Critical Review: Sturgis Bancorp (OTCMKTS:STBI) & Flushing Financial (NASDAQ:FFIC)

Flushing Financial (NASDAQ:FFIC) and Sturgis Bancorp (OTCMKTS:STBI) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.

Risk and Volatility

Flushing Financial has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, Sturgis Bancorp has a beta of 0.18, suggesting that its share price is 82% less volatile than the S&P 500.

Profitability

This table compares Flushing Financial and Sturgis Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Flushing Financial	7.15%	6.25%	0.50%
Sturgis Bancorp	13.20%	N/A	N/A

Dividends

Flushing Financial pays an annual dividend of $0.88 per share and has a dividend yield of 5.5%. Sturgis Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 2.8%. Flushing Financial pays out 88.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sturgis Bancorp pays out 19.7% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Flushing Financial and Sturgis Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flushing Financial	$489.63 million	1.10	$18.88 million	$1.00	15.87
Sturgis Bancorp	$59.13 million	0.94	$7.46 million	$3.66	6.97

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Flushing Financial and Sturgis Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flushing Financial	0	4	0	0	2.00
Sturgis Bancorp	0	0	0	0	0.00

Flushing Financial currently has a consensus price target of $16.80, suggesting a potential upside of 5.86%. Given Flushing Financial’s stronger consensus rating and higher possible upside, research analysts plainly believe Flushing Financial is more favorable than Sturgis Bancorp.

Insider and Institutional Ownership

67.1% of Flushing Financial shares are owned by institutional investors. 5.7% of Flushing Financial shares are owned by company insiders. Comparatively, 16.0% of Sturgis Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Flushing Financial beats Sturgis Bancorp on 11 of the 15 factors compared between the two stocks.

About Flushing Financial

Flushing Financial Corporation operates as the bank holding company for Flushing Bank that provides banking products and services primarily to consumers, businesses, and governmental units. It offers various deposit products, including checking and savings accounts, money market accounts, non-interest bearing demand accounts, NOW accounts, and certificates of deposit. The company also provides mortgage loans secured by multi-family residential, commercial real estate, one-to-four family mixed-use property, one-to-four family residential property, and commercial business loans; construction loans; small business administration loans and other small business loans; mortgage loan surrogates, such as mortgage-backed securities; and consumer loans, including overdraft lines of credit, as well as the United States government securities, corporate fixed-income securities, and other marketable securities. It operates full-service banking offices in Queens, Nassau, Suffolk, Kings, and New York counties, New York; and an internet branch under the iGObanking and BankPurely brands. Flushing Financial Corporation was founded in 1929 and is based in Uniondale, New York.

About Sturgis Bancorp

Sturgis Bancorp, Inc. operates as the bank holding company for Sturgis Bank & Trust Company that provides banking products and services in Michigan, the United States. The company offers checking, savings and health savings, and money market accounts; and certificates of deposit and individual retirement accounts. It also provides mortgage, automobile, savings secured, personal, home equity, equipment and machinery, government supported, and commercial real estate loans, as well as home equity lines of credit and business lines of credit; and credit cards. In addition, the company offers private banking, cashier checks, wire transfers, foreign drafts and foreign currency, overdraft protection, night depository, and notary services, as well as safe deposit boxes and residential mortgages. Further, it provides direct deposit, remote deposit capture, Visa check card, and checks reorder services; and investment and financial-advisory services, as well as commercial and consumer insurance and title insurance products. Additionally, the company offers estate and asset management services, such as estate settlements, trust administration, record keeping, investment management, and custody services; cash and treasury management; and online and mobile banking, bill pay, and mobile wallet services. It operates through 14 bank facilities and 4 full service standalone ATMs located in 12 communities in Michigan. Sturgis Bancorp, Inc. was founded in 1905 and is headquartered in Sturgis, Michigan.