Critical Comparison: NBT Bancorp (NASDAQ:NBTB) versus Potomac Bancshares (OTCMKTS:PTBS)

Potomac Bancshares (OTCMKTS:PTBS) and NBT Bancorp (NASDAQ:NBTB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, valuation, analyst recommendations, institutional ownership and risk.

Volatility and Risk

Potomac Bancshares has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, NBT Bancorp has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.

Profitability

This table compares Potomac Bancshares and NBT Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Potomac Bancshares	N/A	N/A	N/A
NBT Bancorp	18.67%	10.86%	1.25%

Earnings and Valuation

This table compares Potomac Bancshares and NBT Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potomac Bancshares	$54.90 million	1.62	$9.70 million	$2.16	9.14
NBT Bancorp	$906.48 million	2.42	$169.24 million	$3.30	12.72

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

Insider & Institutional Ownership

5.3% of Potomac Bancshares shares are owned by institutional investors. Comparatively, 58.5% of NBT Bancorp shares are owned by institutional investors. 4.4% of Potomac Bancshares shares are owned by company insiders. Comparatively, 3.0% of NBT Bancorp shares are owned 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.

Dividends

Potomac Bancshares pays an annual dividend of $0.52 per share and has a dividend yield of 2.6%. NBT Bancorp pays an annual dividend of $1.48 per share and has a dividend yield of 3.5%. Potomac Bancshares pays out 24.1% of its earnings in the form of a dividend. NBT Bancorp pays out 44.8% 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. NBT Bancorp has increased its dividend for 12 consecutive years. NBT Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Potomac Bancshares and NBT Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potomac Bancshares	0	0	0	0	0.00
NBT Bancorp	0	2	2	1	2.80

NBT Bancorp has a consensus price target of $52.00, suggesting a potential upside of 23.84%. Given NBT Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe NBT Bancorp is more favorable than Potomac Bancshares.

Summary

NBT Bancorp beats Potomac Bancshares on 16 of the 18 factors compared between the two stocks.

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.

About NBT Bancorp

NBT Bancorp Inc., a financial holding company, provides commercial banking, retail banking, and wealth management services. Its deposit products include demand deposit, savings, negotiable order of withdrawal, money market deposit, and certificate of deposit accounts. The company's loan portfolio comprises indirect and direct consumer, home equity, mortgages, business banking loans, and commercial loans; commercial and industrial, commercial real estate, agricultural, and commercial construction loans; and residential real estate loans. It also provides trust and investment services; financial planning and life insurance services; and retirement plan administration and recordkeeping services. In addition, the company offers insurance products comprising personal property and casualty, business liability, and commercial insurance, as well as other products and services through 24-hour online, mobile, and telephone channels that enable customers to check balances, make deposits, transfer funds, pay bills, access statements, apply for loans, and access various other products and services. Further, it operates as a property management and passive investment company, as well as investment advisor that provides investment management and financial consulting services. The company operates in upstate New York, northeastern Pennsylvania, southern New Hampshire, western Massachusetts, Vermont, southern Maine, and central and northwestern Connecticut. NBT Bancorp Inc. was founded in 1856 and is headquartered in Norwich, New York.