Financial Analysis: Northpointe Bancshares (NYSE:NPB) vs. Potomac Bancshares (OTCMKTS:PTBS)

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

Institutional & Insider Ownership

5.3% of Potomac Bancshares shares are held by institutional investors. 4.4% of Potomac Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Potomac Bancshares and Northpointe Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potomac Bancshares	$48.09 million	1.34	$6.80 million	$1.64	9.45
Northpointe Bancshares	$187.14 million	2.28	N/A	N/A	N/A

Potomac Bancshares has higher earnings, but lower revenue than Northpointe Bancshares.

Analyst Recommendations

This is a summary of current ratings and target prices for Potomac Bancshares and Northpointe Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potomac Bancshares	0	0	0	0	0.00
Northpointe Bancshares	0	0	2	0	3.00

Northpointe Bancshares has a consensus target price of $17.25, suggesting a potential upside of 22.43%. Given Northpointe Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe Northpointe Bancshares is more favorable than Potomac Bancshares.

Profitability

This table compares Potomac Bancshares and Northpointe Bancshares’ 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
Northpointe Bancshares	N/A	N/A	N/A

Dividends

Potomac Bancshares pays an annual dividend of $0.52 per share and has a dividend yield of 3.4%. Northpointe Bancshares pays an annual dividend of $0.10 per share and has a dividend yield of 0.7%. Potomac Bancshares pays out 31.7% of its earnings in the form of a dividend.

Summary

Northpointe Bancshares beats Potomac Bancshares on 6 of the 9 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 Northpointe Bancshares

Northpointe Bancshares, Inc. operates as a bank holding company. It offers a nationwide mortgage purchase program, residential mortgage loans, digital deposit banking to retail customers and custodial deposit services. The company was founded by Charles A. Williams in 1998 and is headquartered in Grand Rapids, MI.