Financial Review: PCB Bancorp (NASDAQ:PCB) & Merchants Bancorp (NASDAQ:MBIN)

Merchants Bancorp (NASDAQ:MBIN) and PCB Bancorp (NASDAQ:PCB) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Profitability

This table compares Merchants Bancorp and PCB Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merchants Bancorp	19.80%	15.29%	1.34%
PCB Bancorp	19.65%	12.91%	1.24%

Valuation & Earnings

This table compares Merchants Bancorp and PCB Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merchants Bancorp	$1.37 billion	1.62	$218.77 million	$4.98	9.69
PCB Bancorp	$209.37 million	1.88	$37.45 million	$2.89	9.71

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Merchants Bancorp and PCB Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merchants Bancorp	0	3	2	0	2.40
PCB Bancorp	0	3	0	1	2.50

Merchants Bancorp currently has a consensus target price of $55.25, suggesting a potential upside of 14.53%. PCB Bancorp has a consensus target price of $27.75, suggesting a potential downside of 1.08%. Given Merchants Bancorp’s higher possible upside, analysts plainly believe Merchants Bancorp is more favorable than PCB Bancorp.

Insider and Institutional Ownership

24.6% of Merchants Bancorp shares are owned by institutional investors. Comparatively, 33.0% of PCB Bancorp shares are owned by institutional investors. 44.9% of Merchants Bancorp shares are owned by company insiders. Comparatively, 27.0% of PCB Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Merchants Bancorp has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, PCB Bancorp has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Dividends

Merchants Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 0.9%. PCB Bancorp pays an annual dividend of $0.88 per share and has a dividend yield of 3.1%. Merchants Bancorp pays out 8.8% of its earnings in the form of a dividend. PCB Bancorp pays out 30.4% 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. Merchants Bancorp has raised its dividend for 8 consecutive years and PCB Bancorp has raised its dividend for 7 consecutive years.

Summary

Merchants Bancorp beats PCB Bancorp on 12 of the 18 factors compared between the two stocks.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.

About PCB Bancorp

PCB Bancorp operates as the bank holding company for PCB Bank that provides various banking products and services to small to medium-sized businesses, individuals, and professionals in Southern California. The company offers demand, savings, money market, and time deposits, as well as certificates of deposit; and trade finance, remote deposit capture, courier deposit services, positive pay services, zero balance accounts, and sweep accounts. It also provides real estate loans, including commercial and residential, Small Business Administration (SBA) property, and construction loans; commercial and industrial loans, such as commercial term and lines of credit, SBA commercial term, and SBA Paycheck Protection Program loans; and consumer loans comprising residential mortgage; and automobile loans, unsecured lines of credit, and term loans. In addition, the company offers access to account balances, online transfers, and online bill payment and electronic delivery of customer statements; and mobile banking solutions that include remote check deposit and mobile bill pay. Further, it provides automated teller machines; and banking by telephone, mail, personal appointment, debit cards, direct deposit, and cashier's checks, as well as treasury management, wire transfer, and automated clearing house services. The company operates through a network of full-service branches in Los Angeles and Orange counties, California; Carrollton and Dallas, Texas; and Englewood Cliffs and Palisade Park, New Jersey, and Bayside, New York. It also operates loan production offices in Los Angeles and Orange Counties, California; Annandale, Virginia; Atlanta, Georgia; Bellevue, Washington; Aurora, Colorado; and Carrollton, Texas. The company was formerly known as Pacific City Financial Corporation and changed its name to PCB Bancorp in July 2019. PCB Bancorp was founded in 2003 and is headquartered in Los Angeles, California.