Sound Financial Bancorp (NASDAQ:SFBC) and Plumas Bancorp (NASDAQ:PLBC) Critical Review

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sound Financial Bancorp and Plumas Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	1	0	0	2.00
Plumas Bancorp	0	0	4	0	3.00

Plumas Bancorp has a consensus target price of $57.67, indicating a potential upside of 5.40%. Given Plumas Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Plumas Bancorp is more favorable than Sound Financial Bancorp.

Profitability

This table compares Sound Financial Bancorp and Plumas Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	12.19%	6.99%	0.70%
Plumas Bancorp	26.67%	15.16%	1.76%

Insider & Institutional Ownership

68.9% of Sound Financial Bancorp shares are held by institutional investors. Comparatively, 41.7% of Plumas Bancorp shares are held by institutional investors. 12.3% of Sound Financial Bancorp shares are held by insiders. Comparatively, 7.4% of Plumas Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Plumas Bancorp pays an annual dividend of $1.32 per share and has a dividend yield of 2.4%. Sound Financial Bancorp pays out 28.7% of its earnings in the form of a dividend. Plumas Bancorp pays out 28.0% 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. Sound Financial Bancorp has increased its dividend for 2 consecutive years and Plumas Bancorp has increased its dividend for 1 consecutive years. Plumas Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Sound Financial Bancorp and Plumas Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	1.76	$7.16 million	$2.93	14.36
Plumas Bancorp	$112.17 million	3.40	$29.62 million	$4.72	11.59

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

Risk and Volatility

Sound Financial Bancorp has a beta of 0.02, meaning that its share price is 98% less volatile than the S&P 500. Comparatively, Plumas Bancorp has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Summary

Plumas Bancorp beats Sound Financial Bancorp on 13 of the 17 factors compared between the two stocks.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.

About Plumas Bancorp

Plumas Bancorp operates as the bank holding company for the Plumas Bank that provides various banking products and services for small and middle market businesses, and individuals in Northeastern California and Northwestern Nevada. The company accepts various deposits, such as checking, money market checking, business sweep, public funds sweep, savings, time deposit, and retirement accounts. Its loan portfolio comprises of term real estate, commercial, and industrial term loans; government-guaranteed and agricultural loans, as well as credit lines; consumer, automobile, and home equity loans; land development and construction loans; and small business administration loans. In addition, the company provides remote deposit, telephone and mobile banking, internet banking with bill-pay options, cashier's check, bank-by-mail, automated teller machine, night depository, safe deposit box, direct deposit, electronic funds transfer, and other customary banking services. Plumas Bancorp was founded in 1980 and is headquartered in Reno, Nevada.