Critical Survey: First Mid Bancshares (NASDAQ:FMBH) and Prime Meridian (OTCMKTS:PMHG)

First Mid Bancshares (NASDAQ:FMBH) and Prime Meridian (OTCMKTS:PMHG) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, institutional ownership and profitability.

Dividends

First Mid Bancshares pays an annual dividend of $0.92 per share and has a dividend yield of 2.4%. Prime Meridian pays an annual dividend of $0.25 per share and has a dividend yield of 1.0%. First Mid Bancshares pays out 29.7% of its earnings in the form of a dividend. Prime Meridian pays out 10.0% 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.

Earnings & Valuation

This table compares First Mid Bancshares and Prime Meridian’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Mid Bancshares	$386.95 million	2.37	$68.93 million	$3.10	12.36
Prime Meridian	$41.82 million	1.97	$8.71 million	$2.50	10.00

First Mid Bancshares has higher revenue and earnings than Prime Meridian. Prime Meridian is trading at a lower price-to-earnings ratio than First Mid Bancshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares First Mid Bancshares and Prime Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Mid Bancshares	17.01%	10.56%	1.06%
Prime Meridian	18.62%	10.49%	0.97%

Risk & Volatility

First Mid Bancshares has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Prime Meridian has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for First Mid Bancshares and Prime Meridian, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Mid Bancshares	0	0	5	0	3.00
Prime Meridian	0	0	0	0	N/A

First Mid Bancshares currently has a consensus price target of $36.60, suggesting a potential downside of 4.49%. Given First Mid Bancshares’ higher probable upside, equities research analysts plainly believe First Mid Bancshares is more favorable than Prime Meridian.

Insider & Institutional Ownership

47.6% of First Mid Bancshares shares are held by institutional investors. Comparatively, 11.8% of Prime Meridian shares are held by institutional investors. 7.7% of First Mid Bancshares shares are held by company insiders. Comparatively, 25.9% of Prime Meridian shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

First Mid Bancshares beats Prime Meridian on 12 of the 15 factors compared between the two stocks.

About First Mid Bancshares

First Mid Bancshares, Inc., a financial holding company, provides community banking products and services to commercial, retail, and agricultural customers in the United States. It accepts various deposit products, such as demand deposits, savings accounts, money market deposits, and time deposits. The company's loan products include commercial real estate, commercial and industrial, agricultural and agricultural real estate, residential real estate, and consumer loans, as well as construction and land development, 1-4 family residential properties, and multifamily residential properties loans; and other loans comprising loans to municipalities to support community projects, such as infrastructure improvements or equipment purchases. It also offers wealth management services, which include estate planning, investment, and farm management and brokerage services for individuals; employee benefit services for businesses; and farm management and brokerage services. In addition, the company provides property and casualty, senior insurance products, and group medical insurance for businesses; and personal lines insurance to individuals. The company was formerly known as First Mid-Illinois Bancshares, Inc. and changed its name to First Mid Bancshares, Inc. in April 2019. First Mid Bancshares, Inc. was founded in 1865 and is headquartered in Mattoon, Illinois.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.