Reviewing MainStreet Bank (NASDAQ:MNSB) & Park National (NYSE:PRK)

Park National (NYSE:PRK) and MainStreet Bank (NASDAQ:MNSB) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Analyst Ratings

This is a breakdown of current ratings and target prices for Park National and MainStreet Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Park National	0	4	0	0	2.00
MainStreet Bank	0	1	1	0	2.50

Park National presently has a consensus target price of $211.00, indicating a potential upside of 16.37%. Given Park National’s higher possible upside, equities research analysts clearly believe Park National is more favorable than MainStreet Bank.

Earnings & Valuation

This table compares Park National and MainStreet Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Park National	$623.80 million	5.25	$151.42 million	$11.17	16.23
MainStreet Bank	$135.62 million	1.33	$15.61 million	$2.04	12.42

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

Profitability

This table compares Park National and MainStreet Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Park National	23.46%	12.31%	1.50%
MainStreet Bank	13.24%	9.16%	0.79%

Institutional & Insider Ownership

62.7% of Park National shares are owned by institutional investors. Comparatively, 52.3% of MainStreet Bank shares are owned by institutional investors. 2.2% of Park National shares are owned by insiders. Comparatively, 10.2% of MainStreet Bank shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Park National pays an annual dividend of $4.40 per share and has a dividend yield of 2.4%. MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Park National pays out 39.4% of its earnings in the form of a dividend. MainStreet Bank pays out 19.6% 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. Park National has raised its dividend for 8 consecutive years. Park National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Park National has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, MainStreet Bank has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500.

Summary

Park National beats MainStreet Bank on 13 of the 17 factors compared between the two stocks.

About Park National

Park National Corporation operates as the bank holding company for Park National Bank that provides commercial banking and trust services in small and medium population areas. The company offers deposits for demand, savings, and time accounts; trust and wealth management services; cash management services; safe deposit operations; electronic funds transfers; Internet and mobile banking solutions with bill pay service; credit cards; and various additional banking-related services. It also provides commercial loans, including financing for industrial and commercial properties, financing for equipment, inventory and accounts receivable, acquisition financing, and commercial leasing, as well as for consumer finance companies; commercial real estate loans comprising mortgage loans to developers and owners of commercial real estate; originates financing leases primarily for the purchase of commercial vehicles, operating/manufacturing equipment, and municipal vehicles/equipment; consumer loans, such as automobile loans; consumer finance services; home equity lines of credit; and residential real estate and construction loans, as well as installment loans and commercial loans. In addition, the company offers aircraft financing services; and ParkDirect, a personal banking application. Park National Corporation was founded in 1908 and is headquartered in Newark, Ohio.

About MainStreet Bank

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.