Critical Survey: MidWestOne Financial Group (NASDAQ:MOFG) & Red River Bancshares (NASDAQ:RRBI)

MidWestOne Financial Group (NASDAQ:MOFG) and Red River Bancshares (NASDAQ:RRBI) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Insider & Institutional Ownership

65.4% of MidWestOne Financial Group shares are held by institutional investors. Comparatively, 27.6% of Red River Bancshares shares are held by institutional investors. 2.5% of MidWestOne Financial Group shares are held by insiders. Comparatively, 16.6% of Red River Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares MidWestOne Financial Group and Red River Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidWestOne Financial Group	$238.84 million	4.26	-$60.29 million	$2.81	17.55
Red River Bancshares	$169.85 million	4.00	$42.76 million	$6.95	14.87

Red River Bancshares has lower revenue, but higher earnings than MidWestOne Financial Group. Red River Bancshares is trading at a lower price-to-earnings ratio than MidWestOne Financial Group, indicating that it is currently the more affordable of the two stocks.

Dividends

MidWestOne Financial Group pays an annual dividend of $0.97 per share and has a dividend yield of 2.0%. Red River Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. MidWestOne Financial Group pays out 34.5% of its earnings in the form of a dividend. Red River Bancshares pays out 14.4% 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. Red River Bancshares has increased its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of current ratings for MidWestOne Financial Group and Red River Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidWestOne Financial Group	0	2	1	0	2.33
Red River Bancshares	0	3	1	0	2.25

MidWestOne Financial Group presently has a consensus target price of $50.00, suggesting a potential upside of 1.40%. Red River Bancshares has a consensus target price of $106.00, suggesting a potential upside of 2.55%. Given Red River Bancshares’ higher possible upside, analysts plainly believe Red River Bancshares is more favorable than MidWestOne Financial Group.

Profitability

This table compares MidWestOne Financial Group and Red River Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidWestOne Financial Group	16.66%	10.22%	0.96%
Red River Bancshares	26.25%	12.47%	1.39%

Risk & Volatility

MidWestOne Financial Group has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Red River Bancshares has a beta of 0.41, suggesting that its share price is 59% less volatile than the S&P 500.

Summary

Red River Bancshares beats MidWestOne Financial Group on 9 of the 16 factors compared between the two stocks.

About MidWestOne Financial Group

MidWestOne Financial Group, Inc. operates as the bank holding company for MidWestOne Bank that provides commercial and retail banking products and services to individuals, businesses, governmental units, and institutional customers. It offers range of deposit products, including noninterest bearing and interest bearing demand deposits, savings, money market, and time deposits accounts. The company also provides commercial, real estate, agricultural, credit card, and consumer loans; and financing arrangements, such as brokered deposits, term debt, subordinated debt, and equity. In addition, it offers trust and investment services comprising administering estates, trusts, and conservatorships; property and farm management, investment advisory, retail securities brokerage, financial planning, and custodial services; and licensed brokers services. Further, the company provides online and mobile banking, debit cards, automated teller machines, and safe deposit boxes. MidWestOne Financial Group, Inc. was founded in 1934 and is headquartered in Iowa City, Iowa.

About Red River Bancshares

Red River Bancshares, Inc. operates as a bank holding company for Red River Bank that provides banking products and services to commercial and retail customers in Louisiana. The company provides various deposit products, including checking, saving, money market accounts, and time deposits. It offers commercial real estate loans; one-to-four family mortgage loans and home equity lines of credit; construction and development loans; commercial and industrial loans; small business administration paycheck protection program loans; tax-exempt loans; consumer loans to individuals for personal, family, and household purposes, including secured and unsecured installment and term loans; home mortgage loans; and lines of credit and standby letters of credit. In addition, the company provides treasury management, private banking, and brokerage; investment advisory, financial planning, and a suite of retirement plans; debit and credit cards, direct deposits, cashier's checks, and wire transfer services; online banking services, including access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; and banking services in person, through ATMs, drive-through facilities, night deposits, telephone, mail, mobile banking, and remote deposits. Red River Bancshares, Inc. was incorporated in 1998 and is headquartered in Alexandria, Louisiana.