Contrasting Independent Bank (NASDAQ:IBCP) and Civista Bancshares (NASDAQ:CIVB)

Civista Bancshares (NASDAQ:CIVB) and Independent Bank (NASDAQ:IBCP) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Earnings and Valuation

This table compares Civista Bancshares and Independent Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Civista Bancshares	$254.95 million	1.82	$46.21 million	$2.66	8.39
Independent Bank	$315.38 million	2.12	$68.54 million	$3.28	9.88

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

Volatility and Risk

Civista Bancshares has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Independent Bank has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Dividends

Civista Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 3.2%. Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.5%. Civista Bancshares pays out 27.1% of its earnings in the form of a dividend. Independent Bank pays out 34.1% 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. Civista Bancshares has raised its dividend for 4 consecutive years and Independent Bank has raised its dividend for 11 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

52.1% of Civista Bancshares shares are held by institutional investors. Comparatively, 79.4% of Independent Bank shares are held by institutional investors. 2.6% of Civista Bancshares shares are held by company insiders. Comparatively, 5.9% of Independent Bank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Civista Bancshares and Independent Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Civista Bancshares	0	4	3	0	2.43
Independent Bank	0	3	1	0	2.25

Civista Bancshares presently has a consensus target price of $26.00, suggesting a potential upside of 16.44%. Independent Bank has a consensus target price of $36.67, suggesting a potential upside of 13.13%. Given Civista Bancshares’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Civista Bancshares is more favorable than Independent Bank.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Civista Bancshares	18.12%	10.48%	1.15%
Independent Bank	21.73%	14.20%	1.26%

Summary

Independent Bank beats Civista Bancshares on 13 of the 17 factors compared between the two stocks.

About Civista Bancshares

Civista Bancshares, Inc. operates as the financial holding company for Civista Bank that provides community banking services. It collects a range of customer deposits; and offers commercial and agriculture, commercial and residential real estate, farm real estate, real estate construction, consumer, and other loans, as well as letters of credit. The company also holds and manages securities portfolio; leases general equipment; and provides captive insurance products. It operates in North Central, West Central, South Western Ohio, South Eastern Indiana, and Northern Kentucky. The company was formerly known as First Citizens Banc Corp and changed its name to Civista Bancshares, Inc. in May 2015. Civista Bancshares, Inc. was founded in 1884 and is headquartered in Sandusky, Ohio.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.