Contrasting Five Star Bancorp (NASDAQ:FSBC) & Summit State Bank (NASDAQ:SSBI)

Summit State Bank (NASDAQ:SSBI) and Five Star Bancorp (NASDAQ:FSBC) 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, risk, dividends, analyst recommendations, earnings, institutional ownership and profitability.

Institutional and Insider Ownership

46.9% of Five Star Bancorp shares are owned by institutional investors. 21.7% of Five Star Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Summit State Bank pays an annual dividend of $0.16 per share and has a dividend yield of 1.5%. Five Star Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.3%. Summit State Bank pays out -123.1% of its earnings in the form of a dividend. Five Star Bancorp pays out 29.6% 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.

Profitability

This table compares Summit State Bank and Five Star Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Summit State Bank	-1.41%	N/A	N/A
Five Star Bancorp	23.18%	13.88%	1.32%

Earnings & Valuation

This table compares Summit State Bank and Five Star Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Summit State Bank	$35.97 million	2.04	-$3.66 million	($0.13)	-83.46
Five Star Bancorp	$148.75 million	5.06	$45.67 million	$2.70	13.04

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

Analyst Ratings

This is a summary of recent ratings for Summit State Bank and Five Star Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Summit State Bank	1	0	0	0	1.00
Five Star Bancorp	0	2	5	0	2.71

Five Star Bancorp has a consensus price target of $39.40, indicating a potential upside of 11.93%. Given Five Star Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Five Star Bancorp is more favorable than Summit State Bank.

Volatility and Risk

Summit State Bank has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500. Comparatively, Five Star Bancorp has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Summary

Five Star Bancorp beats Summit State Bank on 15 of the 16 factors compared between the two stocks.

About Summit State Bank

Summit State Bank engages in providing an array of financial services to small and medium-sized businesses, their owners and employees, entrepreneurs, high net worth families, foundations, estates, and individual consumers. It specializes in business services, personal accounts, nonprofit programs, and mobile banking ranging from lending, checking, merchant, eBanking, automated teller machines, equity loans, and others. The company was founded on December 20, 1982 and is headquartered in Santa Rosa, CA.

About Five Star Bancorp

Five Star Bancorp operates as the bank holding company for Five Star Bank that provides a range of banking products and services to small and medium-sized businesses, professionals, and individuals in Northern California. It accepts various deposits, such as money market accounts, noninterest-bearing and interest checking accounts, savings accounts, term certificate accounts, and time deposits. The company also offers loan products, including commercial and residential real estate loans; commercial loans; commercial land loans; farmland loans; commercial and residential construction loans; and consumer and other loans, as well as operating lines of credit. In addition, it provides debit cards; and remote deposit capture, online and mobile banking, and direct deposit services. Five Star Bancorp was founded in 1999 and is headquartered in Rancho Cordova, California.