Head to Head Review: Southern Michigan Bancorp (OTCMKTS:SOMC) vs. Parke Bancorp (NASDAQ:PKBK)

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

Institutional & Insider Ownership

49.7% of Parke Bancorp shares are owned by institutional investors. 13.0% of Parke Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southern Michigan Bancorp	13.00%	10.60%	0.76%
Parke Bancorp	28.04%	13.02%	1.90%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Southern Michigan Bancorp and Parke Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Michigan Bancorp	0	0	0	0	0.00
Parke Bancorp	0	0	1	0	3.00

Risk and Volatility

Southern Michigan Bancorp has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, Parke Bancorp has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500.

Dividends

Southern Michigan Bancorp pays an annual dividend of $0.68 per share and has a dividend yield of 2.4%. Parke Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 2.3%. Southern Michigan Bancorp pays out 25.4% of its earnings in the form of a dividend. Parke Bancorp pays out 20.6% 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.

Valuation & Earnings

This table compares Southern Michigan Bancorp and Parke Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Michigan Bancorp	$93.18 million	1.40	$12.22 million	$2.68	10.46
Parke Bancorp	$146.08 million	2.46	$37.78 million	$3.50	8.76

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

Summary

Parke Bancorp beats Southern Michigan Bancorp on 13 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 Parke Bancorp

Parke Bancorp, Inc. operates as the bank holding company for Parke Bank that provides personal and business financial services to individuals and small to mid-sized businesses. The company offers various deposit products, including checking, savings, time, money market, and individual retirement accounts, as well as certificates of deposit. Its loan portfolio comprises commercial and industrial, construction, commercial and residential real estate mortgage, and consumer loans. In addition, the company provides debit cards, internet banking, and online bill payment services. Parke Bancorp, Inc. was founded in 1999 and is headquartered in Washington Township, New Jersey.