Analyzing Ottawa Bancorp (OTCMKTS:OTTW) & First United (NASDAQ:FUNC)

Ottawa Bancorp (OTCMKTS:OTTW) and First United (NASDAQ:FUNC) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Profitability

This table compares Ottawa Bancorp and First United’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ottawa Bancorp	9.15%	4.28%	0.48%
First United	20.19%	13.33%	1.28%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Ottawa Bancorp and First United, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ottawa Bancorp	0	0	0	0	0.00
First United	0	0	1	0	3.00

Dividends

Ottawa Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 3.0%. First United pays an annual dividend of $1.04 per share and has a dividend yield of 2.8%. Ottawa Bancorp pays out 61.1% of its earnings in the form of a dividend. First United pays out 27.6% 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. First United has raised its dividend for 6 consecutive years.

Volatility and Risk

Ottawa Bancorp has a beta of 0.07, suggesting that its share price is 93% less volatile than the S&P 500. Comparatively, First United has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500.

Earnings & Valuation

This table compares Ottawa Bancorp and First United”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ottawa Bancorp	$18.48 million	1.85	$1.68 million	$0.72	20.64
First United	$88.87 million	2.75	$24.51 million	$3.77	9.98

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

Insider and Institutional Ownership

33.3% of First United shares are held by institutional investors. 7.8% of Ottawa Bancorp shares are held by company insiders. Comparatively, 8.1% of First United shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

First United beats Ottawa Bancorp on 14 of the 16 factors compared between the two stocks.

About Ottawa Bancorp

Ottawa Bancorp, Inc. operates as the bank holding company for OSB Community Bank, a savings bank that provides various financial services to individual and corporate customers in Illinois. The company's deposit products include saving, checking, money market, and interest-bearing accounts, as well as certificate of deposit. Its loan portfolio comprises commercial, non-residential real estate, one-to-four family residential, multi-family residential, consumer direct, and purchased auto loans; business and construction loans; motor vehicle, home improvement, share, and personal unsecured loans, as well as home equity and small personal credit lines; mortgage loans; and student loans. The company also provides cash management solutions, such as remote deposit capture, automated clearing house/payroll direct deposit, and merchant services, as well as commercial leasing services. In addition, it offers notary, lamination, night depository, document faxing, money gift envelopes, safe deposit boxes, and coin counting, as well as debit and credit cards, and digital banking services. The company was formerly known as Ottawa Savings Bancorp, Inc. and changed its name to Ottawa Bancorp, Inc. in October 2016. Ottawa Bancorp, Inc. was founded in 1871 and is based in Ottawa, Illinois.

About First United

First United Corporation operates as the bank holding company for First United Bank & Trust that provides various retail and commercial banking services to businesses and individuals. It offers various deposit products, which includes checking, savings, money market deposit, and regular and individual retirement accounts (IRAs), as well as certificates of deposit. The company loan portfolio includes commercial loans secured by real estate, commercial equipment, vehicles, or other assets of the borrower; commercial real estate loans for residential and commercial development, agricultural purpose properties, and service industry buildings, such as restaurants and motels, retail buildings, and general purpose business space; residential mortgage loans; home equity lines of credit; residential real estate construction loans; and indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. It also offers access to multi-million-dollar certificates of deposit and the Intrafi cash service, including multi-million-dollar savings and demand deposits to municipalities, businesses, and consumers; and treasury management, cash sweep, and various checking services. In addition, the company provides trust services, which includes personal trust, investment agency accounts, charitable trusts, retirement accounts, including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration, and estate planning; and insurance products, brokerage services, and safe deposit and night depository facilities. First United Corporation was founded in 1900 and is headquartered in Oakland, Maryland.