Head to Head Survey: First Commonwealth Financial (NYSE:FCF) & Potomac Bancshares (OTCMKTS:PTBS)

Potomac Bancshares (OTCMKTS:PTBS) and First Commonwealth Financial (NYSE:FCF) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, profitability, analyst recommendations, valuation and risk.

Dividends

Potomac Bancshares pays an annual dividend of $0.52 per share and has a dividend yield of 2.9%. First Commonwealth Financial pays an annual dividend of $0.54 per share and has a dividend yield of 3.3%. Potomac Bancshares pays out 26.9% of its earnings in the form of a dividend. First Commonwealth Financial pays out 40.3% 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. First Commonwealth Financial has increased its dividend for 9 consecutive years. First Commonwealth Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Potomac Bancshares and First Commonwealth Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potomac Bancshares	$48.09 million	1.55	$7.99 million	$1.93	9.32
First Commonwealth Financial	$699.69 million	2.45	$142.57 million	$1.34	12.19

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

Institutional & Insider Ownership

5.3% of Potomac Bancshares shares are owned by institutional investors. Comparatively, 72.6% of First Commonwealth Financial shares are owned by institutional investors. 4.4% of Potomac Bancshares shares are owned by insiders. Comparatively, 2.2% of First Commonwealth Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Potomac Bancshares and First Commonwealth Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Potomac Bancshares	N/A	N/A	N/A
First Commonwealth Financial	18.94%	9.71%	1.18%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Potomac Bancshares and First Commonwealth Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potomac Bancshares	0	0	0	0	0.00
First Commonwealth Financial	0	2	3	0	2.60

First Commonwealth Financial has a consensus price target of $18.90, indicating a potential upside of 15.74%. Given First Commonwealth Financial’s stronger consensus rating and higher probable upside, analysts clearly believe First Commonwealth Financial is more favorable than Potomac Bancshares.

Volatility & Risk

Potomac Bancshares has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, First Commonwealth Financial has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Summary

First Commonwealth Financial beats Potomac Bancshares on 14 of the 17 factors compared between the two stocks.

About Potomac Bancshares

Potomac Bancshares, Inc. operates as the bank holding company for Bank of Charles Town that provides various banking products and services to individuals and businesses. The company offers checking, savings, and individual retirement accounts; and certificates of deposit (CD). It also provides personal loans, including new and used vehicle, home equity, unsecured home improvement and personal, retail equipment, and lot loans, as well as loans secured by CD, and home equity lines of credit; commercial loans for building or office purchases, commercial real estate and construction, and production and administrative equipment purchases; lines of credit; mortgage, commercial, term, residential and commercial construction, commercial real estate, and agricultural loans; and credit and debit cards. In addition, the company offers Card Pay, cash management, merchant, financial planning, trust and estate, investment management, wealth management, full-service brokerage, retirement and insurance planning and products, asset allocation and management, and college planning services, as well as telephone, mobile, and online banking services. Potomac Bancshares, Inc. was founded in 1871 and is based in Charles Town, West Virginia.

About First Commonwealth Financial

First Commonwealth Financial Corporation, a financial holding company, provides various consumer and commercial banking services in the United States. Its consumer services include personal checking accounts, interest-earning checking accounts, savings and health savings accounts, insured money market accounts, debit cards, investment certificates, fixed and variable rate certificates of deposit, mortgage loans, secured and unsecured installment loans, construction and real estate loans, safe deposit facilities, credit cards, credit lines with overdraft checking protection, IRA accounts, and automated teller machine (atm) services, as well as internet, mobile, and telephone banking services. The company's commercial banking services comprise commercial lending, business checking accounts, online account management services, payroll direct deposits, commercial cash management services, and repurchase agreements, as well as ACH origination services. In addition, it offers various trust and asset management services; auto, home, and business insurance, as well as term life insurance; and annuities, mutual funds, and stock and bond brokerage services through a broker-dealer and insurance brokers. The company was founded in 1934 and is headquartered in Indiana, Pennsylvania.