Prime Meridian (OTCMKTS:PMHG) & Bank7 (NASDAQ:BSVN) Financial Analysis

Bank7 (NASDAQ:BSVN) and Prime Meridian (OTCMKTS:PMHG) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Bank7 and Prime Meridian, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank7	0	1	3	0	2.75
Prime Meridian	0	0	0	0	0.00

Bank7 presently has a consensus price target of $54.00, indicating a potential upside of 30.43%. Given Bank7’s stronger consensus rating and higher possible upside, analysts plainly believe Bank7 is more favorable than Prime Meridian.

Dividends

Bank7 pays an annual dividend of $1.08 per share and has a dividend yield of 2.6%. Prime Meridian pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. Bank7 pays out 23.8% of its earnings in the form of a dividend. Prime Meridian pays out 40.3% 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. Bank7 has raised its dividend for 5 consecutive years. Bank7 is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

23.5% of Bank7 shares are held by institutional investors. Comparatively, 11.8% of Prime Meridian shares are held by institutional investors. 25.8% of Bank7 shares are held by insiders. Comparatively, 25.9% of Prime Meridian shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Bank7 has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Prime Meridian has a beta of 0.17, indicating that its share price is 83% less volatile than the S&P 500.

Profitability

This table compares Bank7 and Prime Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank7	31.60%	19.11%	2.39%
Prime Meridian	15.49%	9.27%	0.87%

Valuation & Earnings

This table compares Bank7 and Prime Meridian”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank7	$142.79 million	2.74	$45.70 million	$4.53	9.14
Prime Meridian	$50.36 million	3.62	$8.49 million	$2.48	21.77

Bank7 has higher revenue and earnings than Prime Meridian. Bank7 is trading at a lower price-to-earnings ratio than Prime Meridian, indicating that it is currently the more affordable of the two stocks.

Summary

Bank7 beats Prime Meridian on 14 of the 17 factors compared between the two stocks.

About Bank7

Bank7 Corp. operates as a bank holding company for Bank7 that provides banking and financial services to individual and corporate customers. It offers commercial deposit, commercial checking, money market, and other deposit accounts; and retail deposit services, such as certificates of deposit, money market accounts, checking accounts, negotiable order of withdrawal accounts, savings accounts, and automated teller machine access. The company also provides commercial real estate, hospitality, energy, and commercial and industrial lending services; consumer lending services to individuals for personal and household purposes comprising residential real estate loans and mortgage banking services, personal lines of credit, loans for the purchase of automobiles, and other installment loans, as well as secured and unsecured term loans and home improvement loans. It operates through a network of full-service branches in Oklahoma, the Dallas/Fort Worth, Texas metropolitan area, and Kansas. The company was formerly known as Haines Financial Corp. Bank7 Corp. was founded in 1901 and is headquartered in Oklahoma City, Oklahoma.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.