Head to Head Review: Norwood Financial (NASDAQ:NWFL) and American Bank (OTCMKTS:AMBK)

Norwood Financial (NASDAQ:NWFL) and American Bank (OTCMKTS:AMBK) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, institutional ownership, valuation, risk and earnings.

Earnings & Valuation

This table compares Norwood Financial and American Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Norwood Financial	$136.15 million	2.41	$27.75 million	$2.99	10.07
American Bank	$59.94 million	1.98	$13.54 million	$2.10	8.57

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

Profitability

This table compares Norwood Financial and American Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Norwood Financial	20.39%	12.40%	1.20%
American Bank	22.58%	N/A	N/A

Risk & Volatility

Norwood Financial has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, American Bank has a beta of -0.02, indicating that its share price is 102% less volatile than the S&P 500.

Dividends

Norwood Financial pays an annual dividend of $1.28 per share and has a dividend yield of 4.2%. American Bank pays an annual dividend of $0.64 per share and has a dividend yield of 3.6%. Norwood Financial pays out 42.8% of its earnings in the form of a dividend. American Bank pays out 30.5% 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. Norwood Financial has increased its dividend for 7 consecutive years. Norwood Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent recommendations for Norwood Financial and American Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Norwood Financial	0	2	1	0	2.33
American Bank	0	0	0	0	0.00

Norwood Financial currently has a consensus target price of $33.00, suggesting a potential upside of 9.56%. Given Norwood Financial’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Norwood Financial is more favorable than American Bank.

Institutional and Insider Ownership

28.1% of Norwood Financial shares are owned by institutional investors. 9.1% of Norwood Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Norwood Financial beats American Bank on 15 of the 17 factors compared between the two stocks.

About Norwood Financial

Norwood Financial Corp. operates as the bank holding company for Wayne Bank that provides various banking products and services. The company accepts a range of deposit products, including interest-bearing and non-interest-bearing transaction accounts, and statement savings and money market accounts, as well as certificate of deposits. It also provides commercial loans comprising lines of credit, revolving credit, term loans, mortgages, secured lending products, and letter of credit facilities; municipal finance lending; construction loans for commercial construction projects and single-family residences; land loans; construction financing; consumer loans; mortgage lending to finance principal residences and second home dwellings; and indirect dealer financing of new and used automobiles, boats, and recreational vehicles. In addition, the company offers investment securities services; personal and business credit services; trust and investment products; and cash management, direct deposit, remote deposit capture, mobile deposit capture, automated clearing house activity, real estate settlement, and Internet and mobile banking services. Further, it engages in the annuity and mutual fund sale, and discount brokerage activities, as well as insurance agency business. The company serves consumers, businesses, nonprofit organizations, and municipalities. It operates branches in Northeastern Pennsylvania; and in Delaware, Sullivan, Ontario, Otsego, and Yates Counties, New York, as well as automated teller machines. Norwood Financial Corp. was founded in 1870 and is headquartered in Honesdale, Pennsylvania.

About American Bank

American Bank Incorporated operates as the bank holding company for American Bank that provides various banking products and services to consumer, business, institutional, and governmental customers. It accepts a range of interest-bearing checking and money market accounts, savings accounts, certificates of deposit, and individual retirement accounts. The company also offers commercial, industrial, and other loans; commercial mortgage loans; commercial construction loans; residential mortgage loans; and consumer loans, including personal term loans, personal credit lines, automobile loans, home equity loans, and home equity lines of credit and loans. In addition, it provides online or mobile banking, automated teller machine, safe deposit box rental, and wire transfer services, as well as sells checks and checkbooks, and purchases investment securities. The company operates an office located in Allentown, Pennsylvania; and a loan production office in Blue Bell, Pennsylvania. The company was founded in 1997 and is based in Allentown, Pennsylvania.