Comparing Mercantile Bank (NASDAQ:MBWM) & First National Bank Alaska (OTCMKTS:FBAK)

First National Bank Alaska (OTCMKTS:FBAK) and Mercantile Bank (NASDAQ:MBWM) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitability.

Earnings & Valuation

This table compares First National Bank Alaska and Mercantile Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First National Bank Alaska	$87.73 million	9.46	$60.01 million	$22.51	11.64
Mercantile Bank	$230.50 million	3.07	$79.59 million	$4.82	9.03

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

Profitability

This table compares First National Bank Alaska and Mercantile Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First National Bank Alaska	N/A	13.70%	1.11%
Mercantile Bank	21.99%	14.29%	1.41%

Dividends

First National Bank Alaska pays an annual dividend of $16.00 per share and has a dividend yield of 6.1%. Mercantile Bank pays an annual dividend of $1.48 per share and has a dividend yield of 3.4%. First National Bank Alaska pays out 71.1% of its earnings in the form of a dividend. Mercantile Bank pays out 30.7% 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. Mercantile Bank has raised its dividend for 14 consecutive years.

Institutional and Insider Ownership

58.6% of Mercantile Bank shares are owned by institutional investors. 3.2% of Mercantile Bank shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

First National Bank Alaska has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for First National Bank Alaska and Mercantile Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First National Bank Alaska	0	0	0	0	0.00
Mercantile Bank	0	1	2	0	2.67

Mercantile Bank has a consensus price target of $52.83, suggesting a potential upside of 21.40%. Given Mercantile Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Mercantile Bank is more favorable than First National Bank Alaska.

Summary

Mercantile Bank beats First National Bank Alaska on 13 of the 17 factors compared between the two stocks.

About First National Bank Alaska

First National Bank Alaska, a commercial bank, provides various banking products and services for business, industry, and individual customers primarily in Alaska. The company offers savings and checking accounts; money market deposits; safe deposit services; certificates of deposit; individual retirement accounts; and personal, home equity, and construction loans, as well as loans for stability and growth. It also provides investment, treasury, trust, and wealth management services; and escrow and contract collection, and bankcard services. In addition, the company offers debit and credit cards, online and mobile banking, fraud prevention, and convenience banking services. First National Bank Alaska was founded in 1922 and is headquartered in Anchorage, Alaska.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.