Analyzing LCNB (NASDAQ:LCNB) and Pacific Mercantile Bancorp (NASDAQ:PMBC)

Pacific Mercantile Bancorp (NASDAQ:PMBC) and LCNB (NASDAQ:LCNB) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, earnings, institutional ownership, profitability and dividends.

Earnings & Valuation

This table compares Pacific Mercantile Bancorp and LCNB’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pacific Mercantile Bancorp $67.18 million 2.71 $27.34 million N/A N/A
LCNB $65.64 million 3.65 $14.85 million $1.39 12.96

Pacific Mercantile Bancorp has higher revenue and earnings than LCNB.

Volatility and Risk

Pacific Mercantile Bancorp has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, LCNB has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500.

Profitability

This table compares Pacific Mercantile Bancorp and LCNB’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pacific Mercantile Bancorp 35.65% 18.60% 1.81%
LCNB 22.58% 8.26% 1.10%

Analyst Ratings

This is a breakdown of current recommendations for Pacific Mercantile Bancorp and LCNB, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pacific Mercantile Bancorp 0 1 0 0 2.00
LCNB 0 1 0 0 2.00

Pacific Mercantile Bancorp presently has a consensus target price of $9.00, indicating a potential upside of 8.70%. Given Pacific Mercantile Bancorp’s higher probable upside, research analysts clearly believe Pacific Mercantile Bancorp is more favorable than LCNB.

Insider & Institutional Ownership

67.7% of Pacific Mercantile Bancorp shares are held by institutional investors. Comparatively, 33.6% of LCNB shares are held by institutional investors. 12.3% of Pacific Mercantile Bancorp shares are held by insiders. Comparatively, 6.5% of LCNB shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

LCNB pays an annual dividend of $0.68 per share and has a dividend yield of 3.8%. Pacific Mercantile Bancorp does not pay a dividend. LCNB pays out 48.9% of its earnings in the form of a dividend. LCNB has raised its dividend for 2 consecutive years.

Summary

Pacific Mercantile Bancorp beats LCNB on 10 of the 14 factors compared between the two stocks.

About Pacific Mercantile Bancorp

Pacific Mercantile Bancorp operates as the holding company for Pacific Mercantile Bank that provides a range of commercial banking products and services to small and medium-size businesses, professional firms, and individuals in Southern California, the United States. The company's deposit products include checking accounts, interest-bearing term deposit accounts, savings and money market deposits, and time deposits. It also offers various loan products, such as commercial loans and credit lines, accounts receivable and inventory financing, small business administration guaranteed business loans, owner-occupied commercial real estate loans, working capital lines of credit and asset based lending, growth capital loans, equipment financing, letters of credit, and corporate credit cards. In addition, the company provides cash and treasury management solutions, automated clearinghouse payment and wire solutions, fraud protection services, remote deposit capture services, courier services, and online banking services; and letters of credit and import/export financing services. As of March 6, 2019, it operated seven locations in Orange, Los Angeles, San Diego, and San Bernardino counties, Southern California. The company was founded in 1998 and is based in Costa Mesa, California.

About LCNB

LCNB Corp. operates as the financial holding company for LCNB National Bank that provides commercial and personal banking services in Ohio. The company's deposit products include checking, NOW, savings, Christmas and vacation club, money market deposit, lifetime checking, and individual retirement accounts, as well as certificates of deposit. Its loan portfolio comprises commercial and industrial, commercial and residential real estate, agricultural, construction, small business administration, and residential mortgage loans. The company also offers consumer loans, such as automobile, boat, home improvement, and personal loans. In addition, it provides trust administrative, estate settlement, and fiduciary services; and investment management services for trusts, agency accounts, individual retirement accounts, and foundations/endowments. Further, the company offers investment services and products, including financial needs analysis, mutual funds, securities trading, annuities, and life insurance; and security brokerage services. Additionally, it provides safe deposit boxes, night depositories, cashier's checks, bank-by-mail, ATMs, cash and transaction services, debit cards, wire transfers, electronic funds transfer, utility bill collections, notary public service, personal computer-based cash management services, telephone banking, PC Internet banking, mobile banking, and other services for individuals and businesses. As of December 31, 2018, the company operated through 35 offices, including a main office in Warren County; branch offices in Warren, Butler, Clinton, Clermont, Fayette, Franklin, Hamilton, Montgomery, Preble, and Ross Counties; a loan production office in Franklin County; and an operations center in Warren County, Ohio, as well as 38 ATMs. LCNB Corp. was founded in 1877 and is headquartered in Lebanon, Ohio.

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