Comparing Isabella Bank (OTCMKTS:ISBA) and Silvergate Capital (NYSE:SI)

Silvergate Capital (NYSE:SI) and Isabella Bank (OTCMKTS:ISBA) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Insider and Institutional Ownership

94.4% of Silvergate Capital shares are held by institutional investors. 1.7% of Silvergate Capital shares are held by insiders. Comparatively, 9.7% of Isabella Bank shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Silvergate Capital pays an annual dividend of $2.94 per share and has a dividend yield of 588.4%. Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 4.6%. Silvergate Capital pays out -9.8% of its earnings in the form of a dividend. Isabella Bank pays out 61.2% 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. Silvergate Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Silvergate Capital has a beta of 2.23, meaning that its stock price is 123% more volatile than the S&P 500. Comparatively, Isabella Bank has a beta of -0.03, meaning that its stock price is 103% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Silvergate Capital and Isabella Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Silvergate Capital	0	0	0	0	0.00
Isabella Bank	0	1	0	0	2.00

Isabella Bank has a consensus target price of $24.00, suggesting a potential downside of 1.64%. Given Isabella Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Isabella Bank is more favorable than Silvergate Capital.

Profitability

This table compares Silvergate Capital and Isabella Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Silvergate Capital	45.10%	8.87%	0.81%
Isabella Bank	13.43%	7.42%	0.73%

Valuation and Earnings

This table compares Silvergate Capital and Isabella Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Silvergate Capital	-$609.47 million	-0.03	-$937.91 million	($29.96)	-0.02
Isabella Bank	$93.46 million	1.94	$18.17 million	$1.83	13.33

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

Summary

Isabella Bank beats Silvergate Capital on 8 of the 15 factors compared between the two stocks.

About Silvergate Capital

Silvergate Capital Corporation operates as a bank holding company for Silvergate Bank that provides banking products and services to business and individual clients in the United States. The company accepts deposit products, including interest and noninterest bearing demand accounts, money market and savings accounts, and certificates of deposit accounts. Its loan products comprise one-to-four family real estate loans, multi-family real estate loans, commercial real estate loans, construction loans, commercial and industrial loans, mortgage warehouse loans, and reverse mortgage loans, as well as consumer loans and other loans secured by personal property. The company also provides cash management services for digital currency-related businesses. Silvergate Capital Corporation was founded in 1988 and is headquartered in La Jolla, California.

About Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.