Select Bancorp (NASDAQ: SLCT) and First Business Financial Services (NASDAQ:FBIZ) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Profitability

This table compares Select Bancorp and First Business Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Select Bancorp 16.86% 6.38% 0.77%
First Business Financial Services 12.63% 7.20% 0.66%

Dividends

First Business Financial Services pays an annual dividend of $0.52 per share and has a dividend yield of 2.3%. Select Bancorp does not pay a dividend. First Business Financial Services pays out 38.0% of its earnings in the form of a dividend.

Insider & Institutional Ownership

18.3% of Select Bancorp shares are owned by institutional investors. Comparatively, 58.4% of First Business Financial Services shares are owned by institutional investors. 14.2% of Select Bancorp shares are owned by insiders. Comparatively, 8.3% of First Business Financial Services shares are owned by 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.

Earnings & Valuation

This table compares Select Bancorp and First Business Financial Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Select Bancorp $37.93 million 3.64 $6.75 million $0.58 20.40
First Business Financial Services $96.11 million 2.10 $14.90 million $1.37 16.83

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

Volatility and Risk

Select Bancorp has a beta of 0.27, indicating that its stock price is 73% less volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Select Bancorp and First Business Financial Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Select Bancorp 0 1 0 0 2.00
First Business Financial Services 0 1 0 0 2.00

Select Bancorp presently has a consensus target price of $13.00, suggesting a potential upside of 9.89%. First Business Financial Services has a consensus target price of $25.00, suggesting a potential upside of 8.41%. Given Select Bancorp’s higher probable upside, analysts plainly believe Select Bancorp is more favorable than First Business Financial Services.

About Select Bancorp

Select Bancorp, Inc. is the bank holding company for Select Bank & Trust Company (the Bank). The Bank is a commercial bank. The Bank provides commercial and retail financial services to customers located in its market areas. The Bank offers a range of banking services, including checking and savings accounts, commercial, consumer, mortgage and personal loans, and other associated financial services. The Bank’s lending activities are oriented to the consumer/retail customer, as well as to the small-to-medium sized businesses located in central and eastern North Carolina. The Bank offers commercial, consumer and mortgage lending products. It originates construction loans for the purpose of acquisition, development and construction of both residential and commercial properties (ADC loans). The Bank’s deposits include savings, negotiable order of withdrawal (NOW) account and money market deposits, time deposits and non-interest-bearing deposits.

About First Business Financial Services

First Business Financial Services, Inc. (FBFS) is a bank holding company. The Company engages in the commercial banking business through its bank subsidiaries, which include First Business Bank (FBB), First Business Bank-Milwaukee (FBB-Milwaukee) and Alterra Bank (Alterra) (FBB and FBB-Milwaukee and, together with FBB, the Banks). The operations of FBFS are conducted through the Banks and certain subsidiaries of FBB. The Banks operate as business banks focusing on delivering a line of commercial banking products, including commercial loans and commercial real estate loans, and services to meet the needs of small- and medium-sized businesses, business owners, executives, professionals and high net worth individuals. Its business lines include commercial lending, asset-based financing, equipment financing, small business administration (SBA) lending, treasury management services, and trust and investment services. Its investments include short-term investments and securities.

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