City (NASDAQ:CHCO) versus M&F Bancorp (OTCMKTS:MFBP) Head-To-Head Review

M&F Bancorp (OTCMKTS:MFBP) and City (NASDAQ:CHCO) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Volatility and Risk

M&F Bancorp has a beta of -0.5, meaning that its stock price is 150% less volatile than the S&P 500. Comparatively, City has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Profitability

This table compares M&F Bancorp and City’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&F Bancorp	N/A	N/A	N/A
City	32.33%	16.66%	1.93%

Dividends

M&F Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.3%. City pays an annual dividend of $3.48 per share and has a dividend yield of 2.9%. M&F Bancorp pays out 12.1% of its earnings in the form of a dividend. City pays out 40.0% 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. City has raised its dividend for 6 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

72.4% of City shares are held by institutional investors. 2.9% of M&F Bancorp shares are held by company insiders. Comparatively, 1.9% of City shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares M&F Bancorp and City”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&F Bancorp	$29.33 million	1.25	$4.77 million	$1.99	9.55
City	$297.16 million	5.88	$117.10 million	$8.70	13.94

City has higher revenue and earnings than M&F Bancorp. M&F Bancorp is trading at a lower price-to-earnings ratio than City, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for M&F Bancorp and City, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&F Bancorp	0	0	0	0	0.00
City	0	5	1	0	2.17

City has a consensus target price of $133.25, indicating a potential upside of 9.86%. Given City’s stronger consensus rating and higher probable upside, analysts clearly believe City is more favorable than M&F Bancorp.

Summary

City beats M&F Bancorp on 15 of the 17 factors compared between the two stocks.

About M&F Bancorp

M&F Bancorp, Inc. operates as a bank holding company for the Mechanics and Farmers Bank that provides consumer and commercial banking products and services in North Carolina. It offers deposit products, including demand deposits; checking, savings, and money market accounts, as well as certificates of deposit. The company provides loans for commercial and residential real estate, and construction; and consumer and other loans; as well as ATM services. M&F Bancorp, Inc. was founded in 1907 and is headquartered in Durham, North Carolina.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.