Critical Review: Mercantile Bank (NASDAQ:MBWM) & BNCCORP (OTCMKTS:BNCC)

BNCCORP (OTCMKTS:BNCC) and Mercantile Bank (NASDAQ:MBWM) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Risk and Volatility

BNCCORP has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Profitability

This table compares BNCCORP and Mercantile Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BNCCORP	15.14%	7.93%	0.84%
Mercantile Bank	22.11%	13.75%	1.35%

Valuation and Earnings

This table compares BNCCORP and Mercantile Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BNCCORP	$52.44 million	2.00	$7.93 million	$2.26	13.05
Mercantile Bank	$361.89 million	2.07	$79.59 million	$5.04	9.15

Mercantile Bank has higher revenue and earnings than BNCCORP. Mercantile Bank is trading at a lower price-to-earnings ratio than BNCCORP, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for BNCCORP and Mercantile Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BNCCORP	0	0	0	0	0.00
Mercantile Bank	0	1	3	0	2.75

Mercantile Bank has a consensus price target of $55.25, indicating a potential upside of 19.74%. Given Mercantile Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Mercantile Bank is more favorable than BNCCORP.

Institutional and Insider Ownership

58.6% of Mercantile Bank shares are owned by institutional investors. 28.4% of BNCCORP shares are owned by insiders. Comparatively, 3.2% of Mercantile Bank shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Mercantile Bank beats BNCCORP on 12 of the 14 factors compared between the two stocks.

About BNCCORP

BNCCORP, Inc. operates as the bank holding company for BNC National Bank that provides community banking, retail and mortgage banking, and wealth management services to businesses and consumers. The company offers commercial banking services, including business financing, commercial real estate lending, small business administration loans, business checking, cash management, corporate credit cards, and merchant services to small to middle-market businesses. It also provides retail and mortgage banking services, such as personal checking and savings products, personal loans, and card services; and residential loans through a consumer direct channel, as well as a retail channel. In addition, the company offers wealth management solutions, including 401(k) and other retirement plans, trust services, and personal wealth advisory services. It offers community banking and wealth management services through 11 locations in Arizona and North Dakota; and mortgage banking services through 7 locations in Arizona, North Dakota, Illinois, and Kansas. The company was incorporated in 1987 and is headquartered in Bismarck, North Dakota.

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.