Analyzing American Bank (OTCMKTS:AMBK) & Horizon Bancorp (IN) (NASDAQ:HBNC)

Horizon Bancorp (IN) (NASDAQ:HBNC) and American Bank (OTCMKTS:AMBK) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Profitability

This table compares Horizon Bancorp (IN) and American Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Horizon Bancorp (IN)	-36.38%	13.52%	1.40%
American Bank	22.84%	N/A	N/A

Volatility & Risk

Horizon Bancorp (IN) has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, American Bank has a beta of -0.07, suggesting that its stock price is 107% less volatile than the S&P 500.

Dividends

Horizon Bancorp (IN) pays an annual dividend of $0.64 per share and has a dividend yield of 3.2%. American Bank pays an annual dividend of $0.64 per share and has a dividend yield of 2.8%. Horizon Bancorp (IN) pays out -20.1% of its earnings in the form of a dividend. American Bank pays out 29.1% 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. Horizon Bancorp (IN) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Horizon Bancorp (IN) and American Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Horizon Bancorp (IN)	$405.46 million	2.54	-$150.48 million	($3.18)	-6.31
American Bank	$59.94 million	2.41	$13.54 million	$2.20	10.36

American Bank has lower revenue, but higher earnings than Horizon Bancorp (IN). Horizon Bancorp (IN) is trading at a lower price-to-earnings ratio than American Bank, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

64.5% of Horizon Bancorp (IN) shares are held by institutional investors. 1.2% of Horizon Bancorp (IN) shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Horizon Bancorp (IN) and American Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Bancorp (IN)	0	3	2	0	2.40
American Bank	0	0	0	0	0.00

Horizon Bancorp (IN) presently has a consensus target price of $22.33, indicating a potential upside of 11.33%. Given Horizon Bancorp (IN)’s stronger consensus rating and higher possible upside, analysts plainly believe Horizon Bancorp (IN) is more favorable than American Bank.

Summary

Horizon Bancorp (IN) beats American Bank on 12 of the 16 factors compared between the two stocks.

About Horizon Bancorp (IN)

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that engages in the provision of commercial and retail banking services. The company offers checking, saving, money market, certificate of deposits, individual retirement accounts, and time deposits, as well as non-interest- and interest-bearing demand deposits. It also provides commercial, residential real estate, mortgage, home equity, auto, personal, business, agricultural, and SBA loans, as well as credit cards. In addition, the company offers corporate and individual trust and agency, investment management, and real estate investment trust services; debit cards; treasury management; online and mobile banking; wealth, retirement, and estate and trust services; and sells various insurance products. It operates through full-service offices in northern and central Indiana and southern and central Michigan. Horizon Bancorp, Inc. was founded in 1873 and is headquartered in Michigan City, Indiana.

About American Bank

American Bank Incorporated operates as the bank holding company for American Bank that provides various banking products and services to consumer, business, institutional, and governmental customers. It accepts a range of interest-bearing checking and money market accounts, savings accounts, certificates of deposit, and individual retirement accounts. The company also offers commercial, industrial, and other loans; commercial mortgage loans; commercial construction loans; residential mortgage loans; and consumer loans, including personal term loans, personal credit lines, automobile loans, home equity loans, and home equity lines of credit and loans. In addition, it provides online or mobile banking, automated teller machine, safe deposit box rental, and wire transfer services, as well as sells checks and checkbooks, and purchases investment securities. The company operates an office located in Allentown, Pennsylvania; and a loan production office in Blue Bell, Pennsylvania. The company was founded in 1997 and is based in Allentown, Pennsylvania.