Financial Analysis: MainStreet Bank (NASDAQ:MNSB) versus FB Financial (NYSE:FBK)

FB Financial (NYSE:FBK) and MainStreet Bank (NASDAQ:MNSB) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Valuation & Earnings

This table compares FB Financial and MainStreet Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FB Financial	$764.61 million	4.00	$116.04 million	$2.14	26.75
MainStreet Bank	$137.87 million	1.12	-$9.98 million	($0.90)	-22.28

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

Insider & Institutional Ownership

65.4% of FB Financial shares are owned by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are owned by institutional investors. 1.9% of FB Financial shares are owned by company insiders. Comparatively, 9.3% of MainStreet Bank shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

FB Financial has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, MainStreet Bank has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Profitability

This table compares FB Financial and MainStreet Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FB Financial	11.73%	10.56%	1.28%
MainStreet Bank	-3.32%	6.05%	0.52%

Analyst Recommendations

This is a breakdown of recent ratings for FB Financial and MainStreet Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FB Financial	0	1	5	0	2.83
MainStreet Bank	2	0	0	0	1.00

FB Financial presently has a consensus target price of $60.80, indicating a potential upside of 6.20%. Given FB Financial’s stronger consensus rating and higher possible upside, analysts plainly believe FB Financial is more favorable than MainStreet Bank.

Dividends

FB Financial pays an annual dividend of $0.76 per share and has a dividend yield of 1.3%. MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. FB Financial pays out 35.5% of its earnings in the form of a dividend. MainStreet Bank pays out -44.4% 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. FB Financial has increased its dividend for 8 consecutive years. MainStreet Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

FB Financial beats MainStreet Bank on 14 of the 17 factors compared between the two stocks.

About FB Financial

FB Financial Corporation operates as a bank holding company for FirstBank that provides a suite of commercial and consumer banking services to businesses, professionals, and individuals. The company operates in segments, such as Banking and Mortgage. It offers checking, demand, money market, and savings accounts; deposit and lending products and services to corporate, commercial, and consumer customers; and time deposits and certificates of deposits, as well as residential mortgage loans. The company also provides owner-occupied and non-owner-occupied real estate commercial, residential real estate 1-4 family mortgage, multi-family residential, commercial and industrial, construction, land acquisition, residential lines of credit, and land development loans; and consumer and other loans, such as car, boat, and other recreational vehicle loans, as well as manufactured homes without real estate and personal lines of credit. In addition, the company offers mortgage banking services through its bank branch network and mortgage banking offices in the southeastern United States; direct-to-consumer internet delivery channel; and trust, insurance, and investment services, as well as online and mobile banking services. The company operates full-service bank branches and limited-service branches locations throughout Tennessee, Nashville, Chattanooga, Knoxville, Memphis, Jackson, Birmingham, Florence, Huntsville, Alabama, Bowling Green, and Kentucky; and mortgage offices throughout the southeastern United States. The company was formerly known as First South Bancorp, Inc. and changed its name to FB Financial Corporation in 2016. FB Financial Corporation was founded in 1906 and is headquartered in Nashville, Tennessee.

About MainStreet Bank

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.