Head to Head Review: Alerus Financial (NASDAQ:ALRS) vs. Colony Bankcorp (NYSE:CBAN)

Alerus Financial (NASDAQ:ALRS) and Colony Bankcorp (NYSE:CBAN) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent ratings for Alerus Financial and Colony Bankcorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alerus Financial	0	6	1	0	2.14
Colony Bankcorp	0	0	3	1	3.25

Alerus Financial currently has a consensus target price of $35.50, indicating a potential upside of 6.70%. Colony Bankcorp has a consensus target price of $23.00, indicating a potential upside of 7.12%. Given Colony Bankcorp’s stronger consensus rating and higher probable upside, analysts clearly believe Colony Bankcorp is more favorable than Alerus Financial.

Dividends

Alerus Financial pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. Colony Bankcorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.2%. Alerus Financial pays out 83.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Colony Bankcorp pays out 29.1% of its earnings in the form of a dividend. Alerus Financial has raised its dividend for 25 consecutive years and Colony Bankcorp has raised its dividend for 7 consecutive years. Alerus Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Alerus Financial and Colony Bankcorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alerus Financial	$399.92 million	2.07	$17.44 million	$1.06	31.39
Colony Bankcorp	$190.23 million	2.40	$28.25 million	$1.65	13.01

Colony Bankcorp has lower revenue, but higher earnings than Alerus Financial. Colony Bankcorp is trading at a lower price-to-earnings ratio than Alerus Financial, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Alerus Financial has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Colony Bankcorp has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Profitability

This table compares Alerus Financial and Colony Bankcorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alerus Financial	6.87%	14.41%	1.55%
Colony Bankcorp	15.42%	10.40%	1.06%

Insider & Institutional Ownership

51.2% of Alerus Financial shares are owned by institutional investors. Comparatively, 50.4% of Colony Bankcorp shares are owned by institutional investors. 4.3% of Alerus Financial shares are owned by insiders. Comparatively, 3.9% of Colony Bankcorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

About Alerus Financial

Alerus Financial Corporation operates as the bank holding company for Alerus Financial, National Association that engages in the provision of various financial services to businesses and consumers. The company operates in four segments: Banking, Mortgage, Retirement and Benefit Services, and Wealth Management. It offers various deposit products, including demand deposits, interest-bearing transaction accounts, money market accounts, time and savings deposits, checking accounts, and certificates of deposit; and treasury management products, including electronic receivables management, remote deposit capture, cash vault services, merchant services, and other cash management services. The company also provides commercial loans, business term loans, lines of credit, and commercial real estate loans, as well as construction and land development loans; consumer lending products, including residential first mortgage loans; installment loans and lines of credit; and second mortgage loans. In addition, it offers retirement plan administration and investment advisory services, employee stock ownership plan, fiduciary services, payroll, health savings accounts, and other benefit services, as well as individual retirement accounts; and financial planning, investment management, personal and corporate trust, estate administration, and custody services. Further, the company provides debit and credit cards, online banking, mobile banking/wallet, payment, private banking, payroll accounts, flex spending accounts, administration, and government health insurance program services. It offers banking services in North Dakota, Minnesota, and Arizona; and retirement and benefit plans through offices located in Michigan, Minnesota, and Colorado. The company was formerly known as First National Bank North Dakota and changed its name to Alerus Financial Corporation in 2000. Alerus Financial Corporation was founded in 1879 and is headquartered in Grand Forks, North Dakota.

About Colony Bankcorp

Colony Bankcorp, Inc. operates as the bank holding company for Colony Bank that provides various banking products and services to commercial and consumer customers. The company offers various deposit products, including demand, savings, and time deposits. It also provides loans to small and medium-sized businesses; residential and commercial construction, and land development loans; commercial real estate loans; commercial loans; agri-business and production loans; residential mortgage loans; home equity loans; and consumer loans. In addition, the company offers internet banking services, electronic bill payment services, safe deposit box rentals, telephone banking, credit and debit card services, and remote depository products, as well as access to a network of ATMs. As of January 20, 2022, it operated 39 locations throughout Georgia. The company was founded in 1975 and is headquartered in Fitzgerald, Georgia.