Analyzing F & M Bank (OTCMKTS:FMBM) and Citizens & Northern (NASDAQ:CZNC)

Citizens & Northern (NASDAQ:CZNC) and F & M Bank (OTCMKTS:FMBM) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent ratings for Citizens & Northern and F & M Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Citizens & Northern	0	3	1	0	2.25
F & M Bank	0	0	0	0	0.00

Citizens & Northern currently has a consensus target price of $23.50, indicating a potential upside of 6.82%. Given Citizens & Northern’s stronger consensus rating and higher probable upside, analysts clearly believe Citizens & Northern is more favorable than F & M Bank.

Dividends

Citizens & Northern pays an annual dividend of $1.12 per share and has a dividend yield of 5.1%. F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.4%. Citizens & Northern pays out 75.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. F & M Bank pays out 32.8% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Citizens & Northern and F & M Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Citizens & Northern	$170.03 million	2.32	$23.43 million	$1.48	14.86
F & M Bank	$78.92 million	1.37	$11.23 million	$3.17	9.59

Citizens & Northern has higher revenue and earnings than F & M Bank. F & M Bank is trading at a lower price-to-earnings ratio than Citizens & Northern, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Citizens & Northern has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, F & M Bank has a beta of 0.29, meaning that its stock price is 71% less volatile than the S&P 500.

Profitability

This table compares Citizens & Northern and F & M Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Citizens & Northern	13.75%	9.79%	1.07%
F & M Bank	14.23%	11.72%	0.85%

Insider & Institutional Ownership

30.8% of Citizens & Northern shares are owned by institutional investors. Comparatively, 3.9% of F & M Bank shares are owned by institutional investors. 4.7% of Citizens & Northern shares are owned by insiders. Comparatively, 11.6% of F & M Bank shares are owned 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.

Summary

Citizens & Northern beats F & M Bank on 11 of the 16 factors compared between the two stocks.

About Citizens & Northern

Citizens & Northern Corp. is a holding company, which engages in community banking. It provides a full range of banking and mortgage services to individual and corporate customers in North Central Pennsylvania and Southern New York State. The firm’s lending products include mortgage loans, commercial loans, and consumer loans. Its deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, individual retirement accounts, and certificates of deposit. The company was founded in 1864 and is headquartered in Wellsboro, PA.

About F & M Bank

F & M Bank Corp. operates as the bank holding company for Farmers & Merchants Bank that provides financial products and services to consumers and businesses in Virginia. The company offers commercial and individual demand and time deposit accounts, savings accounts, money market accounts, internet and mobile banking services, and drive-in banking services. It also provides construction loans, including residential, and land acquisition and development loans; commercial real estate loans; business loans; consumer loans, such as personal loans, automobile loans, deposit account loans, installment and demand loans, and home equity loans; residential mortgage loans; credit cards; dealer finance; farmland loans; multi-family loans; and commercial and industrial loans. In addition, the company offers brokerage services and commercial and personal insurance products. Further, it originates conventional and government agency sponsored mortgages; and offers title insurance and real estate settlement services. The company was founded in 1908 and is headquartered in Timberville, Virginia.