Financial Comparison: Prime Meridian (OTCMKTS:PMHG) & United Community Banks (NYSE:UCB)

United Community Banks (NYSE:UCB) and Prime Meridian (OTCMKTS:PMHG) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Valuation & Earnings

This table compares United Community Banks and Prime Meridian”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$1.07 billion	3.59	$328.10 million	$2.72	11.78
Prime Meridian	$50.36 million	3.92	$8.49 million	$2.48	23.39

United Community Banks has higher revenue and earnings than Prime Meridian. United Community Banks is trading at a lower price-to-earnings ratio than Prime Meridian, indicating that it is currently the more affordable of the two stocks.

Dividends

United Community Banks pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. Prime Meridian pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. United Community Banks pays out 36.8% of its earnings in the form of a dividend. Prime Meridian pays out 40.3% 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. United Community Banks is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares United Community Banks and Prime Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	22.05%	9.65%	1.24%
Prime Meridian	15.49%	9.13%	0.87%

Risk and Volatility

United Community Banks has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Prime Meridian has a beta of 0.06, indicating that its stock price is 94% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for United Community Banks and Prime Meridian, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	4	4	0	2.50
Prime Meridian	0	0	0	0	0.00

United Community Banks presently has a consensus target price of $38.40, indicating a potential upside of 19.83%. Given United Community Banks’ stronger consensus rating and higher possible upside, analysts plainly believe United Community Banks is more favorable than Prime Meridian.

Institutional & Insider Ownership

82.3% of United Community Banks shares are held by institutional investors. Comparatively, 11.8% of Prime Meridian shares are held by institutional investors. 0.5% of United Community Banks shares are held by insiders. Comparatively, 25.9% of Prime Meridian shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

United Community Banks beats Prime Meridian on 13 of the 16 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.