Analyzing Southern Michigan Bancorp (OTCMKTS:SOMC) and First Western Financial (OTCMKTS:MYFW)

First Western Financial (NASDAQ:MYFW) and Southern Michigan Bancorp (OTCMKTS:SOMC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, valuation and risk.

Insider and Institutional Ownership

40.2% of First Western Financial shares are owned by institutional investors. 24.4% of First Western Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares First Western Financial and Southern Michigan Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Western Financial 9.58% 6.89% 0.71%
Southern Michigan Bancorp 21.76% 10.92% 1.11%

Earnings & Valuation

This table compares First Western Financial and Southern Michigan Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Western Financial $65.97 million 1.99 $5.65 million N/A N/A
Southern Michigan Bancorp $36.24 million 2.46 $8.13 million N/A N/A

Southern Michigan Bancorp has lower revenue, but higher earnings than First Western Financial.

Analyst Recommendations

This is a summary of current ratings and price targets for First Western Financial and Southern Michigan Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Western Financial 0 1 0 0 2.00
Southern Michigan Bancorp 0 0 0 0 N/A

First Western Financial currently has a consensus price target of $17.00, indicating a potential upside of 3.53%. Given First Western Financial’s higher possible upside, analysts clearly believe First Western Financial is more favorable than Southern Michigan Bancorp.

Risk & Volatility

First Western Financial has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500. Comparatively, Southern Michigan Bancorp has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Summary

First Western Financial beats Southern Michigan Bancorp on 6 of the 11 factors compared between the two stocks.

About First Western Financial

First Western Financial, Inc., a financial holding company, through its subsidiaries, provides an integrated suite of wealth management services comprising private banking, personal trust, investment management, mortgage loans, and institutional asset management services. It operates through three segments: Wealth Management, Capital Management, and Mortgage. The Wealth Management segment provides deposit, loan, insurance, and trust and investment management advisory products and services. The Capital Management offers institutional investment management services; and acts as advisor of proprietary mutual funds. The Mortgage segment engages in soliciting, originating, and selling mortgage loans into the secondary market. The company serves entrepreneurs, professionals, and high-net worth individuals and their related philanthropic and business organizations through a network of boutique private trust bank offices in Colorado, Arizona, Wyoming, and California. First Western Financial, Inc. was founded in 2002 and is headquartered in Denver, Colorado.

About Southern Michigan Bancorp

Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southern Michigan communities. Its deposit products include interest and non-interest checking, passbook savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit. The company also provides home mortgages, equity loans, and personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, individual retirement account rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides online and mobile banking, bill pay, e-statements, health savings account, business succession planning, life insurance, and remote deposit capture services, as well as payroll, prepaid, gift, and credit cards. It operates through a network of 14 banking offices located in Battle Creek, Camden, Centreville, Coldwater, Constantine, Hillsdale, Marshall, Mendon, Portage, Tekonsha, Three Rivers, and Union City, Michigan. The company was founded in 1871 and is based in Coldwater, Michigan.

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