First United (NASDAQ:FUNC) & MainStreet Bank (NASDAQ:MNSB) Financial Comparison

MainStreet Bank (NASDAQ:MNSB) and First United (NASDAQ:FUNC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, profitability, earnings, institutional ownership and dividends.

Risk and Volatility

MainStreet Bank has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, First United has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Dividends

MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. First United pays an annual dividend of $1.04 per share and has a dividend yield of 2.8%. MainStreet Bank pays out 20.1% of its earnings in the form of a dividend. First United pays out 26.6% 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. First United has increased its dividend for 6 consecutive years. First United is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

52.3% of MainStreet Bank shares are owned by institutional investors. Comparatively, 33.3% of First United shares are owned by institutional investors. 10.2% of MainStreet Bank shares are owned by insiders. Comparatively, 8.1% of First United shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for MainStreet Bank and First United, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bank	0	2	0	0	2.00
First United	0	0	1	0	3.00

Earnings and Valuation

This table compares MainStreet Bank and First United”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bank	$135.62 million	1.16	$15.61 million	$1.99	11.09
First United	$121.42 million	1.96	$24.51 million	$3.91	9.44

First United has lower revenue, but higher earnings than MainStreet Bank. First United is trading at a lower price-to-earnings ratio than MainStreet Bank, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares MainStreet Bank and First United’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bank	12.94%	9.13%	0.80%
First United	20.55%	13.39%	1.31%

Summary

First United beats MainStreet Bank on 10 of the 16 factors compared between the two stocks.

About MainStreet Bank

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.

About First United

First United Corporation operates as the bank holding company for First United Bank & Trust that provides various retail and commercial banking services to businesses and individuals. It offers various deposit products, which includes checking, savings, money market deposit, and regular and individual retirement accounts (IRAs), as well as certificates of deposit. The company loan portfolio includes commercial loans secured by real estate, commercial equipment, vehicles, or other assets of the borrower; commercial real estate loans for residential and commercial development, agricultural purpose properties, and service industry buildings, such as restaurants and motels, retail buildings, and general purpose business space; residential mortgage loans; home equity lines of credit; residential real estate construction loans; and indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. It also offers access to multi-million-dollar certificates of deposit and the Intrafi cash service, including multi-million-dollar savings and demand deposits to municipalities, businesses, and consumers; and treasury management, cash sweep, and various checking services. In addition, the company provides trust services, which includes personal trust, investment agency accounts, charitable trusts, retirement accounts, including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration, and estate planning; and insurance products, brokerage services, and safe deposit and night depository facilities. First United Corporation was founded in 1900 and is headquartered in Oakland, Maryland.