Financial Review: Franklin Financial Network (FSB) & Bryn Mawr Bank (BMTC)

Franklin Financial Network (NASDAQ: BMTC) and Bryn Mawr Bank (NASDAQ:BMTC) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Insider & Institutional Ownership

64.3% of Franklin Financial Network shares are held by institutional investors. Comparatively, 74.3% of Bryn Mawr Bank shares are held by institutional investors. 10.6% of Franklin Financial Network shares are held by company insiders. Comparatively, 2.0% of Bryn Mawr Bank shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Bryn Mawr Bank pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Franklin Financial Network does not pay a dividend. Bryn Mawr Bank pays out 41.3% of its earnings in the form of a dividend. Bryn Mawr Bank has increased its dividend for 7 consecutive years.

Earnings and Valuation

This table compares Franklin Financial Network and Bryn Mawr Bank’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Franklin Financial Network $147.17 million 3.98 $28.08 million $2.42 16.69
Bryn Mawr Bank $188.69 million 5.14 $23.01 million $2.42 19.77

Franklin Financial Network has higher earnings, but lower revenue than Bryn Mawr Bank. Franklin Financial Network is trading at a lower price-to-earnings ratio than Bryn Mawr Bank, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Franklin Financial Network has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, Bryn Mawr Bank has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Franklin Financial Network and Bryn Mawr Bank, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Financial Network 0 6 1 0 2.14
Bryn Mawr Bank 0 1 2 0 2.67

Franklin Financial Network currently has a consensus target price of $39.00, suggesting a potential downside of 3.47%. Bryn Mawr Bank has a consensus target price of $53.00, suggesting a potential upside of 10.76%. Given Bryn Mawr Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Bryn Mawr Bank is more favorable than Franklin Financial Network.

Profitability

This table compares Franklin Financial Network and Bryn Mawr Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franklin Financial Network 19.27% 11.81% 0.95%
Bryn Mawr Bank 15.20% 11.63% 1.40%

Summary

Bryn Mawr Bank beats Franklin Financial Network on 10 of the 16 factors compared between the two stocks.

Franklin Financial Network Company Profile

Franklin Financial Network, Inc. operates as the holding company for Franklin Synergy Bank that provides various banking and related financial services to small businesses, corporate entities, local governments, and individuals. The company's deposit products include demand, interest-bearing transaction accounts, money market accounts, certificates of deposit, municipal deposits, savings, and deposit accounts. The company also provides consumer lending solutions, including first mortgage real estate loans, home equity loans, and other personal loans; small business administration, and commercial and industrial loans; and single-family residential mortgage loans and construction loans for residential and commercial purposes. In addition, it offers wealth management/trust services; and retirement planning, financial planning, investment services, and insurance products. The company operates through 13 branches and a loan production office in the Williamson, Rutherford, and Davidson counties in the Nashville metropolitan area. Franklin Financial Network, Inc. was founded in 2007 and is headquartered in Franklin, Tennessee.

Bryn Mawr Bank Company Profile

Bryn Mawr Bank Corporation operates as the bank holding company for The Bryn Mawr Trust Company that provides commercial and retail banking services to individual and business customers. The company accepts deposit products, including non-interest-bearing demand deposit, savings, NOW, and market rate accounts. It also provides loan and lease portfolio of products, such as commercial and residential mortgage, construction, commercial and industrial, and consumer loans, as well as home equity lines and loans; and leasing services. In addition, the company offers wealth management services, such as trust administration and other related fiduciary, custody, investment management and advisory, employee benefit account and IRA administration, estate settlement, tax, financial planning, and brokerage services. Further, it provides insurance and related products and services, such as casualty, property, and allied insurance lines, as well as life insurance, annuities, medical insurance, and accident and health insurance for groups and individuals. Additionally, the company offers a small-ticket equipment financing services. As of December 31, 2017, it owned and operated 37 full-service branch locations, 8 limited-hour retirement community branches, 2 limited-service branch locations, 6 wealth management offices, and 1 insurance agency in Montgomery, Delaware, Chester, Philadelphia, Berks, and Dauphin counties in Pennsylvania; Mercer and Camden counties of New Jersey; and New Castle county in Delaware. The company was founded in 1889 and is headquartered in Bryn Mawr, Pennsylvania.

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