S&T Bancorp (NASDAQ:STBA) vs. F & M Bank (OTCMKTS:FMBM) Critical Comparison

F & M Bank (OTCMKTS:FMBM) and S&T Bancorp (NASDAQ:STBA) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Dividends

F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.3%. S&T Bancorp pays an annual dividend of $1.44 per share and has a dividend yield of 3.3%. F & M Bank pays out 32.8% of its earnings in the form of a dividend. S&T Bancorp pays out 41.1% 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. S&T Bancorp has raised its dividend for 13 consecutive years. S&T Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

F & M Bank has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for F & M Bank and S&T Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
F & M Bank	0	0	0	0	0.00
S&T Bancorp	0	3	2	1	2.67

S&T Bancorp has a consensus price target of $42.25, indicating a potential downside of 3.76%. Given S&T Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe S&T Bancorp is more favorable than F & M Bank.

Valuation and Earnings

This table compares F & M Bank and S&T Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
F & M Bank	$78.92 million	1.43	$11.23 million	$3.17	10.02
S&T Bancorp	$568.51 million	2.95	$134.23 million	$3.50	12.54

S&T Bancorp has higher revenue and earnings than F & M Bank. F & M Bank is trading at a lower price-to-earnings ratio than S&T Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares F & M Bank and S&T Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
F & M Bank	14.23%	11.72%	0.85%
S&T Bancorp	23.61%	9.25%	1.37%

Insider and Institutional Ownership

3.9% of F & M Bank shares are held by institutional investors. Comparatively, 65.2% of S&T Bancorp shares are held by institutional investors. 11.6% of F & M Bank shares are held by company insiders. Comparatively, 1.2% of S&T Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

S&T Bancorp beats F & M Bank on 15 of the 18 factors compared between the two stocks.

About F & M Bank

F & M Bank Corp. operates as the bank holding company for Farmers & Merchants Bank that provides financial products and services to consumers and businesses in Virginia. The company offers commercial and individual demand and time deposit accounts, savings accounts, money market accounts, internet and mobile banking services, and drive-in banking services. It also provides construction loans, including residential, and land acquisition and development loans; commercial real estate loans; business loans; consumer loans, such as personal loans, automobile loans, deposit account loans, installment and demand loans, and home equity loans; residential mortgage loans; credit cards; dealer finance; farmland loans; multi-family loans; and commercial and industrial loans. In addition, the company offers brokerage services and commercial and personal insurance products. Further, it originates conventional and government agency sponsored mortgages; and offers title insurance and real estate settlement services. The company was founded in 1908 and is headquartered in Timberville, Virginia.

About S&T Bancorp

S&T Bancorp, Inc. is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. The company was founded on March 17, 1983 and is headquartered in Indiana, PA.