Critical Comparison: Southern Michigan Bancorp (OTCMKTS:SOMC) versus Pacific Financial (OTCMKTS:PFLC)

Profitability

This table compares Pacific Financial and Southern Michigan Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pacific Financial	N/A	N/A	N/A
Southern Michigan Bancorp	12.60%	10.09%	0.73%

Earnings & Valuation

This table compares Pacific Financial and Southern Michigan Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pacific Financial	N/A	N/A	N/A	$0.45	41.49
Southern Michigan Bancorp	$93.18 million	1.55	$12.22 million	$2.64	11.74

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

Dividends

Pacific Financial pays an annual dividend of $0.60 per share and has a dividend yield of 3.2%. Southern Michigan Bancorp pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. Pacific Financial pays out 134.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern Michigan Bancorp pays out 25.8% of its earnings in the form of a dividend.

Institutional and Insider Ownership

6.8% of Pacific Financial shares are held by institutional investors. 18.8% of Pacific Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Southern Michigan Bancorp beats Pacific Financial on 6 of the 10 factors compared between the two stocks.

About Pacific Financial

Pacific Financial Corporation operates as the bank holding company for Bank of the Pacific that provides various banking products and services in Washington and Oregon. The company offers personal and business checking, and savings accounts; certificates of deposit, individual retirement accounts, and other investment options; home loans; and auto and recreation loans, credit cards, and home equity line of credit. It also provides business and commercial loans, commercial real estate loans, and SBA guaranteed loans, as well as inventory, equipment, and working capital loans; Visa business cards; and treasury management, merchant, and online and mobile banking services. The company operates various branches in the communities of Grays Harbor, Pacific, Thurston, Whatcom, Clark, Skagit, and Wahkiakum counties in the state of Washington; and in Clatsop County, Oregon. It also operates loan production offices in the communities of Burlington, Washington; Salem, Oregon; and Lake Oswego, Oregon; as well as a residential real estate mortgage department. Pacific Financial Corporation was founded in 1971 and is headquartered in Aberdeen, Washington.

About Southern Michigan Bancorp

Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.