Critical Contrast: ChoiceOne Financial Services (NASDAQ:COFS) versus LCNB (NASDAQ:LCNB)

LCNB (NASDAQ:LCNB) and ChoiceOne Financial Services (NASDAQ:COFS) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Dividends

LCNB pays an annual dividend of $0.88 per share and has a dividend yield of 4.7%. ChoiceOne Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 3.5%. LCNB pays out 50.3% of its earnings in the form of a dividend. ChoiceOne Financial Services pays out 32.0% 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. LCNB has raised its dividend for 7 consecutive years and ChoiceOne Financial Services has raised its dividend for 13 consecutive years.

Risk and Volatility

LCNB has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, ChoiceOne Financial Services has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Institutional & Insider Ownership

34.7% of LCNB shares are held by institutional investors. Comparatively, 19.9% of ChoiceOne Financial Services shares are held by institutional investors. 5.7% of LCNB shares are held by insiders. Comparatively, 6.5% of ChoiceOne Financial Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares LCNB and ChoiceOne Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LCNB	20.02%	9.00%	1.11%
ChoiceOne Financial Services	22.77%	12.04%	1.28%

Analyst Recommendations

This is a breakdown of current ratings for LCNB and ChoiceOne Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LCNB	0	2	1	0	2.33
ChoiceOne Financial Services	0	1	2	0	2.67

LCNB currently has a consensus target price of $20.00, indicating a potential upside of 5.93%. ChoiceOne Financial Services has a consensus target price of $36.50, indicating a potential upside of 10.27%. Given ChoiceOne Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe ChoiceOne Financial Services is more favorable than LCNB.

Earnings and Valuation

This table compares LCNB and ChoiceOne Financial Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LCNB	$97.56 million	2.76	$23.12 million	$1.75	10.79
ChoiceOne Financial Services	$227.62 million	2.18	$28.18 million	$3.63	9.12

ChoiceOne Financial Services has higher revenue and earnings than LCNB. ChoiceOne Financial Services is trading at a lower price-to-earnings ratio than LCNB, indicating that it is currently the more affordable of the two stocks.

Summary

ChoiceOne Financial Services beats LCNB on 13 of the 17 factors compared between the two stocks.

About LCNB

LCNB Corp. operates as the financial holding company for LCNB National Bank that provides banking services in Ohio. Its deposit products include checking accounts, demand deposits, savings accounts, NOW and money market deposits, as well as individual retirement accounts and time certificates. The company's loan products comprise commercial and industrial, commercial and residential real estate, agricultural, construction, and small business administration loans; and residential mortgage loans that consists of loans for purchasing or refinancing personal residences, home equity lines of credit, and loans for commercial or consumer purposes secured by residential mortgages. It offers consumer loans, such as automobile, recreational vehicles, boat, home improvement, and personal loans. In addition, the company provides trust administration, estate settlement, and fiduciary services; and investment management services for trusts, agency accounts, individual retirement accounts, and foundations/endowments. Further, it offers investment services and products, including financial needs analysis, mutual funds, securities trading, annuities, and life insurance; and security brokerage services. Additionally, the company provides safe deposit boxes, night depositories, cashier's checks, bank-by-mail, ATMs, cash and transaction services, debit cards, wire transfers, electronic funds transfer, utility bill collections, notary public service, cash management services, telephone banking, PC Internet banking, mobile banking, and other services for individuals and businesses. LCNB Corp. was founded in 1877 and is headquartered in Lebanon, Ohio.

About ChoiceOne Financial Services

ChoiceOne Financial Services, Inc. operates as the bank holding company for ChoiceOne Bank that provides banking services to corporations, partnerships, and individuals in Michigan. The company offers various deposit products, including time, savings, and demand deposits, safe deposit, and automated transaction machine services. It also provides commercial lending products, such as business, industry, agricultural, construction, inventory, and real estate loans; and consumer loans comprising direct and indirect loans to consumers and purchasers of residential and real properties. In addition, the company offers alternative investment products, which include annuities and mutual funds; and sells insurance policies, such as life and health for commercial and consumer clients. Further, it provides trust and wealth management services. ChoiceOne Financial Services, Inc. was founded in 1898 and is headquartered in Sparta, Michigan.