Southern Michigan Bancorp (OTCMKTS:SOMC) vs. Valley National Bancorp (NASDAQ:VLY) Financial Survey

Valley National Bancorp (NASDAQ:VLY) and Southern Michigan Bancorp (OTCMKTS:SOMC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares Valley National Bancorp and Southern Michigan Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Valley National Bancorp	18.61%	8.68%	1.01%
Southern Michigan Bancorp	13.00%	10.48%	0.75%

Insider & Institutional Ownership

61.0% of Valley National Bancorp shares are held by institutional investors. 1.1% of Valley National Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Valley National Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 2.9%. Southern Michigan Bancorp pays an annual dividend of $0.68 per share and has a dividend yield of 2.2%. Valley National Bancorp pays out 39.6% of its earnings in the form of a dividend. Southern Michigan Bancorp pays out 25.4% 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.

Volatility and Risk

Valley National Bancorp has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Southern Michigan Bancorp has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Valley National Bancorp and Southern Michigan Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valley National Bancorp	0	4	10	3	2.94
Southern Michigan Bancorp	0	0	0	0	0.00

Valley National Bancorp presently has a consensus target price of $15.93, indicating a potential upside of 6.58%. Given Valley National Bancorp’s stronger consensus rating and higher possible upside, research analysts clearly believe Valley National Bancorp is more favorable than Southern Michigan Bancorp.

Earnings & Valuation

This table compares Valley National Bancorp and Southern Michigan Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valley National Bancorp	$2.09 billion	3.97	$597.98 million	$1.11	13.47
Southern Michigan Bancorp	$93.18 million	1.53	$12.22 million	$2.68	11.45

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

Summary

Valley National Bancorp beats Southern Michigan Bancorp on 14 of the 17 factors compared between the two stocks.

About Valley National Bancorp

Valley National Bancorp operates as the holding company for Valley National Bank that provides various commercial, private banking, retail, insurance, and wealth management financial services products. It operates through Consumer Banking, Commercial Banking, and Treasury and Corporate other segments. The company offers non-interest bearing, savings, NOW, money market, and time deposit accounts; commercial and industrial, commercial real estate, residential mortgage, and automobile loans; loans secured by the cash surrender value of life insurance; home equity loans and lines of credit; automobile financing; and secured and unsecured other consumer loans. It also invests in various securities and interest-bearing deposits with other banks; and provides international banking services, such as standby and documentary letters of credit, and related products, as well as foreign exchange transactions, documentary collections, and foreign wire transfers services. In addition, the company offers investment services for individuals and small to medium sized businesses; and trusts investment strategies designed for various investment profiles and objectives. Further, it provides trust services, such as living and testamentary trusts, investment management, custodial and escrow services, and estate administration to individuals; tax credit advisory services; brokerage services; property and casualty, life, health, and title insurance agency services; and health care equipment lending and other commercial equipment leasing services, as well as owns real estate related investments. Additionally, the company offers online, mobile, and telephone banking services; receivable, payment, and security solution, merchant, payroll processing, and liquidity services; credit cards; and drive-in and night deposit, automated teller machine, remote deposit capture, and safe deposit facility services. Valley National Bancorp was founded in 1927 and is headquartered in Morristown, New Jersey.

About Southern Michigan Bancorp

Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.