Farmers & Merchants Bancorp (OTCMKTS:FMCB) vs. California BanCorp (NASDAQ:BCAL) Critical Analysis

Farmers & Merchants Bancorp (OTCMKTS:FMCB) and California BanCorp (NASDAQ:BCAL) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Institutional and Insider Ownership

5.6% of Farmers & Merchants Bancorp shares are owned by institutional investors. Comparatively, 55.4% of California BanCorp shares are owned by institutional investors. 8.5% of Farmers & Merchants Bancorp shares are owned by insiders. Comparatively, 14.8% of California BanCorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Farmers & Merchants Bancorp and California BanCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	30.89%	15.03%	1.65%
California BanCorp	26.60%	11.51%	1.57%

Analyst Recommendations

This is a summary of recent ratings for Farmers & Merchants Bancorp and California BanCorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	0	0	0	0.00
California BanCorp	0	1	3	1	3.00

California BanCorp has a consensus price target of $20.50, indicating a potential upside of 11.90%. Given California BanCorp’s stronger consensus rating and higher probable upside, analysts clearly believe California BanCorp is more favorable than Farmers & Merchants Bancorp.

Risk & Volatility

Farmers & Merchants Bancorp has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, California BanCorp has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $20.20 per share and has a dividend yield of 1.8%. California BanCorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.2%. Farmers & Merchants Bancorp pays out 15.4% of its earnings in the form of a dividend. California BanCorp pays out 20.7% 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.

Earnings & Valuation

This table compares Farmers & Merchants Bancorp and California BanCorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bancorp	$292.68 million	2.74	$88.46 million	$130.83	8.79
California BanCorp	$237.07 million	2.50	$63.06 million	$1.93	9.49

Farmers & Merchants Bancorp has higher revenue and earnings than California BanCorp. Farmers & Merchants Bancorp is trading at a lower price-to-earnings ratio than California BanCorp, indicating that it is currently the more affordable of the two stocks.

Summary

California BanCorp beats Farmers & Merchants Bancorp on 9 of the 17 factors compared between the two stocks.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals. The company accepts various deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also offers range of lending products comprising commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides various specialized services consisting of credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. The company was founded in 1916 and is headquartered in Lodi, California.

About California BanCorp

Southern California Bancorp operates as the holding company for Bank of Southern California, N.A. that provides various financial products to individuals, professionals, and small-to medium-sized businesses. The company offers checking, personal and business savings, and money market accounts, as well as certificates of deposit. It also provides home equity lines of credit, business loans and lines of credit, commercial real estate and construction loans, small business administration loans, letters of credit, and personal and business credit cards. In addition, the company provides cash vault, sweep accounts, and remote deposit capture services; online and mobile banking services; courier service; lockbox services; and merchant services. It operates branches in San Diego, Orange, Ventura, Los Angeles, and Riverside counties, as well as the Inland Empire. The company was founded in 2001 and is headquartered in San Diego, California.