Head to Head Analysis: Arrow Financial (NASDAQ:AROW) vs. Union Bankshares (NASDAQ:UNB)

Arrow Financial (NASDAQ:AROW) and Union Bankshares (NASDAQ:UNB) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, valuation, dividends, risk and earnings.

Risk & Volatility

Arrow Financial has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Union Bankshares has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Arrow Financial and Union Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Financial	0	3	2	0	2.40
Union Bankshares	0	1	0	0	2.00

Arrow Financial currently has a consensus price target of $39.83, indicating a potential downside of 2.50%. Given Arrow Financial’s stronger consensus rating and higher probable upside, research analysts clearly believe Arrow Financial is more favorable than Union Bankshares.

Dividends

Arrow Financial pays an annual dividend of $1.20 per share and has a dividend yield of 2.9%. Union Bankshares pays an annual dividend of $1.44 per share and has a dividend yield of 5.7%. Arrow Financial pays out 38.8% of its earnings in the form of a dividend. Union Bankshares pays out 56.9% 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. Arrow Financial has raised its dividend for 7 consecutive years.

Profitability

This table compares Arrow Financial and Union Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Financial	20.72%	12.38%	1.17%
Union Bankshares	13.13%	14.94%	0.74%

Earnings and Valuation

This table compares Arrow Financial and Union Bankshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Financial	$242.58 million	2.78	$43.95 million	$3.09	13.22
Union Bankshares	$86.06 million	1.36	$11.08 million	$2.53	10.02

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

Institutional and Insider Ownership

46.7% of Arrow Financial shares are held by institutional investors. Comparatively, 14.8% of Union Bankshares shares are held by institutional investors. 3.5% of Arrow Financial shares are held by insiders. Comparatively, 2.1% of Union Bankshares shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Arrow Financial beats Union Bankshares on 15 of the 17 factors compared between the two stocks.

About Arrow Financial

Arrow Financial Corporation, a bank holding company, provides commercial and consumer banking, and financial products and services. The company’s deposit products include demand deposits, interest-bearing checking accounts, savings deposits, time deposits, and other time deposits. Its lending activities comprise commercial loans, such as term loans, time notes, and lines of credit; and commercial real estate loans to finance real estate purchases, refinancing, expansions, and enhancement to commercial properties, as well as commercial construction and land development loans to finance projects. The company’s lending activities also include consumer installment loans to finance personal expenditures, personal lines of credit, overdraft protection, and automobile loans; and residential real estate loans, fixed home equity loans, and home equity lines of credit for consumers to finance home improvements, debt consolidation, education, and other uses. In addition, it maintains an indirect lending program. Further, the company provides retirement planning, trust, and estate administration services for individuals, as well as pension, profit-sharing, and employee benefit plan administration services for corporations. Additionally, it offers insurance agency services comprising group health care policies and life insurance, and property and casualty insurance products; and investment advisory services to its proprietary mutual funds, as well as holds a real estate investment trust. It operates in the northeastern region of New York State in Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany, and Schenectady counties. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.

About Union Bankshares

Union Bankshares, Inc. operates as the bank holding company for Union Bank that provides retail, commercial, and municipal banking products and services in northern Vermont and New Hampshire. It offers retail depository services, such as personal checking, savings, money market, IRA/SEP/KEOGH, and health savings accounts, as well as certificates of deposit. The company also provides commercial real estate loans; commercial loans for plant and equipment, working capital, real estate renovation, and other business purposes to business owners and investors; small business administration guaranteed loans; residential construction and mortgage loans; municipal financing, including loans and excess deposits secured by FHLBB letters of credit; and home improvement loans and overdraft checking privileges against preauthorized lines of credit. In addition, it offers online cash management services, including account reconciliation, credit card depository, automated clearing house origination, wire transfers, positive pay and night depository services; merchant credit card services for the deposit and immediate credit of sales drafts; remote deposit capture services; and online mortgage application and consumer deposit account opening services. Further, the company provides business checking accounts; standby letters of credit, bank checks or money orders, and safe deposit boxes; ATM cards and services; debit cards; telephone, internet, and mobile banking services, including bill pay; and wealth management, fiduciary, and trust services. It offers retail banking services to individuals; and commercial banking services to small and medium sized business corporations, limited liability companies, partnerships, and sole proprietorships, as well as nonprofit organizations, local municipalities, and school districts. Union Bankshares, Inc. was founded in 1891 and is headquartered in Morrisville, Vermont.