Contrasting Farmers National Banc (NASDAQ:FMNB) and Surrey Bancorp (OTCMKTS:SRYB)

Farmers National Banc (NASDAQ:FMNB) and Surrey Bancorp (OTCMKTS:SRYB) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Farmers National Banc and Surrey Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers National Banc	19.50%	14.55%	1.09%
Surrey Bancorp	37.97%	N/A	N/A

Valuation & Earnings

This table compares Farmers National Banc and Surrey Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers National Banc	$170.30 million	3.34	$49.93 million	$1.45	10.43
Surrey Bancorp	$16.20 million	4.23	$5.10 million	$1.52	10.99

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

Dividends

Farmers National Banc pays an annual dividend of $0.68 per share and has a dividend yield of 4.5%. Surrey Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.9%. Farmers National Banc pays out 46.9% of its earnings in the form of a dividend. Surrey Bancorp pays out 31.6% 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. Farmers National Banc has increased its dividend for 8 consecutive years. Farmers National Banc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Farmers National Banc has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, Surrey Bancorp has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Institutional & Insider Ownership

38.7% of Farmers National Banc shares are held by institutional investors. Comparatively, 3.7% of Surrey Bancorp shares are held by institutional investors. 4.0% of Farmers National Banc shares are held by company insiders. Comparatively, 33.7% of Surrey Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Farmers National Banc and Surrey Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers National Banc	0	2	1	0	2.33
Surrey Bancorp	0	0	0	0	N/A

Farmers National Banc presently has a consensus target price of $15.67, suggesting a potential upside of 3.55%. Given Farmers National Banc’s higher possible upside, analysts clearly believe Farmers National Banc is more favorable than Surrey Bancorp.

Summary

Farmers National Banc beats Surrey Bancorp on 10 of the 16 factors compared between the two stocks.

About Farmers National Banc

Farmers National Banc Corp. operates as a bank holding company for The Farmers National Bank of Canfield engages in the banking, trust, retirement consulting, insurance, and financial management businesses. It offers commercial and retail banking services, including checking, savings, and time deposit accounts; commercial, mortgage and installment, and home equity loans; home equity lines of credit, night depository, safe deposit box, money order, bank check, automated teller machine, Internet banking, travel card, E bond transaction, brokerage, and other services. The company also provides personal and corporate trust services in the areas of estate settlement, trust administration, employee benefit plans, and retirement services; property and casualty insurance products and services; and various insurance products through licensed representatives, as well as invests in municipal securities. The company was founded in 1887 and is headquartered in Canfield, Ohio.

About Surrey Bancorp

Surrey BanCorp engages in the provision of banking solutions through its subsidiaries, Surrey Bank & Trust . It offers checking accounts, savings, deposit services, mortgages, real estate loans, commercial credit products, business checking, and electronic banking. The company was founded on May 1, 2003 and is headquartered in Mount Airy, NC.