Mercantile Bank (NASDAQ:MBWM) and United Bancorp (NASDAQ:UBCP) Financial Analysis

United Bancorp (NASDAQ:UBCP) and Mercantile Bank (NASDAQ:MBWM) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Volatility & Risk

United Bancorp has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.

Insider & Institutional Ownership

15.4% of United Bancorp shares are owned by institutional investors. Comparatively, 58.6% of Mercantile Bank shares are owned by institutional investors. 12.9% of United Bancorp shares are owned by insiders. Comparatively, 3.2% of Mercantile Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

United Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 5.7%. Mercantile Bank pays an annual dividend of $1.52 per share and has a dividend yield of 3.3%. United Bancorp pays out 58.5% of its earnings in the form of a dividend. Mercantile Bank pays out 28.8% 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 Bancorp has increased its dividend for 13 consecutive years and Mercantile Bank has increased its dividend for 14 consecutive years.

Earnings and Valuation

This table compares United Bancorp and Mercantile Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Bancorp	$31.13 million	2.49	$7.40 million	$1.30	10.31
Mercantile Bank	$239.11 million	3.16	$79.59 million	$5.28	8.79

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for United Bancorp and Mercantile Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Bancorp	0	1	0	0	2.00
Mercantile Bank	0	2	4	0	2.67

Mercantile Bank has a consensus target price of $54.50, suggesting a potential upside of 17.41%. Given Mercantile Bank’s stronger consensus rating and higher probable upside, analysts plainly believe Mercantile Bank is more favorable than United Bancorp.

Profitability

This table compares United Bancorp and Mercantile Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Bancorp	16.44%	11.96%	0.90%
Mercantile Bank	23.05%	14.07%	1.40%

Summary

Mercantile Bank beats United Bancorp on 14 of the 17 factors compared between the two stocks.

About United Bancorp

United Bancorp, Inc. operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio. The company provides range of banking and financial services, which includes accepting demand, savings, and time deposits. It also offers commercial, real estate and consumer loans. United Bancorp, Inc. was founded in 1902 and is headquartered in Martins Ferry, Ohio.

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.