Head-To-Head Analysis: Farmers & Merchants Bancorp, Inc. (OH) (NASDAQ:FMAO) versus Sound Financial Bancorp (NASDAQ:SFBC)

Farmers & Merchants Bancorp, Inc. (OH) (NASDAQ:FMAO) and Sound Financial Bancorp (NASDAQ:SFBC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, analyst recommendations, valuation, institutional ownership, profitability and earnings.

Risk & Volatility

Farmers & Merchants Bancorp, Inc. (OH) has a beta of 0.2, indicating that its stock price is 80% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Profitability

This table compares Farmers & Merchants Bancorp, Inc. (OH) and Sound Financial Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Farmers & Merchants Bancorp, Inc. (OH) 23.20% 10.16% 1.35%
Sound Financial Bancorp 17.81% 9.33% 0.94%

Institutional and Insider Ownership

15.8% of Farmers & Merchants Bancorp, Inc. (OH) shares are held by institutional investors. Comparatively, 38.1% of Sound Financial Bancorp shares are held by institutional investors. 10.0% of Farmers & Merchants Bancorp, Inc. (OH) shares are held by insiders. Comparatively, 12.7% of Sound Financial Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Farmers & Merchants Bancorp, Inc. (OH) and Sound Financial Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Farmers & Merchants Bancorp, Inc. (OH) $57.29 million 5.62 $14.95 million $1.68 17.26
Sound Financial Bancorp $37.45 million 2.42 $7.04 million N/A N/A

Farmers & Merchants Bancorp, Inc. (OH) has higher revenue and earnings than Sound Financial Bancorp.

Dividends

Farmers & Merchants Bancorp, Inc. (OH) pays an annual dividend of $0.60 per share and has a dividend yield of 2.1%. Sound Financial Bancorp pays an annual dividend of $0.56 per share and has a dividend yield of 1.6%. Farmers & Merchants Bancorp, Inc. (OH) pays out 35.7% of its earnings in the form of a dividend. Sound Financial Bancorp has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings for Farmers & Merchants Bancorp, Inc. (OH) and Sound Financial Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Farmers & Merchants Bancorp, Inc. (OH) 0 1 0 0 2.00
Sound Financial Bancorp 0 0 0 0 N/A

Summary

Farmers & Merchants Bancorp, Inc. (OH) beats Sound Financial Bancorp on 8 of the 13 factors compared between the two stocks.

About Farmers & Merchants Bancorp, Inc. (OH)

Farmers & Merchants Bancorp, Inc. operates as the bank holding company for The Farmers & Merchants State Bank that provides commercial banking, retail banking, and other financial products and services to individuals and small businesses in northwest Ohio and northeast Indiana. The company offers checking accounts; savings and time deposits, including certificates of deposit; and custodial services for individual retirement accounts and health savings accounts. It also provides commercial, agricultural, and residential mortgage, as well as consumer and credit card lending products; loans for farm land, farm equipment, and livestock; operating loans for seeds, fertilizers, and feeds; home improvements loans; and loans for autos, trucks, recreational vehicles, and motorcycles. In addition, the company offers commercial real estate loans, such as operation lines of credit and machinery purchase loans; and agricultural and consumer real estate, commercial and industrial, agricultural, and consumer loans, as well as industrial development bonds. Further, it provides automated teller machine services; and online banking, remote deposit capture or electronic deposit processing, merchant credit card, and mobile banking services. As of February 13, 2019, the company operated through 30 offices. Farmers & Merchants Bancorp, Inc. was founded in 1897 and is based in Archbold, Ohio.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the holding company for Sound Community Bank that provides traditional banking and other financial services for individuals and businesses. It accepts various deposits products comprising savings accounts, money market deposit accounts, NOW accounts, demand accounts, certificates of deposit, and checking accounts. The company also offers various loan products, such as loans secured by first and second mortgages on one-to four-family residences; home equity loans comprising fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; secured and unsecured consumer loans, including new and used manufactured home loans, floating home loans, automobile loans, boat loans, and recreational vehicle loans, and loans secured by deposit accounts; land loans; and commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory. It operates through main office in Seattle; seven branch offices, of which four are located in the Seattle Metropolitan Statistical area, two are located in Clallam County, and one is located in Jefferson County; and two loan production offices, including one located in the Madison Park neighborhood of Seattle and one located in Sequim. Sound Financial Bancorp, Inc. was incorporated in 2008 and is headquartered in Seattle, Washington.

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