Head-To-Head Contrast: Community West Bancshares (NASDAQ:CWBC) versus Merchants Bancorp (NASDAQ:MBIN)

Community West Bancshares (NASDAQ:CWBC) and Merchants Bancorp (NASDAQ:MBIN) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Profitability

This table compares Community West Bancshares and Merchants Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community West Bancshares	4.59%	7.90%	0.78%
Merchants Bancorp	22.08%	22.86%	1.76%

Risk & Volatility

Community West Bancshares has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Merchants Bancorp has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Earnings and Valuation

This table compares Community West Bancshares and Merchants Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community West Bancshares	$46.27 million	7.42	$7.67 million	$0.52	34.87
Merchants Bancorp	$666.97 million	2.52	$320.39 million	$6.31	5.80

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

Dividends

Community West Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.6%. Merchants Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. Community West Bancshares pays out 92.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Merchants Bancorp pays out 6.3% of its earnings in the form of a dividend.

Institutional and Insider Ownership

33.8% of Community West Bancshares shares are held by institutional investors. Comparatively, 24.6% of Merchants Bancorp shares are held by institutional investors. 11.2% of Community West Bancshares shares are held by company insiders. Comparatively, 39.7% of Merchants Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Community West Bancshares and Merchants Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community West Bancshares	0	1	2	0	2.67
Merchants Bancorp	0	1	2	0	2.67

Community West Bancshares currently has a consensus target price of $23.33, indicating a potential upside of 28.70%. Merchants Bancorp has a consensus target price of $54.50, indicating a potential upside of 48.83%. Given Merchants Bancorp’s higher possible upside, analysts plainly believe Merchants Bancorp is more favorable than Community West Bancshares.

Summary

Merchants Bancorp beats Community West Bancshares on 10 of the 14 factors compared between the two stocks.

About Community West Bancshares

Community West Bancshares operates as the bank holding company for Community West Bank, N.A. that provides various financial products and services in California. The company offers deposit products, such as checking accounts, savings accounts, money market accounts, and fixed rate and fixed maturity certificates of deposits; and cash management products. It also provides commercial, commercial real estate, consumer, manufactured housing, and small business administration loans, as well as agricultural loans for real estate and operating lines; home equity lines of credit collateralized by residential real estate; single family real estate loans; and installment loans consisting of automobile and general-purpose loans. The company serves small to medium-sized businesses and their owners, professionals, high-net worth individuals, and non-profit organizations. Community West Bancshares was founded in 1989 and is headquartered in Goleta, California.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.