Financial Contrast: Mercantile Bank (NASDAQ:MBWM) and First Western Financial (NASDAQ:MYFW)
by Mitch Edgeman · The Markets DailyMercantile Bank (NASDAQ:MBWM – Get Free Report) and First Western Financial (NASDAQ:MYFW – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.
Profitability
This table compares Mercantile Bank and First Western Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Mercantile Bank | 23.99% | 15.52% | 1.50% |
| First Western Financial | 3.93% | 2.86% | 0.24% |
Institutional & Insider Ownership
58.6% of Mercantile Bank shares are owned by institutional investors. Comparatively, 60.3% of First Western Financial shares are owned by institutional investors. 3.1% of Mercantile Bank shares are owned by insiders. Comparatively, 17.9% of First Western Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Mercantile Bank and First Western Financial”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Mercantile Bank | $230.14 million | 2.92 | $82.22 million | $5.16 | 8.08 |
| First Western Financial | $89.25 million | 2.23 | $5.22 million | $0.77 | 26.88 |
Mercantile Bank has higher revenue and earnings than First Western Financial. Mercantile Bank is trading at a lower price-to-earnings ratio than First Western Financial, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Mercantile Bank has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, First Western Financial has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Mercantile Bank and First Western Financial, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Mercantile Bank | 0 | 3 | 1 | 0 | 2.25 |
| First Western Financial | 0 | 1 | 2 | 0 | 2.67 |
Mercantile Bank currently has a consensus target price of $52.00, suggesting a potential upside of 24.73%. First Western Financial has a consensus target price of $22.17, suggesting a potential upside of 7.09%. Given Mercantile Bank’s higher possible upside, equities research analysts plainly believe Mercantile Bank is more favorable than First Western Financial.
Summary
Mercantile Bank beats First Western Financial on 9 of the 14 factors compared between the two stocks.
About Mercantile Bank
Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.
About First Western Financial
First Western Financial, Inc., a financial holding company, provides wealth advisory, private baking, personal trust, investment management, mortgage lending, and institutional asset management services. The company operates through two segments: Wealth Management and Mortgage. The Wealth Management segment provides deposit, loan, life insurance, and trust and investment management advisory products and services. The Mortgage segment engages in soliciting, originating, and selling mortgage loans into the secondary market. It serves entrepreneurs, professionals, high net worth individuals or families, and business and philanthropic organizations. First Western Financial, Inc. was incorporated in 2002 and is headquartered in Denver, Colorado.