Critical Survey: Civista Bancshares (NASDAQ:CIVB) versus Independent Bank (NASDAQ:IBCP)

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

Dividends

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

Earnings & Valuation

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

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

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 & Risk

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

Profitability

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

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Independent Bank and Civista Bancshares, as provided by MarketBeat.com.

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

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

Institutional and Insider Ownership

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

Summary

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

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.

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.