Critical Survey: Fidelity D&D Bancorp (NASDAQ:FDBC) vs. MainStreet Bank (NASDAQ:MNSB)

Fidelity D&D Bancorp (NASDAQ:FDBC) and MainStreet Bank (NASDAQ:MNSB) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Profitability

This table compares Fidelity D&D Bancorp and MainStreet Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fidelity D&D Bancorp	19.03%	12.10%	0.97%
MainStreet Bank	-3.32%	6.05%	0.52%

Dividends

Fidelity D&D Bancorp pays an annual dividend of $1.72 per share and has a dividend yield of 3.8%. MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. Fidelity D&D Bancorp pays out 38.1% 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. Fidelity D&D Bancorp has raised its dividend for 10 consecutive years. Fidelity D&D Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Fidelity D&D Bancorp and MainStreet Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fidelity D&D Bancorp	$126.04 million	2.07	$20.79 million	$4.51	10.04
MainStreet Bank	$137.87 million	1.17	-$9.98 million	($0.90)	-23.34

Fidelity D&D Bancorp has higher earnings, but lower revenue than MainStreet Bank. MainStreet Bank is trading at a lower price-to-earnings ratio than Fidelity D&D Bancorp, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Fidelity D&D Bancorp has a beta of 0.97, meaning that its stock price is 3% 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.

Institutional and Insider Ownership

20.1% of Fidelity D&D Bancorp shares are owned by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are owned by institutional investors. 21.0% of Fidelity D&D Bancorp 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 hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Fidelity D&D Bancorp and MainStreet Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fidelity D&D Bancorp	0	1	0	0	2.00
MainStreet Bank	2	0	0	0	1.00

Summary

Fidelity D&D Bancorp beats MainStreet Bank on 12 of the 15 factors compared between the two stocks.

About Fidelity D&D Bancorp

Fidelity D&D Bancorp, Inc. is a holding company, which engages in the provision of commercial banking services. It operates through the following segments: Commercial and Industrial, Commercial Real Estate, Consumer, and Residential Real Estate. The Commercial and Industrial segment refers to identified historic and/or the projected cash flows of the borrower and secondarily to the underlying collateral provided by the borrower. The Commercial Real Estate segment offers finances purchase of real estate, refinance existing obligations, and/or to provide capital. The Consumer segment includes home equity installment loans and lines of credit. The Residential Real Estate segment operates as a secured first lien position of the borrower’s residential real estate. The company was founded in 1902 and is headquartered in Dunmore, PA.

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.