Analyzing Prime Meridian (OTCMKTS:PMHG) and MainStreet Bancshares (NASDAQ:MNSB)

Prime Meridian (OTCMKTS:PMHG) and MainStreet Bancshares (NASDAQ:MNSB) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Earnings and Valuation

This table compares Prime Meridian and MainStreet Bancshares’ revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prime Meridian	$41.82 million	1.89	$8.71 million	$2.50	9.60
MainStreet Bancshares	$69.83 million	1.80	$26.58 million	$2.59	6.38

MainStreet Bancshares has higher revenue and earnings than Prime Meridian. MainStreet Bancshares is trading at a lower price-to-earnings ratio than Prime Meridian, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

11.8% of Prime Meridian shares are held by institutional investors. Comparatively, 52.3% of MainStreet Bancshares shares are held by institutional investors. 25.9% of Prime Meridian shares are held by company insiders. Comparatively, 9.2% of MainStreet Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Prime Meridian has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, MainStreet Bancshares has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500.

Dividends

Prime Meridian pays an annual dividend of $0.25 per share and has a dividend yield of 1.0%. MainStreet Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. Prime Meridian pays out 10.0% of its earnings in the form of a dividend. MainStreet Bancshares pays out 15.4% 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.

Analyst Ratings

This is a summary of current recommendations for Prime Meridian and MainStreet Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prime Meridian	0	0	0	0	N/A
MainStreet Bancshares	0	0	0	0	N/A

Profitability

This table compares Prime Meridian and MainStreet Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prime Meridian	16.71%	9.58%	0.89%
MainStreet Bancshares	12.99%	9.06%	0.85%

Summary

Prime Meridian beats MainStreet Bancshares on 7 of the 13 factors compared between the two stocks.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.

About MainStreet Bancshares

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.