United Bankshares (NASDAQ:UBSI – Get Free Report) and Southern Michigan Bancorp (OTCMKTS:SOMC – Get Free Report) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.
Valuation and Earnings
This table compares United Bankshares and Southern Michigan Bancorp”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| United Bankshares | $1.54 billion | 3.74 | $366.31 million | $2.64 | 16.09 |
| Southern Michigan Bancorp | $73.31 million | 1.17 | $10.90 million | $2.25 | 8.33 |
United Bankshares has higher revenue and earnings than Southern Michigan Bancorp. Southern Michigan Bancorp is trading at a lower price-to-earnings ratio than United Bankshares, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| United Bankshares | 0 | 3 | 1 | 0 | 2.25 |
| Southern Michigan Bancorp | 0 | 0 | 0 | 0 | 0.00 |
United Bankshares presently has a consensus target price of $40.25, indicating a potential downside of 5.27%. Given United Bankshares’ stronger consensus rating and higher possible upside, research analysts plainly believe United Bankshares is more favorable than Southern Michigan Bancorp.
Profitability
This table compares United Bankshares and Southern Michigan Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| United Bankshares | 22.05% | 7.58% | 1.23% |
| Southern Michigan Bancorp | 12.27% | 10.19% | 0.70% |
Dividends
United Bankshares pays an annual dividend of $1.48 per share and has a dividend yield of 3.5%. Southern Michigan Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 3.2%. United Bankshares pays out 56.1% of its earnings in the form of a dividend. Southern Michigan Bancorp pays out 26.7% 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. United Bankshares has raised its dividend for 25 consecutive years. United Bankshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
United Bankshares has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, Southern Michigan Bancorp has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.
Insider and Institutional Ownership
70.8% of United Bankshares shares are held by institutional investors. 3.7% of United Bankshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
United Bankshares beats Southern Michigan Bancorp on 15 of the 17 factors compared between the two stocks.
About United Bankshares
United Bankshares, Inc., through its subsidiaries, primarily provides commercial and retail banking products and services in the United States. It operates through two segments, Community Banking and Mortgage Banking. The company accepts checking, savings, and time and money market accounts; individual retirement accounts; and demand deposits, statement and special savings, and NOW accounts. Its loan products include commercial loans and leases to small to mid-size industrial and commercial companies; construction and real estate loans, such as commercial and residential mortgages, and loans secured by owner-occupied real estate; personal, student, credit card receivables, personal, commercial, and floor plan loans; and home equity loans. In addition, the company provides credit cards; safe deposit boxes, wire transfers, and other banking products and services; investment and security services; services to correspondent banks, including buying and selling federal funds; automated teller machine services; and internet and telephone banking services. Further, it offers community banking services, such as asset management, real property title insurance, financial planning, mortgage banking, and brokerage services, as well as investment management and retirement planning services. United Bankshares, Inc. was incorporated in 1982 and is headquartered in Charleston, West Virginia.
About Southern Michigan Bancorp
Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.
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