & Merchants Bank of Long Beach provides various banking products and services to individuals, professionals, and small to medium-sized businesses in Los Angeles, Orange, and Santa Barbara Counties. It offers checking, savings, Christmas club savings, health savings, market rate savings, and money market accounts; demand and time deposits; certificates of deposit; and individual retirement account. The company also provides personal, home, commercial real estate, real estate and construction, and commercial business loans, as well as lines of credit; financing for residential loans comprising single-family and multifamily loans; and credit and debit cards. In addition, it offers account management, receivables and payables, and risk management services; commercial lending services; and faith-based and healthcare banking services, as well as online and mobile banking services. Farmers & Merchants Bank of Long Beach was founded in 1907 and is headquartered in Long Beach, California.