Financial Review: Metropolitan Bank (NYSE:MCB) versus Unity Bancorp (NASDAQ:UNTY)

Metropolitan Bank (NYSE:MCB) and Unity Bancorp (NASDAQ:UNTY) 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, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Metropolitan Bank and Unity Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Metropolitan Bank	0	1	3	1	3.00
Unity Bancorp	0	0	5	0	3.00

Metropolitan Bank presently has a consensus target price of $95.00, suggesting a potential upside of 5.10%. Unity Bancorp has a consensus target price of $64.75, suggesting a potential upside of 20.53%. Given Unity Bancorp’s higher possible upside, analysts clearly believe Unity Bancorp is more favorable than Metropolitan Bank.

Institutional & Insider Ownership

79.8% of Metropolitan Bank shares are owned by institutional investors. Comparatively, 42.3% of Unity Bancorp shares are owned by institutional investors. 5.5% of Metropolitan Bank shares are owned by insiders. Comparatively, 28.9% of Unity Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Metropolitan Bank has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Unity Bancorp has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500.

Earnings & Valuation

This table compares Metropolitan Bank and Unity Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Metropolitan Bank	$306.37 million	3.66	$71.10 million	$8.12	11.13
Unity Bancorp	$188.41 million	2.86	$57.95 million	$5.94	9.04

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Metropolitan Bank	15.89%	10.95%	1.04%
Unity Bancorp	31.33%	16.06%	1.85%

Dividends

Metropolitan Bank pays an annual dividend of $1.00 per share and has a dividend yield of 1.1%. Unity Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. Metropolitan Bank pays out 12.3% of its earnings in the form of a dividend. Unity Bancorp pays out 10.8% 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. Unity Bancorp has raised its dividend for 12 consecutive years. Unity Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Unity Bancorp beats Metropolitan Bank on 9 of the 17 factors compared between the two stocks.

About Metropolitan Bank

Metropolitan Bank Holding Corp. operates as the bank holding company for Metropolitan Commercial Bank that provides a range of business, commercial, and retail banking products and services to small businesses, middle-market enterprises, public entities, and individuals in the New York metropolitan area. The company offers checking, savings, term deposit, money market, demand deposit, and other interest-bearing transaction accounts. It also provides lending products, including commercial real estate, multi-family, construction, and one-to four-family real estate loans; commercial and industrial loans; consumer loans; acquisition and renovation loans; loans to refinance or return borrower equity; loans on owner-occupied properties; working capital lines of credit; trade finance and letters of credit; and term loans. In addition, the company offers cash management services, as well as online and mobile banking, ACH, remote deposit capture, and debit cards. The company was formerly known as Metbank Holding Corp. and changed its name to Metropolitan Bank Holding Corp. in January 2007. Metropolitan Bank Holding Corp. was incorporated in 1997 and is headquartered in New York, New York.

About Unity Bancorp

Unity Bancorp, Inc. operates as a bank holding company for Unity Bank that provides range of commercial and retail banking services to individuals, small and medium sized businesses, and professional communities. It offers personal and business checking accounts, time deposits, money market accounts, savings accounts, and retirement accounts, as well as noninterest and interest-bearing demand deposits. The company also provides small business administration loans; commercial loans; and residential mortgage and consumer loans, including residential real estate, home equity lines and loans, and residential construction lines, as well as personal loans. In addition, it offers credit and debit cards, wire transfer, safe deposit box, automated teller, and internet and mobile banking services; and automated clearing house origination and remote deposit capture services. Unity Bancorp, Inc. was incorporated in 1991 and is headquartered in Clinton, New Jersey.