Contrasting Nicolet Bankshares (NYSE:NIC) & Farmers & Merchants Bancorp (OTCMKTS:FMCB)

Farmers & Merchants Bancorp (OTCMKTS:FMCB) and Nicolet Bankshares (NYSE:NIC) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $17.60 per share and has a dividend yield of 1.8%. Nicolet Bankshares pays an annual dividend of $1.12 per share and has a dividend yield of 1.3%. Farmers & Merchants Bancorp pays out 15.1% of its earnings in the form of a dividend. Nicolet Bankshares pays out 17.3% 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. Farmers & Merchants Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Farmers & Merchants Bancorp and Nicolet Bankshares’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bancorp	$268.67 million	2.64	$88.31 million	$116.37	8.25
Nicolet Bankshares	$336.61 million	3.87	$61.52 million	$6.49	13.43

Farmers & Merchants Bancorp has higher earnings, but lower revenue than Nicolet Bankshares. Farmers & Merchants Bancorp is trading at a lower price-to-earnings ratio than Nicolet Bankshares, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

5.6% of Farmers & Merchants Bancorp shares are owned by institutional investors. Comparatively, 43.1% of Nicolet Bankshares shares are owned by institutional investors. 7.8% of Farmers & Merchants Bancorp shares are owned by insiders. Comparatively, 16.4% of Nicolet Bankshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Farmers & Merchants Bancorp and Nicolet Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	30.81%	16.03%	1.61%
Nicolet Bankshares	21.13%	10.37%	1.26%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Farmers & Merchants Bancorp and Nicolet Bankshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	0	0	0	N/A
Nicolet Bankshares	0	3	1	0	2.25

Nicolet Bankshares has a consensus price target of $100.00, suggesting a potential upside of 14.73%. Given Nicolet Bankshares’ higher probable upside, analysts plainly believe Nicolet Bankshares is more favorable than Farmers & Merchants Bancorp.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals. The company accepts various deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also offers range of lending products comprising commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides various specialized services consisting of credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. The company was founded in 1916 and is headquartered in Lodi, California.

About Nicolet Bankshares

Nicolet Bankshares, Inc. operates as the bank holding company for Nicolet National Bank that provides banking products and services for businesses and individuals in Wisconsin and Michigan. The company accepts checking, savings, and money market accounts; various certificates of deposit; and individual retirement accounts. It also offers commercial loans, including commercial, industrial, and business loans and lines of credit; commercial real estate loans; agricultural (AG) production and AG real estate loans; commercial real estate investment real estate loans; construction and land development loans; residential real estate loans, such as residential first lien and junior lien mortgages, home equity loans, lines of credit, and residential construction loans; and consumer loans. In addition, the company provides cash management, international banking, personal brokerage, safe deposit boxes, and trust and fiduciary services, as well as wealth management and retirement plan services. Further, it offers mortgage refinancing; online services, such as commercial, retail, and trust online banking; automated bill payment, mobile banking deposits and account access, and remote deposit capture services; and other services consisting of wire transfers, debit cards, credit cards, pre-paid gift cards, direct deposits, and official bank checks, as well as facilitates crop insurance products. The company was formerly known as Green Bay Financial Corporation and changed its name to Nicolet Bankshares, Inc. in March 2002. The company was incorporated in 2000 and is headquartered in Green Bay, Wisconsin.