Critical Contrast: M&F Bancorp (OTCMKTS:MFBP) versus S&T Bancorp (NASDAQ:STBA)

M&F Bancorp (OTCMKTS:MFBP) and S&T Bancorp (NASDAQ:STBA) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Institutional & Insider Ownership

65.2% of S&T Bancorp shares are owned by institutional investors. 2.9% of M&F Bancorp shares are owned by insiders. Comparatively, 1.4% of S&T Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares M&F Bancorp and S&T Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&F Bancorp	N/A	N/A	N/A
S&T Bancorp	24.68%	10.86%	1.44%

Earnings and Valuation

This table compares M&F Bancorp and S&T Bancorp’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&F Bancorp	N/A	N/A	N/A	N/A	N/A
S&T Bancorp	$535.52 million	2.35	$144.78 million	$3.53	9.31

S&T Bancorp has higher revenue and earnings than M&F Bancorp.

Volatility & Risk

M&F Bancorp has a beta of -0.16, meaning that its stock price is 116% less volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500.

Dividends

M&F Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. S&T Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 4.0%. S&T Bancorp pays out 37.4% of its earnings in the form of a dividend. S&T Bancorp has increased its dividend for 11 consecutive years. S&T Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for M&F Bancorp and S&T Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&F Bancorp	0	0	0	0	N/A
S&T Bancorp	0	1	0	0	2.00

S&T Bancorp has a consensus price target of $30.00, suggesting a potential downside of 8.76%. Given S&T Bancorp’s higher possible upside, analysts clearly believe S&T Bancorp is more favorable than M&F Bancorp.

Summary

S&T Bancorp beats M&F Bancorp on 9 of the 11 factors compared between the two stocks.

About M&F Bancorp

M&F Bancorp, Inc. operates as a bank holding company for the Mechanics and Farmers Bank that provides consumer and commercial banking products and services in North Carolina. It offers deposit products, including demand deposits; checking, savings, and money market accounts, as well as certificates of deposit. The company provides loans for commercial and residential real estate, and construction; and consumer and other loans; as well as ATM services. M&F Bancorp, Inc. was founded in 1907 and is headquartered in Durham, North Carolina.

About S&T Bancorp

S&T Bancorp, Inc. operates as the bank holding company for S&T Bank that engages in the provision of retail and commercial banking products and services. The company operates through six segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The company accepts time and demand deposits; and offers commercial and consumer loans, cash management services, and brokerage and trust services, as well as acts as guardian and custodian of employee benefits. It also manages private investment accounts for individuals and institutions. In addition, the company distributes life insurance and long-term disability income insurance products, as well as offers title insurance agency services to commercial customers; and acts as a reinsurer of credit life, accident, and health insurance policies. S&T Bancorp, Inc. was founded in 1902 and is headquartered in Indiana, Pennsylvania.