Head to Head Survey: Origin Bancorp (NASDAQ:OBK) and Mercantile Bank (NASDAQ:MBWM)

Origin Bancorp (NASDAQ:OBK) and Mercantile Bank (NASDAQ:MBWM) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Valuation and Earnings

This table compares Origin Bancorp and Mercantile Bank’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Origin Bancorp	$355.67 million	2.81	$83.80 million	$2.65	12.15
Mercantile Bank	$230.14 million	3.10	$82.22 million	$5.16	8.57

Origin Bancorp has higher revenue and earnings than Mercantile Bank. Mercantile Bank is trading at a lower price-to-earnings ratio than Origin Bancorp, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Origin Bancorp has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Mercantile Bank has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Profitability

This table compares Origin Bancorp and Mercantile Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Origin Bancorp	13.18%	7.94%	0.86%
Mercantile Bank	23.99%	15.52%	1.50%

Dividends

Origin Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 1.9%. Mercantile Bank pays an annual dividend of $1.44 per share and has a dividend yield of 3.3%. Origin Bancorp pays out 22.6% of its earnings in the form of a dividend. Mercantile Bank pays out 27.9% 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. Mercantile Bank has raised its dividend for 13 consecutive years. Mercantile Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

54.7% of Origin Bancorp shares are owned by institutional investors. Comparatively, 58.6% of Mercantile Bank shares are owned by institutional investors. 6.2% of Origin Bancorp shares are owned by insiders. Comparatively, 3.1% of Mercantile Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Origin Bancorp and Mercantile Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Origin Bancorp	0	1	4	0	2.80
Mercantile Bank	0	3	1	0	2.25

Origin Bancorp currently has a consensus target price of $36.00, suggesting a potential upside of 11.84%. Mercantile Bank has a consensus target price of $52.00, suggesting a potential upside of 17.62%. Given Mercantile Bank’s higher possible upside, analysts plainly believe Mercantile Bank is more favorable than Origin Bancorp.

Summary

Mercantile Bank beats Origin Bancorp on 9 of the 17 factors compared between the two stocks.

About Origin Bancorp

Origin Bancorp, Inc. operates as a bank holding company for Origin Bank that provides banking and financial services to small and medium-sized businesses, municipalities, and retail clients in Texas, Louisiana, and Mississippi. It offers noninterest and interest-bearing checking accounts, savings deposits, money market accounts, and time deposits; and offers commercial real estate, construction and land development, consumer, residential real estate, commercial and industrial, mortgage warehouse, and residential mortgage loans. The company also offers personal and commercial property, and casualty insurance products; and Internet banking and voice response information, mobile applications, cash management, overdraft protection, direct deposit, safe deposit boxes, U.S. savings bonds, and automatic account transfer services; and mobile and online banking, treasury management, mortgage origination and servicing facilities, peer-to-peer electronic pay solutions, and personal financial management solutions. The company was founded in 1912 and is headquartered in Ruston, Louisiana.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.