Financial Survey: Peoples Bancorp (NASDAQ:PEBO) and Southern Michigan Bancorp (OTCMKTS:SOMC)

Southern Michigan Bancorp (OTCMKTS:SOMC) and Peoples Bancorp (NASDAQ:PEBO) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.

Dividends

Southern Michigan Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Peoples Bancorp pays an annual dividend of $1.60 per share and has a dividend yield of 5.4%. Southern Michigan Bancorp pays out 25.8% of its earnings in the form of a dividend. Peoples Bancorp pays out 47.9% 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.

Institutional & Insider Ownership

60.7% of Peoples Bancorp shares are held by institutional investors. 3.5% of Peoples Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and price targets for Southern Michigan Bancorp and Peoples Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Michigan Bancorp	0	0	0	0	N/A
Peoples Bancorp	0	3	1	0	2.25

Peoples Bancorp has a consensus target price of $33.00, indicating a potential upside of 11.90%. Given Peoples Bancorp’s higher probable upside, analysts plainly believe Peoples Bancorp is more favorable than Southern Michigan Bancorp.

Profitability

This table compares Southern Michigan Bancorp and Peoples Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern Michigan Bancorp	12.88%	10.64%	0.72%
Peoples Bancorp	20.58%	12.76%	1.46%

Earnings & Valuation

This table compares Southern Michigan Bancorp and Peoples Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Michigan Bancorp	$73.31 million	1.08	$10.90 million	$2.33	7.42
Peoples Bancorp	$526.82 million	1.99	$113.36 million	$3.34	8.83

Peoples Bancorp has higher revenue and earnings than Southern Michigan Bancorp. Southern Michigan Bancorp is trading at a lower price-to-earnings ratio than Peoples Bancorp, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Southern Michigan Bancorp has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, Peoples Bancorp has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Summary

Peoples Bancorp beats Southern Michigan Bancorp on 14 of the 15 factors compared between the two stocks.

About Southern Michigan Bancorp

Southern Michigan Bancorp, Inc. operates as the bank holding company for Southern Michigan Bank & Trust that provides a range of commercial banking services to individuals, businesses, institutions, and governmental agencies primarily in the southwest Michigan communities. Its deposit products include interest and non-interest checking, savings, and various types of money market accounts; time, savings, and demand deposits; and certificates of deposit and IRAs. The company also provides home mortgages and equity loans, home equity lines of credit, VA and FHA home loans, USDA rural development loans, and auto/personal loans; business loans, such as lines of credit, term loans, commercial real estate loans, commercial and industrial loans, agriculture loans, letters of credit, small business administration loans, and capital access loans; industrial, construction, real estate, and inventory loans; and consumer lending products comprising direct and indirect loans to purchasers of residential real property and consumer goods. In addition, it offers trust and investment services that include investment management, trustee, IRA rollovers and retirement plan, institutional and personal custody, estate settlement, wealth management, estate and wealth transfer planning assistance, charitable gift planning assistance, and cash management custody services; and safe deposit box and automated teller machine services. Further, the company provides bill pay, e-statements, ACH, wire transfer, remote deposit capture, and insurance services, as well as ATM, debit, credit, and gift cards. The company was founded in 1871 and is based in Coldwater, Michigan.

About Peoples Bancorp

Peoples Bancorp Inc. operates as the holding company for Peoples Bank that provides commercial and consumer banking products and services. The company accepts various deposit products, including demand deposit accounts, savings accounts, money market accounts, certificates of deposit, and governmental deposits; and provides commercial and industrial, commercial real estate, construction, finance, residential real estate, and consumer indirect and direct loans, as well as home equity lines of credit and overdrafts. It also offers debit and automated teller machine (ATM) cards; safe deposit rental facilities; money orders and cashier’s checks; and telephone, mobile, and online banking services. In addition, the company provides various life, health, and property and casualty insurance products; third-party insurance administration; interactive teller machines; insurance premium financing; check deposit and alert notification; commercial and technology equipment leasing; fiduciary and trust; underwriting, origination, and servicing of equipment leases, and equipment financing agreements; and asset management and administration services, as well as employee benefit, retirement, and health care plan administration services. Further, it offers brokerage services through an unaffiliated registered broker-dealers; insurance premium finance lending and leasing; and credit cards to individuals and businesses, as well as provides merchant credit card transaction processing, and person-to-person payment processing services. Peoples Bancorp Inc. was founded in 1902 and is headquartered in Marietta, Ohio.