Contrasting CF Bankshares (NASDAQ:CFBK) and VersaBank (NASDAQ:VBNK)

VersaBank (NASDAQ:VBNK) and CF Bankshares (NASDAQ:CFBK) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, dividends, earnings, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent ratings for VersaBank and CF Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VersaBank	0	1	3	0	2.75
CF Bankshares	0	0	2	0	3.00

VersaBank currently has a consensus target price of $24.00, indicating a potential upside of 5.96%. CF Bankshares has a consensus target price of $40.00, indicating a potential upside of 17.27%. Given CF Bankshares’ stronger consensus rating and higher possible upside, analysts clearly believe CF Bankshares is more favorable than VersaBank.

Profitability

This table compares VersaBank and CF Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VersaBank	9.92%	8.66%	0.75%
CF Bankshares	15.10%	10.10%	0.88%

Risk and Volatility

VersaBank has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500. Comparatively, CF Bankshares has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.

Dividends

VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.3%. CF Bankshares pays an annual dividend of $0.36 per share and has a dividend yield of 1.1%. VersaBank pays out 9.2% of its earnings in the form of a dividend. CF Bankshares pays out 12.4% 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. CF Bankshares has raised its dividend for 4 consecutive years. CF Bankshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

56.9% of VersaBank shares are held by institutional investors. Comparatively, 41.1% of CF Bankshares shares are held by institutional investors. 17.7% of CF Bankshares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares VersaBank and CF Bankshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VersaBank	$217.14 million	3.39	$20.32 million	$0.76	29.80
CF Bankshares	$125.92 million	1.74	$17.54 million	$2.91	11.72

VersaBank has higher revenue and earnings than CF Bankshares. CF Bankshares is trading at a lower price-to-earnings ratio than VersaBank, indicating that it is currently the more affordable of the two stocks.

Summary

CF Bankshares beats VersaBank on 9 of the 17 factors compared between the two stocks.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

About CF Bankshares

CF Bankshares Inc. operates as the bank holding company for CFBank, National Association that provides various banking products and services in the United States. The company accepts savings, retail and business checking accounts, and money market accounts, as well as certificates of deposit. It offers single-family mortgage loans; commercial real estate and multi-family residential mortgage loans; commercial loans and equipment leases; residential real estate loans and treasury management depository services; retail banking services and products. In addition, the company offers consumer loans, such as home equity lines of credit, home improvement loans, and loans secured by deposits and purchased loans, as well as other loans. Further, it provides online internet banking, mobile banking, and remote deposits. The company was formerly known as Central Federal Corporation and changed its name to CF Bankshares Inc. in July 2020. CF Bankshares Inc. was founded in 1892 and is based in Columbus, Ohio.