SB Financial Group (NASDAQ:SBFG) versus VersaBank (NASDAQ:VBNK) Critical Review

SB Financial Group (NASDAQ:SBFG) and VersaBank (NASDAQ:VBNK) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.

Risk & Volatility

SB Financial Group has a beta of 0.19, meaning that its share price is 81% less volatile than the S&P 500. Comparatively, VersaBank has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Profitability

This table compares SB Financial Group and VersaBank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SB Financial Group	17.67%	11.82%	1.07%
VersaBank	9.92%	8.66%	0.75%

Valuation and Earnings

This table compares SB Financial Group and VersaBank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SB Financial Group	$91.03 million	2.01	$13.97 million	$2.68	10.93
VersaBank	$217.14 million	3.36	$20.32 million	$0.76	29.53

VersaBank has higher revenue and earnings than SB Financial Group. SB Financial Group is trading at a lower price-to-earnings ratio than VersaBank, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

66.7% of SB Financial Group shares are owned by institutional investors. Comparatively, 56.9% of VersaBank shares are owned by institutional investors. 6.0% of SB Financial Group shares are owned by company insiders. Comparatively, 5.3% of VersaBank shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

SB Financial Group pays an annual dividend of $0.64 per share and has a dividend yield of 2.2%. VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.3%. SB Financial Group pays out 23.9% of its earnings in the form of a dividend. VersaBank pays out 9.2% 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. SB Financial Group has raised its dividend for 12 consecutive years. SB Financial Group 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 recommendations and price targets for SB Financial Group and VersaBank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SB Financial Group	0	1	1	0	2.50
VersaBank	0	1	3	0	2.75

VersaBank has a consensus target price of $24.00, suggesting a potential upside of 6.95%. Given VersaBank’s stronger consensus rating and higher probable upside, analysts plainly believe VersaBank is more favorable than SB Financial Group.

Summary

VersaBank beats SB Financial Group on 9 of the 17 factors compared between the two stocks.

About SB Financial Group

SB Financial Group, Inc. operates as the financial holding company for the State Bank and Trust Company that provides a range of commercial banking and wealth management services to individual and corporate customers primarily in Ohio, Indiana, and Michigan. It offers checking, savings, money market accounts, as well as time certificates of deposit; and commercial, consumer, agricultural, and residential mortgage loans. The company also provides automatic teller machine, personal and corporate trust, commercial leasing, bank credit card, safe deposit box rental, internet banking, private client group, and other personalized banking products and services; and various trust and financial services comprising asset management services for individuals and corporate employee benefit plans, as well as brokerage services. In addition, it sells insurance products to retail and commercial customers. The company was formerly known as Rurban Financial Corp. and changed its name to SB Financial Group, Inc. in April 2013. SB Financial Group, Inc. was founded in 1902 and is based in Defiance, Ohio.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.