Middlefield Banc (MBCN) versus 1st Source (SRCE) Financial Analysis

Middlefield Banc (NASDAQ: MBCN) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, valuation and profitability.

Volatility & Risk

Middlefield Banc has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500.

Dividends

Middlefield Banc pays an annual dividend of $0.81 per share and has a dividend yield of 1.6%. 1st Source pays an annual dividend of $0.96 per share and has a dividend yield of 1.8%. Middlefield Banc pays out 24.7% of its earnings in the form of a dividend. 1st Source pays out 38.4% 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. 1st Source has raised its dividend for 32 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Middlefield Banc and 1st Source’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Middlefield Banc $48.85 million 3.37 $9.45 million $3.28 15.61
1st Source $311.09 million 4.44 $68.05 million $2.50 21.30

1st Source has higher revenue and earnings than Middlefield Banc. Middlefield Banc is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Middlefield Banc and 1st Source’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Middlefield Banc 19.97% 8.15% 0.89%
1st Source 22.08% 9.58% 1.17%

Insider and Institutional Ownership

28.3% of Middlefield Banc shares are owned by institutional investors. Comparatively, 71.4% of 1st Source shares are owned by institutional investors. 7.0% of Middlefield Banc shares are owned by company insiders. Comparatively, 19.9% of 1st Source shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Middlefield Banc and 1st Source, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Middlefield Banc 0 1 1 0 2.50
1st Source 0 2 1 0 2.33

Middlefield Banc presently has a consensus target price of $52.50, suggesting a potential upside of 2.54%. 1st Source has a consensus target price of $55.00, suggesting a potential upside of 3.27%. Given 1st Source’s higher possible upside, analysts clearly believe 1st Source is more favorable than Middlefield Banc.

Summary

1st Source beats Middlefield Banc on 13 of the 16 factors compared between the two stocks.

About Middlefield Banc

Middlefield Banc Corp. operates as the bank holding company for The Middlefield Banking Company that provides various commercial banking services to small and medium-sized businesses, professionals, small business owners, and retail customers in northeastern and central Ohio. It accepts checking, savings, negotiable order of withdrawal, and money market accounts, as well as time certificates of deposit and IRA accounts. The company offers operational, working capital, term business, residential construction, professional, residential, and mortgage loans; loans to finance capital purchases; selected guaranteed or subsidized loan programs for small businesses; consumer installment loans to purchase automobiles and boats, as well as for home improvement and other personal expenditures; and agricultural loans. It also provides safe deposit facilities, travelers' and official checks, money orders, and ATM services; online banking and bill payment services to individuals; and online cash management services to business customers. In addition, the company resolves and disposes troubled assets in Ohio. As of January 23, 2018, it operated 14 full-service banking centers; an LPL financial brokerage office serving Beachwood, Chardon, Cortland, Dublin, Garrettsville, Mantua, Middlefield, Newbury, Orwell, Solon, Sunbury, Twinsburg, and Westerville; and a loan production office in Mentor, Ohio. Middlefield Banc Corp. was founded in 1901 and is headquartered in Middlefield, Ohio.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and investment management services, and insurance to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate loans, and lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides a range of trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for new and used aircraft, auto and light trucks, construction equipment, and medium and heavy duty trucks; and leases construction equipment, various types of trucks, vans, automobiles, motor coaches, shuttle buses, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services; and investment advisory services to trust and investment clients. As of December 31, 2017, the company operated through 79 banking centers in 17 counties in Indiana and Michigan, and Sarasota County in Florida. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

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