Critical Contrast: Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) vs. City (NASDAQ:CHCO)

Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBLGet Rating) and City (NASDAQ:CHCOGet Rating) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Earnings and Valuation

This table compares Farmers & Merchants Bank of Long Beach and City’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Farmers & Merchants Bank of Long Beach $329.32 million 2.75 $66.34 million $881.19 8.35
City $235.11 million 5.66 $88.08 million $6.29 14.23

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

Risk & Volatility

Farmers & Merchants Bank of Long Beach has a beta of 0.44, suggesting that its share price is 56% less volatile than the S&P 500. Comparatively, City has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.

Dividends

Farmers & Merchants Bank of Long Beach pays an annual dividend of $112.00 per share and has a dividend yield of 1.5%. City pays an annual dividend of $2.60 per share and has a dividend yield of 2.9%. Farmers & Merchants Bank of Long Beach pays out 12.7% of its earnings in the form of a dividend. City pays out 41.3% 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. City has increased its dividend for 10 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Farmers & Merchants Bank of Long Beach and City, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Farmers & Merchants Bank of Long Beach 0 0 0 0 N/A
City 0 2 0 0 2.00

City has a consensus price target of $91.00, indicating a potential upside of 1.65%. Given City’s higher probable upside, analysts clearly believe City is more favorable than Farmers & Merchants Bank of Long Beach.

Profitability

This table compares Farmers & Merchants Bank of Long Beach and City’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Farmers & Merchants Bank of Long Beach 32.98% 24.24% 2.10%
City 38.33% 15.41% 1.56%

Insider and Institutional Ownership

8.0% of Farmers & Merchants Bank of Long Beach shares are held by institutional investors. Comparatively, 68.1% of City shares are held by institutional investors. 12.8% of Farmers & Merchants Bank of Long Beach shares are held by insiders. Comparatively, 2.6% of City shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

City beats Farmers & Merchants Bank of Long Beach on 9 of the 15 factors compared between the two stocks.

About Farmers & Merchants Bank of Long Beach

(Get Rating)

Farmers & Merchants Bank of Long Beach provides various banking products and services to individuals, professionals, and small to medium-sized businesses. It offers checking, savings, Christmas club savings, health savings, money market, and investment accounts; demand and time deposits; certificates of deposit; and retirement plans. The company also provides personal, home, small business administration, commercial real estate, real estate and construction, and commercial business loans, as well as lines of credit; financing for residential loans comprising single-family and multifamily loans; and credit, debit, and gift cards. In addition, it offers account management, receivables and payables, and risk management services; and merchant, electronic lockbox, mobile and remote deposit capture, digital wallet, direct deposit, escrow, faith-based and healthcare banking, and other services, as well as online and mobile banking services. As of December 31, 2021, the company operated 25 branches in Los Angeles, Orange, and Santa Barbara Counties. Farmers & Merchants Bank of Long Beach was incorporated in 1907 and is headquartered in Long Beach, California.

About City

(Get Rating)

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. The company operates through a network of 94 branches and 905 full-time equivalent associates in West Virginia, Virginia, Kentucky, and Ohio. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

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