Critical Analysis: MainStreet Bank (NASDAQ:MNSB) and Orange County Bancorp (NASDAQ:OBT)

Orange County Bancorp (NASDAQ:OBT) and MainStreet Bank (NASDAQ:MNSB) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, valuation, analyst recommendations, earnings, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Orange County Bancorp and MainStreet Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Orange County Bancorp	0	2	2	0	2.50
MainStreet Bank	1	1	0	0	1.50

Orange County Bancorp presently has a consensus target price of $30.25, suggesting a potential downside of 5.73%. Given Orange County Bancorp’s stronger consensus rating and higher probable upside, equities analysts plainly believe Orange County Bancorp is more favorable than MainStreet Bank.

Valuation & Earnings

This table compares Orange County Bancorp and MainStreet Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Orange County Bancorp	$128.82 million	3.33	$27.88 million	$3.02	10.63
MainStreet Bank	$135.62 million	1.29	$13.46 million	$1.76	12.90

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

Insider and Institutional Ownership

42.6% of Orange County Bancorp shares are owned by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are owned by institutional investors. 9.3% of Orange County Bancorp shares are owned by company insiders. Comparatively, 9.3% of MainStreet Bank shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Orange County Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 2.2%. MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Orange County Bancorp pays out 23.8% of its earnings in the form of a dividend. MainStreet Bank pays out 22.7% 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.

Profitability

This table compares Orange County Bancorp and MainStreet Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Orange County Bancorp	23.51%	15.98%	1.41%
MainStreet Bank	11.51%	8.37%	0.72%

Volatility and Risk

Orange County Bancorp has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500. Comparatively, MainStreet Bank has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Summary

Orange County Bancorp beats MainStreet Bank on 11 of the 16 factors compared between the two stocks.

About Orange County Bancorp

Orange County Bancorp, Inc., through its subsidiaries, provides commercial and consumer banking products and services, and trust and wealth management services to small businesses, middle-market enterprises, local municipal governments, and individuals. It accepts various deposits, including interest-bearing and noninterest-bearing demand accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company also offers commercial real estate loans, commercial and industrial loans, commercial real estate construction loans, residential real estate loans, home equity loans, and consumer loans. In addition, it provides traditional trust and administration, asset management, financial planning, and wealth management services. The company operates full-service branches and loan production office in Orange, Westchester, Rockland, and Bronx counties in New York. Orange County Bancorp, Inc. was founded in 1892 and is headquartered in Middletown, New York.

About MainStreet Bank

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.