Critical Survey: Independent Bank (NASDAQ:IBCP) & Chemung Financial (NASDAQ:CHMG)

Independent Bank (NASDAQ:IBCP) and Chemung Financial (NASDAQ:CHMG) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Dividends

Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.0%. Chemung Financial pays an annual dividend of $1.44 per share and has a dividend yield of 1.7%. Independent Bank pays out 32.9% of its earnings in the form of a dividend. Chemung Financial pays out 18.1% 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. Independent Bank has increased its dividend for 11 consecutive years and Chemung Financial has increased its dividend for 1 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Independent Bank and Chemung Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank	21.63%	14.57%	1.34%
Chemung Financial	23.36%	14.64%	1.39%

Valuation & Earnings

This table compares Independent Bank and Chemung Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$243.00 million	3.36	$68.54 million	$3.40	10.88
Chemung Financial	$140.78 million	2.95	$15.10 million	$7.97	10.83

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

Risk and Volatility

Independent Bank has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500. Comparatively, Chemung Financial has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Independent Bank and Chemung Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	2	3	0	2.60
Chemung Financial	0	2	4	1	2.86

Independent Bank currently has a consensus target price of $41.00, indicating a potential upside of 10.84%. Chemung Financial has a consensus target price of $88.75, indicating a potential upside of 2.85%. Given Independent Bank’s higher possible upside, research analysts plainly believe Independent Bank is more favorable than Chemung Financial.

Insider & Institutional Ownership

79.4% of Independent Bank shares are held by institutional investors. Comparatively, 47.5% of Chemung Financial shares are held by institutional investors. 5.9% of Independent Bank shares are held by insiders. Comparatively, 12.7% of Chemung Financial 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.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

About Chemung Financial

Chemung Financial Corporation operates as a bank holding company for Chemung Canal Trust Company that provides a range of banking, financing, fiduciary, and other financial services. The company provides demand, savings, and time deposits; non-interest and interest-bearing checking accounts; and insured money market accounts. It also offers commercial and agricultural loans comprising loans to small to mid-sized businesses; commercial and residential mortgage loans; and consumer loans, including home equity lines of credit and home equity term loans. In addition, the company provides interest rate swaps, letters of credit, employee benefit plans, insurance products, mutual fund, brokerage, and tax preparation services. Further, it offers guardian, custodian, trustee, investment, pension, estate planning, and employee benefit administrative services, as well as acts as an agent for pension, profit-sharing, and other employee benefit trusts. Chemung Financial Corporation was founded in 1833 and is headquartered in Elmira, New York.