Critical Analysis: Peoples Bancorp (NASDAQ:PEBO) and Bank of Marin Bancorp (NASDAQ:BMRC)

Peoples Bancorp (NASDAQ:PEBO) and Bank of Marin Bancorp (NASDAQ:BMRC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Peoples Bancorp and Bank of Marin Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Bancorp	0	3	2	0	2.40
Bank of Marin Bancorp	0	0	3	0	3.00

Peoples Bancorp presently has a consensus price target of $36.90, suggesting a potential upside of 16.11%. Bank of Marin Bancorp has a consensus price target of $28.00, suggesting a potential upside of 13.36%. Given Peoples Bancorp’s higher possible upside, research analysts clearly believe Peoples Bancorp is more favorable than Bank of Marin Bancorp.

Dividends

Peoples Bancorp pays an annual dividend of $1.60 per share and has a dividend yield of 5.0%. Bank of Marin Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 4.0%. Peoples Bancorp pays out 48.3% of its earnings in the form of a dividend. Bank of Marin Bancorp pays out -192.3% 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.

Earnings and Valuation

This table compares Peoples Bancorp and Bank of Marin Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Bancorp	$620.14 million	1.82	$117.21 million	$3.31	9.60
Bank of Marin Bancorp	$119.91 million	3.31	-$8.41 million	($0.52)	-47.50

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

Profitability

This table compares Peoples Bancorp and Bank of Marin Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Bancorp	18.90%	11.07%	1.31%
Bank of Marin Bancorp	-5.52%	3.33%	0.39%

Volatility and Risk

Peoples Bancorp has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Bank of Marin Bancorp has a beta of 0.94, suggesting that its stock price is 6% less volatile than the S&P 500.

Institutional and Insider Ownership

60.7% of Peoples Bancorp shares are held by institutional investors. Comparatively, 52.3% of Bank of Marin Bancorp shares are held by institutional investors. 3.5% of Peoples Bancorp shares are held by insiders. Comparatively, 5.7% of Bank of Marin Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Peoples Bancorp beats Bank of Marin Bancorp on 10 of the 16 factors compared between the two stocks.

About Peoples Bancorp

Peoples Bancorp Inc. operates as the holding company for Peoples Bank that provides commercial and consumer banking products and services. The company accepts various deposit products, including demand deposit accounts, savings accounts, money market accounts, certificates of deposit, and governmental deposits; and provides commercial and industrial, commercial real estate, construction, finance, residential real estate, and consumer indirect and direct loans, as well as home equity lines of credit and overdrafts. It also offers debit and automated teller machine (ATM) cards; safe deposit rental facilities; money orders and cashier’s checks; and telephone, mobile, and online banking services. In addition, the company provides various life, health, and property and casualty insurance products; third-party insurance administration; interactive teller machines; insurance premium financing; check deposit and alert notification; commercial and technology equipment leasing; fiduciary and trust; underwriting, origination, and servicing of equipment leases, and equipment financing agreements; and asset management and administration services, as well as employee benefit, retirement, and health care plan administration services. Further, it offers brokerage services through an unaffiliated registered broker-dealers; insurance premium finance lending and leasing; and credit cards to individuals and businesses, as well as provides merchant credit card transaction processing, and person-to-person payment processing services. Peoples Bancorp Inc. was founded in 1902 and is headquartered in Marietta, Ohio.

About Bank of Marin Bancorp

Bank of Marin Bancorp operates as the holding company for Bank of Marin that provides a range of financial services primarily to small to medium-sized businesses, not-for-profit organizations, and commercial real estate investors in the United States. The company offers personal and business checking and savings accounts; and individual retirement, health savings, and demand deposit marketplace accounts, as well as time certificates of deposit, certificate of deposit account registry, and insured cash sweep services. It also provides commercial real estate, commercial and industrial, and consumer loans, as well as construction financing and home equity lines of credit. In addition, the company offers merchant and payroll services; commercial equipment leasing program; payment solutions; treasury management services; credit cards; and mobile deposit, remote deposit capture, automated clearing house, wire transfer, and image lockbox services. Further, it provides wealth management and trust services comprising customized investment portfolio management, financial planning, trust administration, estate settlement, and custody services, as well as 401(k) plan services; and automated teller machines, and telephone and digital banking services. The company was incorporated in 1989 and is headquartered in Novato, California.