Mercantile Bank (NASDAQ:MBWM – Get Free Report) and Patriot National Bancorp (NASDAQ:PNBK – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.
Institutional and Insider Ownership
58.6% of Mercantile Bank shares are owned by institutional investors. Comparatively, 39.3% of Patriot National Bancorp shares are owned by institutional investors. 2.5% of Mercantile Bank shares are owned by insiders. Comparatively, 12.8% of Patriot National Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Profitability
This table compares Mercantile Bank and Patriot National Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Mercantile Bank | 24.42% | 13.39% | 1.44% |
| Patriot National Bancorp | -9.76% | -7.09% | -0.58% |
Analyst Recommendations
This is a summary of recent ratings for Mercantile Bank and Patriot National Bancorp, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Mercantile Bank | 0 | 3 | 2 | 1 | 2.67 |
| Patriot National Bancorp | 1 | 0 | 0 | 0 | 1.00 |
Mercantile Bank currently has a consensus target price of $62.20, suggesting a potential upside of 2.95%. Given Mercantile Bank’s stronger consensus rating and higher probable upside, analysts clearly believe Mercantile Bank is more favorable than Patriot National Bancorp.
Earnings and Valuation
This table compares Mercantile Bank and Patriot National Bancorp”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Mercantile Bank | $371.80 million | 2.81 | $88.75 million | $5.68 | 10.64 |
| Patriot National Bancorp | $58.36 million | 1.63 | -$12.71 million | ($0.07) | -11.43 |
Mercantile Bank has higher revenue and earnings than Patriot National Bancorp. Patriot National Bancorp is trading at a lower price-to-earnings ratio than Mercantile Bank, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Mercantile Bank has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Patriot National Bancorp has a beta of -0.62, suggesting that its share price is 162% less volatile than the S&P 500.
Summary
Mercantile Bank beats Patriot National Bancorp on 14 of the 15 factors compared between the two stocks.
About Mercantile Bank
Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.
About Patriot National Bancorp
Patriot National Bancorp, Inc. operates as the holding company for Patriot Bank, N.A. that provides community banking services to individuals, small and medium-sized businesses, and professionals. The company accepts consumer and commercial deposit accounts, such as checking, interest-bearing negotiable order of withdrawal, money market, time certificates of deposit, savings, prepaid deposit, on-line national money market, individual retirement accounts, and health savings accounts, as well as certificate of deposit account registry service. Its loan portfolio comprises commercial real estate, commercial business, small business administration, construction, purchased residential real estate, and various consumer loans. The company also offers automated clearing house transfers, lockbox, internet banking, bill payment, remote deposit capture, debit card, money order, traveler's check, and automatic teller machine services. Patriot National Bancorp, Inc. was founded in 1994 and is headquartered in Stamford, Connecticut.
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