Comparing Mercantile Bank (NASDAQ:MBWM) and Solera National Bancorp (OTCMKTS:SLRK)

Mercantile Bank (NASDAQ:MBWM) and Solera National Bancorp (OTCMKTS:SLRK) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, analyst recommendations, earnings and valuation.

Volatility & Risk

Mercantile Bank has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, Solera National Bancorp has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500.

Earnings and Valuation

This table compares Mercantile Bank and Solera National Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$361.89 million	2.20	$79.59 million	$5.28	9.29
Solera National Bancorp	$75.25 million	0.81	$18.07 million	$5.22	2.70

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

Insider and Institutional Ownership

58.6% of Mercantile Bank shares are owned by institutional investors. 3.2% of Mercantile Bank shares are owned by insiders. Comparatively, 17.4% of Solera National Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Mercantile Bank and Solera National Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	23.05%	13.78%	1.39%
Solera National Bancorp	28.36%	N/A	N/A

Analyst Recommendations

This is a breakdown of current ratings and target prices for Mercantile Bank and Solera National Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	2	4	0	2.67
Solera National Bancorp	0	0	0	0	0.00

Mercantile Bank currently has a consensus target price of $55.00, indicating a potential upside of 12.08%. Given Mercantile Bank’s stronger consensus rating and higher possible upside, equities analysts clearly believe Mercantile Bank is more favorable than Solera National Bancorp.

Summary

Mercantile Bank beats Solera National Bancorp on 12 of the 14 factors compared between the two stocks.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.

About Solera National Bancorp

Solera National Bancorp, Inc. operates as the bank holding company for Solera National Bank that provides commercial and consumer banking services in the United States. The company offers checking and savings accounts, money market accounts, time and demand deposits, and individual retirement accounts (IRA), as well as certificates of deposit; and real estate secured loans, construction loans, small business administration loans, business lines of credit, and equipment financing. It also provides online banking, account analysis, combined account analysis, commercial sweep, remote deposit, ACH origination, payroll direct deposit, merchant, business debit card, and cash management services. The company was incorporated in 2006 and is based in Lakewood, Colorado.