Critical Contrast: 1st Colonial Bancorp (OTCMKTS:FCOB) and Merchants Bancorp (NASDAQ:MBIN)

Merchants Bancorp (NASDAQ:MBIN) and 1st Colonial Bancorp (OTCMKTS:FCOB) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Profitability

This table compares Merchants Bancorp and 1st Colonial Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merchants Bancorp	20.73%	19.09%	1.57%
1st Colonial Bancorp	17.46%	10.65%	0.98%

Valuation & Earnings

This table compares Merchants Bancorp and 1st Colonial Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merchants Bancorp	$1.45 billion	1.13	$320.39 million	$5.44	6.56
1st Colonial Bancorp	$46.18 million	1.69	$8.06 million	$1.66	9.79

Merchants Bancorp has higher revenue and earnings than 1st Colonial Bancorp. Merchants Bancorp is trading at a lower price-to-earnings ratio than 1st Colonial Bancorp, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Merchants Bancorp has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500. Comparatively, 1st Colonial Bancorp has a beta of 0.2, indicating that its stock price is 80% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Merchants Bancorp and 1st Colonial Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merchants Bancorp	0	1	2	0	2.67
1st Colonial Bancorp	0	0	0	0	0.00

Merchants Bancorp presently has a consensus target price of $47.50, suggesting a potential upside of 33.17%. Given Merchants Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Merchants Bancorp is more favorable than 1st Colonial Bancorp.

Institutional and Insider Ownership

24.6% of Merchants Bancorp shares are held by institutional investors. Comparatively, 13.4% of 1st Colonial Bancorp shares are held by institutional investors. 34.8% 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 is poised for long-term growth.

Summary

Merchants Bancorp beats 1st Colonial Bancorp on 12 of the 14 factors compared between the two stocks.

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.

About 1st Colonial Bancorp

1st Colonial Bancorp, Inc. operates as the bank holding company for 1st Colonial Community Bank that provides a range of business and consumer financial services in New Jersey. The company offers various deposit products, including savings accounts, money market accounts, certificates of deposit, club accounts, and business and personal checking accounts. It also provides home equity loans, home equity lines of credit, personal and vehicle loans, residential and commercial mortgages, construction loans, business lines of credit, equipment and vehicle financing, real estate loans, working capital line of credit, and business acquisition loans, as well as small business administration loans. In addition, the company offers cash management services comprising remote deposit capture, ACH/wire transfer, night deposit drop, and merchant services; safe deposit boxes; and coin counting, online and mobile banking, debit card, and ATM services. The company was founded in 2000 and is headquartered in Mount Laurel, New Jersey.