Sound Financial Bancorp (NASDAQ:SFBC) versus Bay Commercial Bank (NASDAQ:BCML) Head-To-Head Comparison

Bay Commercial Bank (NASDAQ:BCML) and Sound Financial Bancorp (NASDAQ:SFBC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Insider & Institutional Ownership

66.2% of Bay Commercial Bank shares are owned by institutional investors. Comparatively, 68.8% of Sound Financial Bancorp shares are owned by institutional investors. 7.2% of Bay Commercial Bank shares are owned by insiders. Comparatively, 12.6% of Sound Financial Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Bay Commercial Bank pays an annual dividend of $1.20 per share and has a dividend yield of 4.2%. Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Bay Commercial Bank pays out 55.0% of its earnings in the form of a dividend. Sound Financial Bancorp pays out 30.3% 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. Bay Commercial Bank has increased its dividend for 3 consecutive years and Sound Financial Bancorp has increased its dividend for 2 consecutive years. Bay Commercial Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Bay Commercial Bank and Sound Financial Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bay Commercial Bank	0	0	2	1	3.33
Sound Financial Bancorp	0	1	0	0	2.00

Bay Commercial Bank presently has a consensus price target of $34.00, suggesting a potential upside of 17.97%. Given Bay Commercial Bank’s stronger consensus rating and higher probable upside, research analysts clearly believe Bay Commercial Bank is more favorable than Sound Financial Bancorp.

Valuation & Earnings

This table compares Bay Commercial Bank and Sound Financial Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bay Commercial Bank	$100.54 million	3.12	$23.93 million	$2.18	13.22
Sound Financial Bancorp	$38.85 million	2.73	$7.16 million	$2.77	14.91

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

Profitability

This table compares Bay Commercial Bank and Sound Financial Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bay Commercial Bank	16.92%	7.22%	0.92%
Sound Financial Bancorp	11.64%	6.76%	0.67%

Risk and Volatility

Bay Commercial Bank has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.11, suggesting that its stock price is 89% less volatile than the S&P 500.

Summary

Bay Commercial Bank beats Sound Financial Bancorp on 13 of the 18 factors compared between the two stocks.

About Bay Commercial Bank

BayCom Corp operates as the bank holding company for United Business Bank that provides various financial services to small and mid-sized businesses, service professionals, and individuals. The company provides demand, savings, money market, and time deposit accounts. It offers commercial and multifamily real estate loans, including owner-occupied and investor real estate loans; commercial and industrial loans, such as equipment loans and working capital lines of credit; small business administration loans; construction and land loans; agriculture-related loans; and consumer loans comprising installment loans, unsecured and secured personal lines of credit, and overdraft protection. In addition, the company provides online and mobile banking, automated teller machine, remote deposit capture, night depository, courier, direct deposit, treasury management, wire transfer, automated clearing house, debit cards, cashier's and travelers checks, letters of credit, lockbox, positive pay, reverse positive pay, and account reconciliation services, as well as zero balance accounts and sweep accounts, including loan sweep. It operates through a network of full-service banking branches in Northern and Southern California; Las Vegas, Nevada; Denver, Colorado; Custer, Delta, and Grand counties, Colorado; and Seattle, Washington and Central New Mexico. The company was formerly known as Bay Commercial Bank and changed its name to BayCom Corp in January 2017. BayCom Corp was incorporated in 2004 and is headquartered in Walnut Creek, California.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.