Analyzing City Bank (OTCMKTS:CTBK) and Mercantile Bank (NASDAQ:MBWM)

Mercantile Bank (NASDAQ:MBWM) and City Bank (OTCMKTS:CTBK) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Mercantile Bank and City Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	21.99%	14.29%	1.41%
City Bank	N/A	N/A	N/A

Earnings and Valuation

This table compares Mercantile Bank and City Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$231.48 million	3.18	$79.59 million	$4.95	9.21
City Bank	N/A	N/A	N/A	N/A	N/A

Mercantile Bank has higher revenue and earnings than City Bank.

Institutional & Insider Ownership

58.6% of Mercantile Bank shares are held by institutional investors. 3.1% of Mercantile Bank shares are held by company insiders. Comparatively, 37.5% of City Bank shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Mercantile Bank has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, City Bank has a beta of 3.65, indicating that its stock price is 265% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Mercantile Bank and City Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	2	2	0	2.50
City Bank	0	0	0	0	0.00

Mercantile Bank presently has a consensus target price of $54.67, suggesting a potential upside of 19.96%. Given Mercantile Bank’s stronger consensus rating and higher probable upside, analysts clearly believe Mercantile Bank is more favorable than City Bank.

Summary

Mercantile Bank beats City Bank on 8 of the 10 factors compared between the two stocks.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.

About City Bank

As of April 17, 2010, City Bank was acquired by Whidbey Island Bank. City Bank offers commercial banking services. The company was incorporated in 1974 and is headquartered in Lynnwood, Washington.