Analyzing FS Bancorp (NASDAQ:FSBW) & Bank of Marin Bancorp (NASDAQ:BMRC)

Bank of Marin Bancorp (NASDAQ:BMRC) and FS Bancorp (NASDAQ:FSBW) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, institutional ownership, dividends and analyst recommendations.

Insider & Institutional Ownership

52.3% of Bank of Marin Bancorp shares are owned by institutional investors. Comparatively, 63.9% of FS Bancorp shares are owned by institutional investors. 5.1% of Bank of Marin Bancorp shares are owned by insiders. Comparatively, 12.7% of FS Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Bank of Marin Bancorp has a beta of 0.91, meaning that its stock price is 9% less volatile than the S&P 500. Comparatively, FS Bancorp has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500.

Valuation and Earnings

This table compares Bank of Marin Bancorp and FS Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Marin Bancorp	$119.91 million	3.33	-$8.41 million	$0.43	57.60
FS Bancorp	$206.39 million	1.53	$35.02 million	$4.21	9.89

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

Dividends

Bank of Marin Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 4.0%. FS Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 2.7%. Bank of Marin Bancorp pays out 232.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FS Bancorp pays out 26.6% of its earnings in the form of a dividend. FS Bancorp has raised its dividend for 12 consecutive years.

Analyst Ratings

This is a summary of current ratings for Bank of Marin Bancorp and FS Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Marin Bancorp	0	1	3	0	2.75
FS Bancorp	0	1	0	0	2.00

Bank of Marin Bancorp currently has a consensus price target of $26.25, indicating a potential upside of 5.97%. FS Bancorp has a consensus price target of $44.00, indicating a potential upside of 5.64%. Given Bank of Marin Bancorp’s stronger consensus rating and higher probable upside, research analysts plainly believe Bank of Marin Bancorp is more favorable than FS Bancorp.

Profitability

This table compares Bank of Marin Bancorp and FS Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of Marin Bancorp	4.43%	4.60%	0.54%
FS Bancorp	15.88%	11.32%	1.09%

Summary

FS Bancorp beats Bank of Marin Bancorp on 10 of the 17 factors compared between the two stocks.

About Bank of Marin Bancorp

Bank of Marin Bancorp operates as the holding company for Bank of Marin that provides a range of financial services primarily to small to medium-sized businesses, not-for-profit organizations, and commercial real estate investors in the United States. The company offers personal and business checking and savings accounts; and individual retirement, health savings, and demand deposit marketplace accounts, as well as time certificates of deposit, certificate of deposit account registry, and insured cash sweep services. It also provides commercial real estate, commercial and industrial, and consumer loans, as well as construction financing and home equity lines of credit. In addition, the company offers merchant and payroll services; commercial equipment leasing program; payment solutions; treasury management services; credit cards; and mobile deposit, remote deposit capture, automated clearing house, wire transfer, and image lockbox services. Further, it provides wealth management and trust services comprising customized investment portfolio management, financial planning, trust administration, estate settlement, and custody services, as well as 401(k) plan services; and automated teller machines, and telephone and digital banking services. The company was incorporated in 1989 and is headquartered in Novato, California.

About FS Bancorp

FS Bancorp, Inc. operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches. The company operates in two segments, Commercial and Consumer Banking; and Home Lending. It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans. It operates full bank service branches and home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, and Thurston counties; and a loan production office in the market area of the Tri-Cities. FS Bancorp, Inc. was founded in 1936 and is headquartered in Mountlake Terrace, Washington.