Analyzing Mercantile Bank (NASDAQ:MBWM) & First Northern Community Bancorp (NASDAQ:FNRN)

Mercantile Bank (NASDAQ:MBWM) and First Northern Community Bancorp (NASDAQ:FNRN) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Volatility & Risk

Mercantile Bank has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, First Northern Community Bancorp has a beta of 0.04, indicating that its share price is 96% less volatile than the S&P 500.

Profitability

This table compares Mercantile Bank and First Northern Community Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	24.42%	13.37%	1.43%
First Northern Community Bancorp	24.39%	10.73%	1.18%

Valuation and Earnings

This table compares Mercantile Bank and First Northern Community Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$371.80 million	2.85	$88.75 million	$5.61	10.94
First Northern Community Bancorp	$88.40 million	3.04	$21.13 million	$1.37	12.04

Mercantile Bank has higher revenue and earnings than First Northern Community Bancorp. Mercantile Bank is trading at a lower price-to-earnings ratio than First Northern Community Bancorp, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Mercantile Bank and First Northern Community Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	3	2	1	2.67
First Northern Community Bancorp	0	0	1	0	3.00

Mercantile Bank currently has a consensus price target of $62.20, suggesting a potential upside of 1.37%. Given Mercantile Bank’s higher possible upside, research analysts plainly believe Mercantile Bank is more favorable than First Northern Community Bancorp.

Institutional and Insider Ownership

58.6% of Mercantile Bank shares are owned by institutional investors. Comparatively, 17.9% of First Northern Community Bancorp shares are owned by institutional investors. 2.5% of Mercantile Bank shares are owned by company insiders. Comparatively, 11.9% of First Northern Community Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Mercantile Bank beats First Northern Community Bancorp on 11 of the 15 factors compared between the two stocks.

About Mercantile Bank

Mercantile Bank Corporation is a Michigan-based bank holding company headquartered in Grand Rapids. Through its subsidiary, Mercantile Bank, it provides commercial and personal banking services to individuals, businesses and organizations across Michigan. The bank offers deposit accounts and lending products, including commercial, real estate, mortgage and consumer loans. Its services also include online and mobile banking and other banking solutions for businesses and individuals. Mercantile Bank traces its history to 1997, when it began operations in West Michigan.

About First Northern Community Bancorp

First Northern Community Bancorp is the bank holding company for First Northern Bank, a community banking institution headquartered in Dixon, California. Through its banking subsidiary, the company serves individuals, families, businesses and agricultural customers in Northern California. First Northern Bank provides a range of traditional banking products and services, including checking and savings accounts, certificates of deposit, consumer loans, residential and commercial real estate financing, business loans and agricultural lending.