Critical Analysis: Signature Bank (NASDAQ:SBNY) versus Equity Bancshares (NASDAQ:EQBK)

Equity Bancshares (NASDAQ:EQBK) and Signature Bank (NASDAQ:SBNY) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Equity Bancshares and Signature Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equity Bancshares	0	3	3	0	2.50
Signature Bank	0	0	0	0	0.00

Equity Bancshares currently has a consensus target price of $50.40, indicating a potential upside of 12.27%. Given Equity Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Equity Bancshares is more favorable than Signature Bank.

Profitability

This table compares Equity Bancshares and Signature Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Equity Bancshares	18.66%	14.64%	1.31%
Signature Bank	N/A	N/A	N/A

Dividends

Equity Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Signature Bank pays an annual dividend of $0.70 per share and has a dividend yield of 92.1%. Equity Bancshares pays out 60.0% of its earnings in the form of a dividend. Signature Bank pays out 6.8% 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. Equity Bancshares has raised its dividend for 3 consecutive years. Signature Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

71.8% of Equity Bancshares shares are owned by institutional investors. Comparatively, 11.1% of Signature Bank shares are owned by institutional investors. 6.6% of Equity Bancshares shares are owned by company insiders. Comparatively, 1.5% of Signature Bank shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Equity Bancshares and Signature Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equity Bancshares	$192.21 million	4.46	$62.62 million	$1.20	37.41
Signature Bank	$2.70 billion	0.02	$1.34 billion	$10.22	0.07

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

Volatility and Risk

Equity Bancshares has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Signature Bank has a beta of 12.61, meaning that its stock price is 1,161% more volatile than the S&P 500.

Summary

Equity Bancshares beats Signature Bank on 11 of the 17 factors compared between the two stocks.

About Equity Bancshares

Equity Bancshares, Inc. operates as the bank holding company for Equity Bank that provides a range of banking, mortgage banking, and financial services to individual and corporate customers. The company accepts various demand, savings, money market, and time deposits. Its loan products include commercial and industrial, commercial real estate, commercial lines of credit, working capital, term, equipment and aircraft financing, acquisition, expansion and development, borrowing base, real estate construction, homebuilder, agricultural, government guaranteed, and other loan products. The company's loan products also comprise 1 4 family residential mortgages, agriculture, consumer, residential real estate mortgage, and agricultural real estate and production loans. It also provides debit and credit cards; insurance brokerage; trust and wealth management; online banking solutions, such as access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; mobile banking solutions comprising remote check deposits with mobile bill pay; ATMs; and treasury management, wire transfer, automated clearing house, and stop payment services. In addition, the company offers cash management deposit products, such as lockbox, remote deposit capture, positive pay, reverse positive pay, account reconciliation services, zero balance accounts, and sweep accounts, as well as banking services through telephone, mail, and personal appointments. It operates a network of branches in Arkansas, Kansas, Missouri, and Oklahoma. Equity Bancshares, Inc. was incorporated in 2002 and is headquartered in Wichita, Kansas.

About Signature Bank

As of March 12, 2023, Signature Bank went out of business. Previously, the company provided digital assets banking services and comprised of certain loan portfolios. The company was incorporated in 2000 and is based in New York, New York. Signature Bank now trades on OTCPK.