Independent Bank (NASDAQ:IBCP – Get Free Report) and Chemung Financial (NASDAQ:CHMG – Get Free Report) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.
Dividends
Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.0%. Chemung Financial pays an annual dividend of $1.44 per share and has a dividend yield of 1.7%. Independent Bank pays out 32.9% of its earnings in the form of a dividend. Chemung Financial pays out 18.1% 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. Independent Bank has raised its dividend for 11 consecutive years and Chemung Financial has raised its dividend for 1 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
79.4% of Independent Bank shares are owned by institutional investors. Comparatively, 47.5% of Chemung Financial shares are owned by institutional investors. 5.9% of Independent Bank shares are owned by insiders. Comparatively, 12.7% of Chemung Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Independent Bank and Chemung Financial”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Independent Bank | $243.00 million | 3.36 | $68.54 million | $3.40 | 10.88 |
| Chemung Financial | $140.78 million | 2.95 | $15.10 million | $7.97 | 10.83 |
Independent Bank has higher revenue and earnings than Chemung Financial. Chemung Financial is trading at a lower price-to-earnings ratio than Independent Bank, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Independent Bank and Chemung Financial, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Independent Bank | 0 | 2 | 3 | 0 | 2.60 |
| Chemung Financial | 0 | 2 | 4 | 1 | 2.86 |
Independent Bank presently has a consensus target price of $41.00, suggesting a potential upside of 10.84%. Chemung Financial has a consensus target price of $88.75, suggesting a potential upside of 2.85%. Given Independent Bank’s higher possible upside, equities research analysts clearly believe Independent Bank is more favorable than Chemung Financial.
Risk and Volatility
Independent Bank has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, Chemung Financial has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.
Profitability
This table compares Independent Bank and Chemung Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Independent Bank | 21.63% | 14.57% | 1.34% |
| Chemung Financial | 23.36% | 14.64% | 1.39% |
About Independent Bank
Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.
About Chemung Financial
Chemung Financial Corporation operates as a bank holding company for Chemung Canal Trust Company that provides a range of banking, financing, fiduciary, and other financial services. The company provides demand, savings, and time deposits; non-interest and interest-bearing checking accounts; and insured money market accounts. It also offers commercial and agricultural loans comprising loans to small to mid-sized businesses; commercial and residential mortgage loans; and consumer loans, including home equity lines of credit and home equity term loans. In addition, the company provides interest rate swaps, letters of credit, employee benefit plans, insurance products, mutual fund, brokerage, and tax preparation services. Further, it offers guardian, custodian, trustee, investment, pension, estate planning, and employee benefit administrative services, as well as acts as an agent for pension, profit-sharing, and other employee benefit trusts. Chemung Financial Corporation was founded in 1833 and is headquartered in Elmira, New York.
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