Head-To-Head Analysis: Potomac Bancshares (OTCMKTS:PTBS) & Middlefield Banc (NASDAQ:MBCN)

Potomac Bancshares (OTCMKTS:PTBS) and Middlefield Banc (NASDAQ:MBCN) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, dividends, earnings and analyst recommendations.

Volatility & Risk

Potomac Bancshares has a beta of 0.21, meaning that its stock price is 79% less volatile than the S&P 500. Comparatively, Middlefield Banc has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Potomac Bancshares and Middlefield Banc, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Potomac Bancshares	0	0	0	0	0.00
Middlefield Banc	0	2	1	0	2.33

Middlefield Banc has a consensus target price of $35.00, indicating a potential upside of 3.95%. Given Middlefield Banc’s stronger consensus rating and higher probable upside, analysts clearly believe Middlefield Banc is more favorable than Potomac Bancshares.

Profitability

This table compares Potomac Bancshares and Middlefield Banc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Potomac Bancshares	N/A	N/A	N/A
Middlefield Banc	16.65%	8.91%	1.01%

Valuation & Earnings

This table compares Potomac Bancshares and Middlefield Banc”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Potomac Bancshares	$54.90 million	N/A	N/A	$2.16	9.14
Middlefield Banc	$77.79 million	3.50	$19.42 million	$2.39	14.09

Middlefield Banc has higher revenue and earnings than Potomac Bancshares. Potomac Bancshares is trading at a lower price-to-earnings ratio than Middlefield Banc, indicating that it is currently the more affordable of the two stocks.

Dividends

Potomac Bancshares pays an annual dividend of $0.52 per share and has a dividend yield of 2.6%. Middlefield Banc pays an annual dividend of $0.84 per share and has a dividend yield of 2.5%. Potomac Bancshares pays out 24.1% of its earnings in the form of a dividend. Middlefield Banc pays out 35.1% 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. Middlefield Banc has raised its dividend for 1 consecutive years. Potomac Bancshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

5.3% of Potomac Bancshares shares are owned by institutional investors. Comparatively, 31.7% of Middlefield Banc shares are owned by institutional investors. 4.4% of Potomac Bancshares shares are owned by insiders. Comparatively, 4.1% of Middlefield Banc shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Middlefield Banc beats Potomac Bancshares on 12 of the 15 factors compared between the two stocks.

About Potomac Bancshares

Potomac Bancshares, Inc. operates as the bank holding company for Bank of Charles Town that provides various banking products and services to individuals and businesses. The company offers checking, savings, and individual retirement accounts; and certificates of deposit (CD). It also provides personal loans, including new and used vehicle, home equity, unsecured home improvement and personal, retail equipment, and lot loans, as well as loans secured by CD, and home equity lines of credit; commercial loans for building or office purchases, commercial real estate and construction, and production and administrative equipment purchases; lines of credit; mortgage, commercial, term, residential and commercial construction, commercial real estate, and agricultural loans; and credit and debit cards. In addition, the company offers Card Pay, cash management, merchant, financial planning, trust and estate, investment management, wealth management, full-service brokerage, retirement and insurance planning and products, asset allocation and management, and college planning services, as well as telephone, mobile, and online banking services. Potomac Bancshares, Inc. was founded in 1871 and is based in Charles Town, West Virginia.

About Middlefield Banc

Middlefield Banc Corp. operates as the bank holding company for The Middlefield Banking Company that provides various commercial banking services to small and medium-sized businesses, professionals, small business owners, and retail customers in northeastern and central Ohio. It offers checking, savings, negotiable order of withdrawal accounts, money market accounts, time certificates of deposit, commercial loans, real estate loans, various consumer loans, safe deposit facilities, and travelers' checks. The company also provides operational and working capital, term business, residential construction, professional, and residential and mortgage loans, as well as consumer installment loans for home improvements, automobiles, boats, and other personal expenditures; loans to finance capital purchases; selected guaranteed or subsidized loan programs for small businesses; and agricultural loans. In addition, the company resolves and disposes troubled assets in Ohio. Further, it offers official checks, money orders, and ATM services, as well as IRA accounts; online banking and bill payment services to individuals; and online cash management services to business customers. Middlefield Banc Corp. was founded in 1901 and is headquartered in Middlefield, Ohio.