F & M Bank (OTCMKTS:FMBM – Get Free Report) and Citizens & Northern (NASDAQ:CZNC – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.
Dividends
F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.4%. Citizens & Northern pays an annual dividend of $1.12 per share and has a dividend yield of 5.0%. F & M Bank pays out 32.8% of its earnings in the form of a dividend. Citizens & Northern pays out 75.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
3.9% of F & M Bank shares are held by institutional investors. Comparatively, 30.8% of Citizens & Northern shares are held by institutional investors. 11.6% of F & M Bank shares are held by insiders. Comparatively, 4.7% of Citizens & Northern shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| F & M Bank | $78.92 million | 1.38 | $11.23 million | $3.17 | 9.62 |
| Citizens & Northern | $170.03 million | 2.36 | $23.43 million | $1.48 | 15.15 |
Citizens & Northern has higher revenue and earnings than F & M Bank. F & M Bank is trading at a lower price-to-earnings ratio than Citizens & Northern, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares F & M Bank and Citizens & Northern’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| F & M Bank | 14.23% | 11.45% | 0.84% |
| Citizens & Northern | 13.75% | 9.79% | 1.07% |
Risk and Volatility
F & M Bank has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500. Comparatively, Citizens & Northern has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current recommendations for F & M Bank and Citizens & Northern, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| F & M Bank | 0 | 0 | 0 | 0 | 0.00 |
| Citizens & Northern | 0 | 3 | 1 | 0 | 2.25 |
Citizens & Northern has a consensus price target of $23.50, suggesting a potential upside of 4.82%. Given Citizens & Northern’s stronger consensus rating and higher possible upside, analysts clearly believe Citizens & Northern is more favorable than F & M Bank.
Summary
Citizens & Northern beats F & M Bank on 11 of the 16 factors compared between the two stocks.
About F & M Bank
F & M Bank Corp. operates as the bank holding company for Farmers & Merchants Bank that provides financial products and services to consumers and businesses in Virginia. The company offers commercial and individual demand and time deposit accounts, savings accounts, money market accounts, internet and mobile banking services, and drive-in banking services. It also provides construction loans, including residential, and land acquisition and development loans; commercial real estate loans; business loans; consumer loans, such as personal loans, automobile loans, deposit account loans, installment and demand loans, and home equity loans; residential mortgage loans; credit cards; dealer finance; farmland loans; multi-family loans; and commercial and industrial loans. In addition, the company offers brokerage services and commercial and personal insurance products. Further, it originates conventional and government agency sponsored mortgages; and offers title insurance and real estate settlement services. The company was founded in 1908 and is headquartered in Timberville, Virginia.
About Citizens & Northern
Citizens & Northern Corp. is a holding company, which engages in community banking. It provides a full range of banking and mortgage services to individual and corporate customers in North Central Pennsylvania and Southern New York State. The firm’s lending products include mortgage loans, commercial loans, and consumer loans. Its deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, individual retirement accounts, and certificates of deposit. The company was founded in 1864 and is headquartered in Wellsboro, PA.
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