Head-To-Head Analysis: MainStreet Bank (NASDAQ:MNSB) & Potomac Bancshares (OTCMKTS:PTBS)

MainStreet Bank (NASDAQ:MNSB) and Potomac Bancshares (OTCMKTS:PTBS) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, institutional ownership, profitability, valuation, analyst recommendations, risk and earnings.

Risk and Volatility

MainStreet Bank has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Potomac Bancshares has a beta of 0.22, indicating that its share price is 78% less volatile than the S&P 500.

Dividends

MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Potomac Bancshares pays an annual dividend of $0.52 per share and has a dividend yield of 2.6%. MainStreet Bank pays out 22.7% of its earnings in the form of a dividend. Potomac Bancshares pays out 24.1% 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.

Valuation & Earnings

This table compares MainStreet Bank and Potomac Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bank	$135.62 million	1.27	$13.46 million	$1.76	12.66
Potomac Bancshares	$54.90 million	N/A	N/A	$2.16	9.17

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for MainStreet Bank and Potomac Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bank	1	1	0	0	1.50
Potomac Bancshares	0	0	0	0	0.00

Institutional and Insider Ownership

52.3% of MainStreet Bank shares are owned by institutional investors. Comparatively, 5.3% of Potomac Bancshares shares are owned by institutional investors. 9.3% of MainStreet Bank shares are owned by company insiders. Comparatively, 4.4% of Potomac Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares MainStreet Bank and Potomac Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bank	11.51%	8.37%	0.72%
Potomac Bancshares	N/A	N/A	N/A

Summary

MainStreet Bank beats Potomac Bancshares on 10 of the 12 factors compared between the two stocks.

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.

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.