Reviewing United Bancorporation of Alabama (OTCMKTS:UBAB) & First Community Bankshares (NASDAQ:FCBC)

First Community Bankshares (NASDAQ:FCBC) and United Bancorporation of Alabama (OTCMKTS:UBAB) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Volatility and Risk

First Community Bankshares has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500. Comparatively, United Bancorporation of Alabama has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500.

Institutional and Insider Ownership

35.0% of First Community Bankshares shares are owned by institutional investors. Comparatively, 5.5% of United Bancorporation of Alabama shares are owned by institutional investors. 3.7% of First Community Bankshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for First Community Bankshares and United Bancorporation of Alabama, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Community Bankshares	0	1	0	0	2.00
United Bancorporation of Alabama	0	0	0	0	N/A

First Community Bankshares currently has a consensus target price of $38.00, indicating a potential downside of 4.81%. Given First Community Bankshares’ higher probable upside, analysts plainly believe First Community Bankshares is more favorable than United Bancorporation of Alabama.

Dividends

First Community Bankshares pays an annual dividend of $1.24 per share and has a dividend yield of 3.1%. United Bancorporation of Alabama pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. First Community Bankshares pays out 45.8% of its earnings in the form of a dividend. United Bancorporation of Alabama pays out 11.5% 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. First Community Bankshares has increased its dividend for 13 consecutive years. First Community Bankshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares First Community Bankshares and United Bancorporation of Alabama’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Community Bankshares	$158.16 million	4.63	$48.02 million	$2.71	14.73
United Bancorporation of Alabama	$87.26 million	1.91	$31.54 million	$8.71	5.40

First Community Bankshares has higher revenue and earnings than United Bancorporation of Alabama. United Bancorporation of Alabama is trading at a lower price-to-earnings ratio than First Community Bankshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares First Community Bankshares and United Bancorporation of Alabama’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Community Bankshares	28.30%	11.33%	1.74%
United Bancorporation of Alabama	34.65%	27.14%	2.26%

Summary

First Community Bankshares beats United Bancorporation of Alabama on 10 of the 15 factors compared between the two stocks.

About First Community Bankshares

First Community Bankshares, Inc. operates as the financial holding company for First Community Bank that provides various banking products and services. It offers demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement plans; and commercial, consumer real estate, and consumer and other loans. The company also provides trust management, estate administration, and investment advisory services; and investment management services. It serves individuals and businesses across various industries, such as education, government, and health services; coal mining and gas extraction; retail trade; construction; manufacturing; tourism; and transportation. The company operates through branches in West Virginia, Virginia, North Carolina, and Tennessee. Community Bankshares, Inc. was founded in 1874 and is headquartered in Bluefield, Virginia.

About United Bancorporation of Alabama

United Bancorporation of Alabama, Inc. operates as the bank holding company for United Bank that provides banking services. The company offers checking and savings accounts, certificates of deposit, individual retirement accounts, small business programs, business solutions, merchant services, and cash management services. It also provides various lending services, such as personal loans, business loans, lines of credit, and equipment loans; real estate loans for the agricultural community and working lines of credit; and overdraft services. In addition, the company offers debit cards, prepaid cards, Visa credit cards, gift cards, and safe deposit boxes. Further, it provides check cashing, convenience, remote deposit, mobile check deposit, personal storage compartments, Web payment options, insurance products, investment and brokerage, and online and mobile banking services. United Bancorporation of Alabama, Inc. was founded in 1904 and is based in Atmore, Alabama.