Head-To-Head Review: Mercantile Bank (NASDAQ:MBWM) vs. Civista Bancshares (NASDAQ:CIVB)

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

Institutional & Insider Ownership

58.6% of Mercantile Bank shares are owned by institutional investors. Comparatively, 52.1% of Civista Bancshares shares are owned by institutional investors. 2.5% of Mercantile Bank shares are owned by company insiders. Comparatively, 1.6% of Civista Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Mercantile Bank and Civista Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$371.80 million	2.41	$88.75 million	$5.57	9.33
Civista Bancshares	$254.95 million	2.41	$46.21 million	$2.72	9.16

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Mercantile Bank and Civista Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	3	4	0	2.57
Civista Bancshares	0	3	3	1	2.71

Mercantile Bank currently has a consensus price target of $56.20, suggesting a potential upside of 8.10%. Civista Bancshares has a consensus price target of $26.60, suggesting a potential upside of 6.78%. Given Mercantile Bank’s higher probable upside, equities analysts plainly believe Mercantile Bank is more favorable than Civista Bancshares.

Dividends

Mercantile Bank pays an annual dividend of $1.56 per share and has a dividend yield of 3.0%. Civista Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.9%. Mercantile Bank pays out 28.0% of its earnings in the form of a dividend. Civista Bancshares pays out 26.5% 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 and Civista Bancshares has raised its dividend for 4 consecutive years. Mercantile Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Mercantile Bank and Civista Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	24.19%	14.06%	1.47%
Civista Bancshares	19.73%	11.09%	1.27%

Volatility and Risk

Mercantile Bank has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500. Comparatively, Civista Bancshares has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Summary

Mercantile Bank beats Civista Bancshares on 15 of the 18 factors compared between the two stocks.

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.

About Civista Bancshares

Civista Bancshares, Inc. operates as the financial holding company for Civista Bank that provides community banking services. It collects a range of customer deposits; and offers commercial and agriculture, commercial and residential real estate, farm real estate, real estate construction, consumer, and other loans, as well as letters of credit. The company also holds and manages securities portfolio; leases general equipment; and provides captive insurance products. It operates in North Central, West Central, South Western Ohio, South Eastern Indiana, and Northern Kentucky. The company was formerly known as First Citizens Banc Corp and changed its name to Civista Bancshares, Inc. in May 2015. Civista Bancshares, Inc. was founded in 1884 and is headquartered in Sandusky, Ohio.