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

Dividends

Bank of Marin Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 1.6%. Peapack-Gladstone Financial Corporation pays an annual dividend of $0.20 per share and has a dividend yield of 0.6%. Bank of Marin Bancorp pays out 31.8% of its earnings in the form of a dividend. Peapack-Gladstone Financial Corporation pays out 11.3% 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.

Valuation and Earnings

This table compares Bank of Marin Bancorp and Peapack-Gladstone Financial Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Bank of Marin Bancorp $83.92 million 5.18 $22.30 million $3.65 19.51
Peapack-Gladstone Financial Corporation $124.41 million 4.83 $30.80 million $1.77 19.53

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

Profitability

This table compares Bank of Marin Bancorp and Peapack-Gladstone Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank of Marin Bancorp 26.72% 9.55% 1.09%
Peapack-Gladstone Financial Corporation 19.54% 9.12% 0.77%

Institutional and Insider Ownership

42.4% of Bank of Marin Bancorp shares are owned by institutional investors. Comparatively, 67.8% of Peapack-Gladstone Financial Corporation shares are owned by institutional investors. 5.2% of Bank of Marin Bancorp shares are owned by company insiders. Comparatively, 5.9% of Peapack-Gladstone Financial Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Bank of Marin Bancorp and Peapack-Gladstone Financial Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank of Marin Bancorp 0 3 0 0 2.00
Peapack-Gladstone Financial Corporation 0 1 2 0 2.67

Bank of Marin Bancorp presently has a consensus target price of $68.67, suggesting a potential downside of 3.56%. Peapack-Gladstone Financial Corporation has a consensus target price of $32.00, suggesting a potential downside of 7.41%. Given Bank of Marin Bancorp’s higher probable upside, analysts plainly believe Bank of Marin Bancorp is more favorable than Peapack-Gladstone Financial Corporation.

Volatility and Risk

Bank of Marin Bancorp has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Peapack-Gladstone Financial Corporation has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Summary

Peapack-Gladstone Financial Corporation beats Bank of Marin Bancorp on 9 of the 16 factors compared between the two stocks.

Bank of Marin Bancorp Company Profile

Bank of Marin Bancorp (Bancorp) is the holding company for Bank of Marin (the Bank). The Company’s business banking focus is on small to medium-sized businesses, professionals and not-for-profit organizations. As of December 31, 2016, the Company operated through 20 offices in Marin, Sonoma, San Francisco, Napa and Alameda counties. It makes international banking services available to its customers indirectly through other financial institutions, with whom it has correspondent banking relationships. The Company offers a range of commercial and retail deposit and lending programs. Its lending categories include commercial real estate loans, commercial and industrial loans, construction financing, consumer loans and home equity lines of credit. The Company offers a range of personal and business checking and savings accounts, and time deposit alternatives.

Peapack-Gladstone Financial Corporation Company Profile

Peapack-Gladstone Financial Corporation is a bank holding company. The Company’s principal subsidiary is Peapack-Gladstone Bank (the Bank), which is a state chartered commercial bank. The Company operates through two segments: Banking and Private Wealth Management Division. The Banking segment includes commercial, commercial real estate, multifamily, residential and consumer lending activities; deposit generation; operation of automated teller machines (ATMs); telephone and Internet banking services; merchant credit card services, and customer support sales. The Private Wealth Management Division includes asset management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; corporate trust services, including services as trustee for pension and profit sharing plans, and other financial planning and advisory services.

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