California BanCorp (NASDAQ:BCAL) versus Pinnacle Bank (OTCMKTS:PBNK) Critical Review

California BanCorp (NASDAQ:BCAL) and Pinnacle Bank (OTCMKTS:PBNK) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for California BanCorp and Pinnacle Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
California BanCorp	0	1	1	1	3.00
Pinnacle Bank	0	0	0	0	0.00

California BanCorp currently has a consensus target price of $19.50, indicating a potential upside of 17.12%. Given California BanCorp’s stronger consensus rating and higher possible upside, research analysts plainly believe California BanCorp is more favorable than Pinnacle Bank.

Risk and Volatility

California BanCorp has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Pinnacle Bank has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500.

Earnings and Valuation

This table compares California BanCorp and Pinnacle Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
California BanCorp	$184.56 million	2.93	$5.43 million	$0.87	19.14
Pinnacle Bank	$53.91 million	2.24	$8.85 million	$1.78	11.43

Pinnacle Bank has lower revenue, but higher earnings than California BanCorp. Pinnacle Bank is trading at a lower price-to-earnings ratio than California BanCorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares California BanCorp and Pinnacle Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
California BanCorp	13.20%	10.97%	1.40%
Pinnacle Bank	14.83%	7.72%	0.88%

Insider and Institutional Ownership

55.4% of California BanCorp shares are owned by institutional investors. Comparatively, 8.4% of Pinnacle Bank shares are owned by institutional investors. 14.8% of California BanCorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

California BanCorp beats Pinnacle Bank on 12 of the 15 factors compared between the two stocks.

About California BanCorp

Southern California Bancorp operates as the holding company for Bank of Southern California, N.A. that provides various financial products to individuals, professionals, and small-to medium-sized businesses. The company offers checking, personal and business savings, and money market accounts, as well as certificates of deposit. It also provides home equity lines of credit, business loans and lines of credit, commercial real estate and construction loans, small business administration loans, letters of credit, and personal and business credit cards. In addition, the company provides cash vault, sweep accounts, and remote deposit capture services; online and mobile banking services; courier service; lockbox services; and merchant services. It operates branches in San Diego, Orange, Ventura, Los Angeles, and Riverside counties, as well as the Inland Empire. The company was founded in 2001 and is headquartered in San Diego, California.

About Pinnacle Bank

Pinnacle Bank, a commercial bank, provides various depository and credit services in Santa Clara, San Benito, and Monterey counties. The company offers checking, savings, money market, sweep, and individual retirement accounts, as well as certificates of deposit and certificates of deposit account registry services. It also provides home equity lines of credit and single family home construction loans; and loans and lines of credit, letters of credit, commercial real estate, and government assisted loans, as well as credit cards. In addition, the company offers automated teller machine cards/debit cards, debit card protection products, and safe deposit boxes; cash management products, such as online and mobile banking, online bill payment, mobile check deposit, automated clearing house (ACH) origination, remote deposit capture, night depository box, positive pay, ACH fraud filter, merchant card processing, wire transfer, and foreign currency services; and asset based lending covering accounts receivable financing, factoring, and purchase order financing services. It serves individual and business customers, as well as nonprofit organizations in Morgan Hill, Gilroy, Salinas, and Campbell. Pinnacle Bank was founded in 2006 and is headquartered in Gilroy, California.