Contrasting Southern Michigan Bancorp (OTCMKTS:SOMC) and QNB (OTCMKTS:QNBC)

Dividends

QNB pays an annual dividend of $1.48 per share and has a dividend yield of 4.4%. Southern Michigan Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 3.2%. QNB pays out 47.4% 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.

Risk & Volatility

QNB has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Southern Michigan Bancorp has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500.

Valuation & Earnings

This table compares QNB and Southern Michigan Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
QNB	$90.98 million	1.38	$9.48 million	$3.12	10.88
Southern Michigan Bancorp	$73.31 million	1.17	$10.90 million	$2.25	8.31

Southern Michigan Bancorp has lower revenue, but higher earnings than QNB. Southern Michigan Bancorp is trading at a lower price-to-earnings ratio than QNB, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares QNB and Southern Michigan Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
QNB	12.58%	11.61%	0.65%
Southern Michigan Bancorp	12.27%	10.19%	0.70%

Insider & Institutional Ownership

0.7% of QNB shares are held by institutional investors. 16.0% of QNB shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

QNB beats Southern Michigan Bancorp on 10 of the 13 factors compared between the two stocks.

About QNB

QNB Corp. operates as the bank holding company for QNB Bank that engages in the provision of commercial and retail banking products, and retail brokerage services. It offers various deposit products, which include demand and savings accounts, such as money market, interest-bearing demand, club, traditional statement savings, and online savings accounts; and time deposits comprising certificates of deposit and individual retirement accounts. The company also provides commercial and industrial loans, commercial and residential real estate loans, construction and land development loans, indirect lease financing, 1-4 family residential mortgage loans, home equity loans and lines of credit, and consumer loans. In addition, it offers retail brokerage and advisory services; credit cards and insurance products; merchant services; ATM and debit card services; and internet and mobile-banking, electronic bill pay, and remote deposit capture services. The company serves other community banks, thrift institutions, credit unions and other non-bank financial organizations, such as mutual fund companies, insurance companies, and brokerage companies. QNB Corp. was founded in 1877 and is based in Quakertown, Pennsylvania.

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.