Middlefield Banc (NASDAQ:MBCN) & Bank of the James Financial Group (NASDAQ:BOTJ) Critical Review

Middlefield Banc (NASDAQ:MBCN) and Bank of the James Financial Group (NASDAQ:BOTJ) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Valuation and Earnings

This table compares Middlefield Banc and Bank of the James Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Middlefield Banc	$108.47 million	1.89	$15.52 million	$1.92	13.22
Bank of the James Financial Group	$59.78 million	1.03	$7.94 million	$1.75	7.71

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

Analyst Recommendations

This is a summary of current ratings and price targets for Middlefield Banc and Bank of the James Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Middlefield Banc	0	2	0	0	2.00
Bank of the James Financial Group	0	0	0	0	0.00

Middlefield Banc currently has a consensus price target of $28.50, suggesting a potential upside of 12.29%. Given Middlefield Banc’s stronger consensus rating and higher probable upside, equities analysts clearly believe Middlefield Banc is more favorable than Bank of the James Financial Group.

Profitability

This table compares Middlefield Banc and Bank of the James Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Middlefield Banc	14.31%	7.47%	0.85%
Bank of the James Financial Group	13.29%	12.48%	0.80%

Volatility & Risk

Middlefield Banc has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Bank of the James Financial Group has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Institutional and Insider Ownership

31.7% of Middlefield Banc shares are owned by institutional investors. Comparatively, 18.5% of Bank of the James Financial Group shares are owned by institutional investors. 3.8% of Middlefield Banc shares are owned by company insiders. Comparatively, 15.3% of Bank of the James Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Middlefield Banc pays an annual dividend of $0.80 per share and has a dividend yield of 3.2%. Bank of the James Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 3.0%. Middlefield Banc pays out 41.7% of its earnings in the form of a dividend. Bank of the James Financial Group pays out 22.9% 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.

Summary

Middlefield Banc beats Bank of the James Financial Group on 11 of the 15 factors compared between the two stocks.

About Middlefield Banc

Middlefield Banc Corp. operates as the bank holding company for The Middlefield Banking Company that provides various commercial banking services to small and medium-sized businesses, professionals, small business owners, and retail customers in northeastern and central Ohio. It offers checking, savings, negotiable order of withdrawal accounts, money market accounts, time certificates of deposit, commercial loans, real estate loans, various consumer loans, safe deposit facilities, and travelers' checks. The company also provides operational and working capital, term business, residential construction, professional, and residential and mortgage loans, as well as consumer installment loans for home improvements, automobiles, boats, and other personal expenditures; loans to finance capital purchases; selected guaranteed or subsidized loan programs for small businesses; and agricultural loans. In addition, the company resolves and disposes troubled assets in Ohio. Further, it offers official checks, money orders, and ATM services, as well as IRA accounts; online banking and bill payment services to individuals; and online cash management services to business customers. Middlefield Banc Corp. was founded in 1901 and is headquartered in Middlefield, Ohio.

About Bank of the James Financial Group

Bank of the James Financial Group, Inc. operates as the bank holding company for Bank of the James that provides general retail and commercial banking services to individuals, businesses, associations and organizations, and governmental authorities in Virginia, the United States. It offers checking, savings, individual retirement, and health care saving accounts, as well as other time deposits, including money market accounts and certificates of deposit. The company also provides loans to small- and medium-sized businesses for the purchases of equipment, facilities upgrades, inventory acquisition, and various working capital purposes; commercial and residential construction and development loans; commercial real estate mortgage loans; residential mortgage loans; and secured and unsecured consumer loans, such as lines of credit and overdraft lines of credit, as well as personal, automobile, installment, demand, and home equity loans for personal, family, or household purposes. In addition, it offers other banking services, including safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, treasury management, and credit card merchant services. Further, the company provides mortgage banking; investment advisory services; securities brokerage and investment services; and telephone and internet banking services comprising online bill pay, as well as acts as an agent for insurance and annuity products. The company was founded in 1999 and is headquartered in Lynchburg, Virginia.