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

Risk and Volatility

LCNB has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500. Comparatively, First Bancshares has a beta of -0.21, indicating that its stock price is 121% less volatile than the S&P 500.

Institutional & Insider Ownership

28.3% of LCNB shares are held by institutional investors. Comparatively, 66.7% of First Bancshares shares are held by institutional investors. 4.1% of LCNB shares are held by company insiders. Comparatively, 11.8% of First Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares LCNB and First Bancshares’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LCNB $54.92 million 4.56 $12.97 million $1.27 14.84
First Bancshares $80.43 million 6.62 $10.61 million $1.76 23.15

LCNB has higher earnings, but lower revenue than First Bancshares. LCNB is trading at a lower price-to-earnings ratio than First Bancshares, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and recommmendations for LCNB and First Bancshares, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LCNB 0 1 0 0 2.00
First Bancshares 0 0 2 0 3.00

First Bancshares has a consensus target price of $38.00, suggesting a potential downside of 6.75%. Given First Bancshares’ stronger consensus rating and higher possible upside, analysts plainly believe First Bancshares is more favorable than LCNB.

Profitability

This table compares LCNB and First Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LCNB 19.98% 8.04% 0.96%
First Bancshares 17.38% 9.83% 1.10%

Dividends

LCNB pays an annual dividend of $0.64 per share and has a dividend yield of 3.4%. First Bancshares pays an annual dividend of $0.20 per share and has a dividend yield of 0.5%. LCNB pays out 50.4% of its earnings in the form of a dividend. First Bancshares pays out 11.4% 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.

Summary

First Bancshares beats LCNB on 12 of the 16 factors compared between the two stocks.

About LCNB

LCNB Corp., a financial holding company, provides commercial and personal banking services in Ohio. Its deposit products include checking, NOW, savings, Christmas and vacation club, money market deposit, lifetime checking, and individual retirement accounts, as well as certificates of deposit. The company's loan portfolio comprises commercial and industrial, commercial and residential real estate, agricultural, construction, small business administration, and residential mortgage loans. It also offers consumer loans, such as automobile, boat, home improvement, and personal loans. In addition, the company provides trust administrative, estate settlement, and fiduciary services; and investment management services for trusts, agency accounts, individual retirement accounts, and foundations/endowments. Further, it offers investment services and products, including financial needs analysis, mutual funds, securities trading, annuities, and life insurance; and security brokerage services. Additionally, the company provides safe deposit boxes, night depositories, cashier's checks, bank-by-mail, ATMs, cash and transaction services, debit cards, wire transfers, electronic funds transfer, utility bill collections, notary public service, personal computer-based cash management services, telephone banking, PC Internet banking, mobile banking, and other services for individuals and businesses. As of December 31, 2017, the company operated through 34 offices, including a main office in Warren County; branch offices in Warren, Butler, Clinton, Clermont, Hamilton, Montgomery, Preble, Ross, and Fayette Counties; a loan production office in Franklin County; and an operations center in Warren County, Ohio, as well as 38 ATMs. LCNB Corp. was founded in 1877 and is headquartered in Lebanon, Ohio.

About First Bancshares

The First Bancshares, Inc. operates as the holding company for The First, A National Banking Association that provides general commercial and retail banking services. The company operates through three segments: Commercial/Retail Bank, Mortgage Banking Division, and Holding Company. It offers deposit services, including checking, NOW, and savings accounts; other time deposits, such as daily money market accounts and longer-term certificates of deposit; and individual retirement accounts. The company also provides commercial loans comprising secured and unsecured loans for working capital, business expansion, and purchase of equipment and machinery; consumer loans consisting of equity lines of credit, as well as secured and unsecured loans for financing automobiles, home improvements, education, and personal investments; and real estate construction and acquisition loans. In addition, it originates loans to purchase existing residential homes or construct new homes, and to refinance existing mortgages; and provides financial and wealth management services. Further, the company offers Internet banking services, voice response telephone inquiry services, commercial sweep accounts, cash management services, safe deposit boxes, travelers checks, mobile deposit, direct deposit of payroll and social security checks, automatic drafts for various accounts, automated teller machines, and credit card services. It primarily serves small to medium-sized businesses, professional concerns, individuals, associations and organizations, and governmental authorities. As of December 31, 2017, the company operated through a network of 3 full-service branches, 1 motor branch, and 4 loan production offices in the states of Mississippi, Alabama, Louisiana, and Florida. The First Bancshares, Inc. was incorporated in 1995 and is headquartered in Hattiesburg, Mississippi.

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