First Busey (NASDAQ:BUSE) vs. Mercantile Bank (NASDAQ:MBWM) Critical Survey

Mercantile Bank (NASDAQ:MBWM) and First Busey (NASDAQ:BUSE) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Institutional and Insider Ownership

58.6% of Mercantile Bank shares are held by institutional investors. Comparatively, 56.5% of First Busey shares are held by institutional investors. 3.2% of Mercantile Bank shares are held by insiders. Comparatively, 3.9% of First Busey shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Mercantile Bank and First Busey”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$242.65 million	3.56	$88.75 million	$5.46	9.15
First Busey	$719.58 million	2.98	$135.26 million	$1.29	19.29

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

Profitability

This table compares Mercantile Bank and First Busey’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	23.87%	13.54%	1.39%
First Busey	12.96%	9.46%	1.21%

Dividends

Mercantile Bank pays an annual dividend of $1.56 per share and has a dividend yield of 3.1%. First Busey pays an annual dividend of $1.04 per share and has a dividend yield of 4.2%. Mercantile Bank pays out 28.6% of its earnings in the form of a dividend. First Busey pays out 80.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercantile Bank has raised its dividend for 14 consecutive years and First Busey has raised its dividend for 10 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings for Mercantile Bank and First Busey, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	2	4	0	2.67
First Busey	0	3	4	0	2.57

Mercantile Bank presently has a consensus target price of $56.75, indicating a potential upside of 13.61%. First Busey has a consensus target price of $27.00, indicating a potential upside of 8.52%. Given Mercantile Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Mercantile Bank is more favorable than First Busey.

Volatility and Risk

Mercantile Bank has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, First Busey has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Summary

Mercantile Bank beats First Busey on 11 of the 16 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 Busey

First Busey Corporation operates as the bank holding company for Busey Bank that engages in the provision of retail and commercial banking products and services to individual, corporate, institutional, and governmental customers in the United States. It operates through three segments: Banking, Wealth Management, and FirsTech. The Banking segment provides banking services to individual customers, such as demand and savings deposits, money transfers, safe deposit services, individual retirement accounts and other fiduciary services, automated teller machines, and technology-based networks, as well as loan products, including residential real estate, home equity lines of credit, and consumer loans. This segment also offers banking services to corporate customers, including commercial, commercial real estate, real estate construction, and agricultural loans, as well as cash management services. The Wealth Management segment offers a range of investment and asset management, investment, brokerage, investment strategy consulting, fiduciary, philanthropic advisory, tax preparation, business succession planning, and employee retirement plan services to individuals, businesses, and foundations; and professional farm management services to the agricultural industry. The FirsTech segment provides payment technology solutions comprising online, mobile, and voice-recognition bill payments; money management and credit card networks; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments, as well as tools to help clients with billing, reconciliation, bill reminders, and treasury services. The company was founded in 1868 and is headquartered in Champaign, Illinois.