Critical Comparison: M&F Bancorp (OTCMKTS:MFBP) & MetroCity Bankshares (NASDAQ:MCBS)

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

Dividends

MetroCity Bankshares pays an annual dividend of $1.00 per share and has a dividend yield of 3.6%. M&F Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.3%. MetroCity Bankshares pays out 38.8% of its earnings in the form of a dividend. M&F Bancorp pays out 12.1% 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.

Analyst Ratings

This is a breakdown of recent recommendations for MetroCity Bankshares and M&F Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MetroCity Bankshares	0	2	0	0	2.00
M&F Bancorp	0	0	0	0	0.00

MetroCity Bankshares presently has a consensus price target of $31.00, suggesting a potential upside of 12.93%. Given MetroCity Bankshares’ stronger consensus rating and higher possible upside, equities analysts plainly believe MetroCity Bankshares is more favorable than M&F Bancorp.

Insider and Institutional Ownership

25.3% of MetroCity Bankshares shares are held by institutional investors. 27.5% of MetroCity Bankshares shares are held by company insiders. Comparatively, 2.9% of M&F Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk and Volatility

MetroCity Bankshares has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500. Comparatively, M&F Bancorp has a beta of -0.63, suggesting that its stock price is 163% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MetroCity Bankshares	28.25%	15.39%	1.84%
M&F Bancorp	N/A	N/A	N/A

Earnings & Valuation

This table compares MetroCity Bankshares and M&F Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MetroCity Bankshares	$235.98 million	2.96	$64.50 million	$2.58	10.64
M&F Bancorp	$29.33 million	1.25	$4.77 million	$1.99	9.54

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

Summary

MetroCity Bankshares beats M&F Bancorp on 14 of the 15 factors compared between the two stocks.

About MetroCity Bankshares

MetroCity Bankshares, Inc. operates as the bank holding company for Metro City Bank that engages in the provision of banking products and services in the United States. It offers customary banking services, such as consumer and commercial checking accounts, savings, and money market accounts, as well as certificates of deposit. The company also provides commercial and consumer loans, including single family residential loans; construction and development, and owner and non-owner occupied commercial real estate loans; letters of credit; and commercial and industrial loans, residential mortgage loans, and SBA loans. In addition, it offers online banking services, which include access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; mobile banking solutions, such as remote check deposit with mobile bill pay; and automated teller machines and telephone banking services. Further, it provides debit cards for checking customers, direct deposits, and cashier's checks; treasury management services, including wire transfer, automated clearing house, and stop payments services; and cash management deposit products, such as remote deposit capture, positive pay, zero balance accounts, and sweep accounts. The company was founded in 2006 and is headquartered in Atlanta, Georgia.

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.