Analyzing Potomac Bancshares (OTCMKTS:PTBS) & Virginia National Bankshares (NASDAQ:VABK)

Potomac Bancshares (OTCMKTS:PTBS) and Virginia National Bankshares (NASDAQ:VABK) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Profitability

This table compares Potomac Bancshares and Virginia National Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Potomac Bancshares	N/A	N/A	N/A
Virginia National Bankshares	23.11%	11.02%	1.18%

Valuation and Earnings

This table compares Potomac Bancshares and Virginia National Bankshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potomac Bancshares	$54.90 million	1.62	$9.70 million	$2.16	9.14
Virginia National Bankshares	$83.34 million	2.67	$19.26 million	$3.55	11.58

Virginia National Bankshares has higher revenue and earnings than Potomac Bancshares. Potomac Bancshares is trading at a lower price-to-earnings ratio than Virginia National Bankshares, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

5.3% of Potomac Bancshares shares are owned by institutional investors. Comparatively, 37.4% of Virginia National Bankshares shares are owned by institutional investors. 4.4% of Potomac Bancshares shares are owned by company insiders. Comparatively, 14.0% of Virginia National Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Potomac Bancshares pays an annual dividend of $0.52 per share and has a dividend yield of 2.6%. Virginia National Bankshares pays an annual dividend of $1.44 per share and has a dividend yield of 3.5%. Potomac Bancshares pays out 24.1% of its earnings in the form of a dividend. Virginia National Bankshares pays out 40.6% 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.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Potomac Bancshares and Virginia National Bankshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potomac Bancshares	0	0	0	0	0.00
Virginia National Bankshares	0	1	0	0	2.00

Volatility and Risk

Potomac Bancshares has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, Virginia National Bankshares has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500.

Summary

Virginia National Bankshares beats Potomac Bancshares on 13 of the 14 factors compared between the two stocks.

About Potomac Bancshares

Potomac Bancshares, Inc. operates as the bank holding company for Bank of Charles Town that provides various banking products and services to individuals and businesses. The company offers checking, savings, and individual retirement accounts; and certificates of deposit (CD). It also provides personal loans, including new and used vehicle, home equity, unsecured home improvement and personal, retail equipment, and lot loans, as well as loans secured by CD, and home equity lines of credit; commercial loans for building or office purchases, commercial real estate and construction, and production and administrative equipment purchases; lines of credit; mortgage, commercial, term, residential and commercial construction, commercial real estate, and agricultural loans; and credit and debit cards. In addition, the company offers Card Pay, cash management, merchant, financial planning, trust and estate, investment management, wealth management, full-service brokerage, retirement and insurance planning and products, asset allocation and management, and college planning services, as well as telephone, mobile, and online banking services. Potomac Bancshares, Inc. was founded in 1871 and is based in Charles Town, West Virginia.

About Virginia National Bankshares

Virginia National Bankshares Corporation operates as the holding company for Virginia National Bank that provides a range of commercial and retail banking services. The company operates through Bank, Sturman Wealth Advisors, VNB Trust and Estate Services, and Masonry Capital segments. It provides checking accounts, demand deposits, NOW accounts, money market deposit accounts, time deposits, certificates of deposit, individual retirement accounts, and other depository services. In addition, the company offers commercial and industrial loans, real estate construction and land loans, commercial real estate loans, and 1-4 family residential mortgages, as well as consumer loans comprising student loans, revolving credit, and other fixed payment loans. Further, it provides automated teller machines, internet banking, treasury, and cash management services; merchant and debit card services; and wealth and investment advisory, and brokerage services. Additionally, the company offers investment management, corporate trustee, trust and estate administration, IRA administration, house investment management, and custody services. It serves individuals, businesses, and charitable organizations in the Charlottesville/Albemarle County, Fauquier County, Manassas, Prince William County, Richmond, and Winchester market areas in Virginia. Virginia National Bankshares Corporation was founded in 1998 and is headquartered in Charlottesville, Virginia.