Bay Commercial Bank (NASDAQ:BCML) vs. Mercantile Bank (NASDAQ:MBWM) Financial Survey

Mercantile Bank (NASDAQ:MBWM) and Bay Commercial Bank (NASDAQ:BCML) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Analyst Ratings

This is a breakdown of recent recommendations for Mercantile Bank and Bay Commercial Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	4	3	0	2.43
Bay Commercial Bank	1	2	1	0	2.00

Mercantile Bank currently has a consensus price target of $62.00, indicating a potential upside of 1.14%. Bay Commercial Bank has a consensus price target of $34.00, indicating a potential upside of 12.47%. Given Bay Commercial Bank’s higher possible upside, analysts clearly believe Bay Commercial Bank is more favorable than Mercantile Bank.

Earnings and Valuation

This table compares Mercantile Bank and Bay Commercial Bank”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$371.80 million	2.85	$88.75 million	$5.68	10.79
Bay Commercial Bank	$141.48 million	2.33	$23.93 million	$1.20	25.19

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

Volatility and Risk

Mercantile Bank has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, Bay Commercial Bank has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Insider & Institutional Ownership

58.6% of Mercantile Bank shares are held by institutional investors. Comparatively, 66.2% of Bay Commercial Bank shares are held by institutional investors. 2.5% of Mercantile Bank shares are held by company insiders. Comparatively, 2.9% of Bay Commercial Bank shares are held by company 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 Mercantile Bank and Bay Commercial Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	24.75%	13.66%	1.46%
Bay Commercial Bank	9.20%	6.98%	0.90%

Dividends

Mercantile Bank pays an annual dividend of $1.60 per share and has a dividend yield of 2.6%. Bay Commercial Bank pays an annual dividend of $1.20 per share and has a dividend yield of 4.0%. Mercantile Bank pays out 28.2% of its earnings in the form of a dividend. Bay Commercial Bank pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercantile Bank has raised its dividend for 14 consecutive years and Bay Commercial Bank has raised its dividend for 3 consecutive years.

Summary

Mercantile Bank beats Bay Commercial Bank on 12 of the 17 factors compared between the two stocks.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.

About Bay Commercial Bank

BayCom Corp operates as the bank holding company for United Business Bank that provides various financial services to small and mid-sized businesses, service professionals, and individuals. The company provides demand, savings, money market, and time deposit accounts. It offers commercial and multifamily real estate loans, including owner-occupied and investor real estate loans; commercial and industrial loans, such as equipment loans and working capital lines of credit; small business administration loans; construction and land loans; agriculture-related loans; and consumer loans comprising installment loans, unsecured and secured personal lines of credit, and overdraft protection. In addition, the company provides online and mobile banking, automated teller machine, remote deposit capture, night depository, courier, direct deposit, treasury management, wire transfer, automated clearing house, debit cards, cashier's and travelers checks, letters of credit, lockbox, positive pay, reverse positive pay, and account reconciliation services, as well as zero balance accounts and sweep accounts, including loan sweep. It operates through a network of full-service banking branches in Northern and Southern California; Las Vegas, Nevada; Denver, Colorado; Custer, Delta, and Grand counties, Colorado; and Seattle, Washington and Central New Mexico. The company was formerly known as Bay Commercial Bank and changed its name to BayCom Corp in January 2017. BayCom Corp was incorporated in 2004 and is headquartered in Walnut Creek, California.