Analyzing ChoiceOne Financial Services (NASDAQ:COFS) and Northpointe Bancshares (NYSE:NPB)

ChoiceOne Financial Services (NASDAQ:COFS) and Northpointe Bancshares (NYSE:NPB) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Risk and Volatility

ChoiceOne Financial Services has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Northpointe Bancshares has a beta of 0.09, suggesting that its stock price is 91% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for ChoiceOne Financial Services and Northpointe Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ChoiceOne Financial Services	0	1	2	0	2.67
Northpointe Bancshares	2	1	2	0	2.00

ChoiceOne Financial Services presently has a consensus target price of $37.50, suggesting a potential upside of 2.21%. Northpointe Bancshares has a consensus target price of $20.25, suggesting a potential upside of 28.36%. Given Northpointe Bancshares’ higher possible upside, analysts clearly believe Northpointe Bancshares is more favorable than ChoiceOne Financial Services.

Dividends

ChoiceOne Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 3.2%. Northpointe Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. ChoiceOne Financial Services pays out 32.0% of its earnings in the form of a dividend. Northpointe Bancshares pays out 5.6% 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. ChoiceOne Financial Services has raised its dividend for 13 consecutive years. ChoiceOne Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

19.9% of ChoiceOne Financial Services shares are owned by institutional investors. 6.5% of ChoiceOne Financial Services shares are owned by insiders. Comparatively, 18.3% of Northpointe Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares ChoiceOne Financial Services and Northpointe Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ChoiceOne Financial Services	$172.22 million	3.19	$28.18 million	$3.63	10.11
Northpointe Bancshares	$248.79 million	2.19	$83.41 million	$2.13	7.41

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ChoiceOne Financial Services	22.66%	12.13%	1.30%
Northpointe Bancshares	16.27%	13.88%	1.12%

Summary

ChoiceOne Financial Services beats Northpointe Bancshares on 10 of the 16 factors compared between the two stocks.

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.

About Northpointe Bancshares

Northpointe Bancshares, Inc. operates as a bank holding company. It offers a nationwide mortgage purchase program, residential mortgage loans, digital deposit banking to retail customers and custodial deposit services. The company was founded by Charles A. Williams in 1998 and is headquartered in Grand Rapids, MI.