Analyzing Community Heritage Financial (OTCMKTS:CMHF) and MainStreet Bank (NASDAQ:MNSB)

Community Heritage Financial (OTCMKTS:CMHF) and MainStreet Bank (NASDAQ:MNSB) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Valuation and Earnings

This table compares Community Heritage Financial and MainStreet Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Heritage Financial	$60.49 million	1.68	$9.65 million	$3.27	10.55
MainStreet Bank	$135.62 million	1.21	$15.61 million	$1.99	11.58

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Community Heritage Financial and MainStreet Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Heritage Financial	0	0	0	0	0.00
MainStreet Bank	0	1	1	0	2.50

Dividends

Community Heritage Financial pays an annual dividend of $0.32 per share and has a dividend yield of 0.9%. MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Community Heritage Financial pays out 9.8% of its earnings in the form of a dividend. MainStreet Bank pays out 20.1% 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.

Profitability

This table compares Community Heritage Financial and MainStreet Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community Heritage Financial	N/A	N/A	N/A
MainStreet Bank	12.94%	9.13%	0.80%

Volatility & Risk

Community Heritage Financial has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500. Comparatively, MainStreet Bank has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Insider and Institutional Ownership

12.2% of Community Heritage Financial shares are held by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are held by institutional investors. 10.2% of MainStreet Bank shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

MainStreet Bank beats Community Heritage Financial on 12 of the 15 factors compared between the two stocks.

About Community Heritage Financial

Community Heritage Financial, Inc. operates as the bank holding company for Middletown Valley Bank that provides retail and commercial banking services to individuals and businesses in Frederick and Washington counties in Maryland and Franklin County, Pennsylvania. Its primary deposit products include demand, savings, and time deposits, as well as lending products comprise real estate mortgages, commercial business loans, and instalment loans. The company also offers mortgage financing, new home purchases, refinancing, and construction lending in Middletown, Crofton, and Oakland, Maryland. The company was founded in 1908 and is based in Middletown, Maryland.

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.