Critical Analysis: RBB Bancorp (NASDAQ:RBB) and Avidbank (NASDAQ:AVBH)

RBB Bancorp (NASDAQ:RBB) and Avidbank (NASDAQ:AVBH) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares RBB Bancorp and Avidbank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RBB Bancorp	$238.00 million	1.87	$31.95 million	$2.58	10.17
Avidbank	$151.76 million	2.53	-$19.55 million	$3.14	11.12

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

Insider and Institutional Ownership

40.1% of RBB Bancorp shares are held by institutional investors. Comparatively, 15.9% of Avidbank shares are held by institutional investors. 6.8% of RBB Bancorp shares are held by insiders. Comparatively, 9.6% of Avidbank shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

RBB Bancorp has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Avidbank has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500.

Profitability

This table compares RBB Bancorp and Avidbank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RBB Bancorp	18.02%	8.35%	1.05%
Avidbank	20.02%	11.90%	1.32%

Analyst Recommendations

This is a breakdown of current ratings and price targets for RBB Bancorp and Avidbank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RBB Bancorp	0	3	2	0	2.40
Avidbank	0	1	3	1	3.00

RBB Bancorp presently has a consensus price target of $29.33, suggesting a potential upside of 11.79%. Avidbank has a consensus price target of $40.00, suggesting a potential upside of 14.54%. Given Avidbank’s stronger consensus rating and higher possible upside, analysts plainly believe Avidbank is more favorable than RBB Bancorp.

Summary

Avidbank beats RBB Bancorp on 11 of the 15 factors compared between the two stocks.

About RBB Bancorp

RBB Bancorp operates as the bank holding company for Royal Business Bank that provides various banking products and services to the Chinese-American, Korean-American, and other Asian-American communities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company also offers commercial and industrial lines of credit, term loans, mortgage warehouse lines, and international trade discounts; commercial real estate loans; residential, commercial, and land acquisition and development construction loans; small business administration loans; and single-family residential mortgage loans. In addition, it provides international letters of credit, SWIFT, export advisory, trade finance discount, and foreign exchange services; and remote deposit, e-banking, and mobile banking services. The company serves individuals, businesses, municipalities, and other entities. It operates branches in the Western region with branches in Los Angeles County, California; Orange County, California; Ventura County, California; Clark County, Nevada; Honolulu, Hawaii, as well as in Eastern region with branches in Manhattan, Brooklyn and Queens, New York; Chicago, Illinois; and Edison, New Jersey. RBB Bancorp was founded in 2008 and is headquartered in Los Angeles, California.

About Avidbank

Avidbank Holdings, Inc. operates as a bank holding company for Avidbank that provides financial products and services to small and middle-market businesses, professionals, and individuals in the Santa Clara, San Mateo, and San Francisco counties. It offers business and personal deposit products, such as checking, money market, and savings accounts; and certificates of deposit. The company also provides personal lending products include secured and unsecured lines of credit, home equity lines of credit, remodel and new home construction loans, and term loans; corporate banking comprises working capital lines of credit, equipment loans, acquisition financing, shareholder buyouts, ESOP loans, and owner-occupied real estate loans; and commercial real estate lending, such as permanent loans and bridge financing products. In addition, it offers construction lending products, including land acquisition loans, pre-development loans, construction spec SFD, owner-occupied SFD, condominiums, subdivision, unsecured business lines, real estate bridge loans, and RLOC – real estate secured loans. Further, the company provides various financing solutions, such as structured finance, venture lending, asset-based lending, and sponsor finance. Additionally, it offers various services, such as automated clearing house payments and collections, bill pay, wire transfer, lockbox, merchant, remote deposit capture, ATM/debit cards, credit cards, business courier, cash management, and notary services, as well as online and mobile banking. The company was formerly known as Peninsula Bank Holding Co. and changed its name to Avidbank Holdings, Inc. in August 2011. Avidbank Holdings, Inc. was founded in 2003 and is headquartered in San Jose, California.