Critical Analysis: Commonwealth Business Bank (OTCMKTS:CBBI) and Republic Bancorp (NASDAQ:RBCAA)

Commonwealth Business Bank (OTCMKTS:CBBI) and Republic Bancorp (NASDAQ:RBCAA) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.

Risk & Volatility

Commonwealth Business Bank has a beta of 0.15, meaning that its stock price is 85% less volatile than the S&P 500. Comparatively, Republic Bancorp has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Commonwealth Business Bank and Republic Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Commonwealth Business Bank	0	0	0	0	0.00
Republic Bancorp	0	2	1	0	2.33

Republic Bancorp has a consensus target price of $69.00, indicating a potential downside of 7.47%. Given Republic Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Republic Bancorp is more favorable than Commonwealth Business Bank.

Insider & Institutional Ownership

24.4% of Republic Bancorp shares are held by institutional investors. 55.9% of Republic Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Commonwealth Business Bank and Republic Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Commonwealth Business Bank	14.80%	N/A	N/A
Republic Bancorp	25.19%	12.27%	1.87%

Earnings & Valuation

This table compares Commonwealth Business Bank and Republic Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Commonwealth Business Bank	$120.93 million	0.94	$22.43 million	$1.68	6.38
Republic Bancorp	$521.34 million	2.80	$131.32 million	$6.72	11.10

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

Dividends

Commonwealth Business Bank pays an annual dividend of $0.50 per share and has a dividend yield of 4.7%. Republic Bancorp pays an annual dividend of $1.98 per share and has a dividend yield of 2.7%. Commonwealth Business Bank pays out 29.8% of its earnings in the form of a dividend. Republic Bancorp pays out 29.5% 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. Republic Bancorp has raised its dividend for 27 consecutive years.

Summary

Republic Bancorp beats Commonwealth Business Bank on 16 of the 17 factors compared between the two stocks.

About Commonwealth Business Bank

CBB Bancorp, Inc. operates as the holding company for Commonwealth Business Bank that provides various commercial banking products and services to individuals and businesses in the United States. It offers checking, savings, money market, and certification of deposit accounts; SBA lending; business lines of credit; business term loans; business and commercial property loans; construction loans; and credit cards. The company also provides treasury management, and mobile and online banking services, as well as title and escrow services. In addition, it engages in investing activities; and offers trade finance services, including commercial letters of credit, standby letters of credit, and documentary collection services. The company offers its services through full-service and limited-service branches in Southern California, Dallas, Texas and Honolulu, and Hawaii; and loan production offices in the states of Colorado, Georgia, Texas, and Washington. CBB Bancorp, Inc. was founded in 2005 and is headquartered in Los Angeles, California.

About Republic Bancorp

Republic Bancorp, Inc. operates as a bank holding company for Republic Bank & Trust Company that provides various banking products and services in the United States. It operates in six segments: Traditional Banking, Warehouse, Mortgage Banking, Tax Refund Solutions, Republic Payment Solutions, and Republic Credit Solutions. The company offers demand, money market accounts, savings, individual retirement accounts, time, brokered, and other certificates of deposit; and retail and commercial mortgage, construction and land development, consumer, aircraft, and marine loans. It also provides credit cards; title insurance and other financial products and services; and private banking, lockbox processing, remote deposit capture, business online banking, account reconciliation, automated clearing house processing, and internet and mobile banking services. In addition, it offers short-term and revolving credit facilities to mortgage bankers through mortgage warehouse lines of credit; mortgage banking; tax refund solutions, which facilitate the receipt and payment of federal and state tax refund products through third-party tax preparers and tax-preparation software providers; payments-related products and services to consumers through third party service providers; and consumer credit products. The company offers its services through full-services banking centers in Kentucky, Indiana, Florida, Ohio, and Tennessee. Republic Bancorp, Inc. was incorporated in 1974 and is headquartered in Louisville, Kentucky.