Financial Analysis: United Security Bancshares (NASDAQ:UBFO) & Bank of Marin Bancorp (NASDAQ:BMRC)

Bank of Marin Bancorp (NASDAQ:BMRC) and United Security Bancshares (NASDAQ:UBFO) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Profitability

This table compares Bank of Marin Bancorp and United Security Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of Marin Bancorp	-21.76%	6.00%	0.70%
United Security Bancshares	18.65%	9.11%	1.01%

Dividends

Bank of Marin Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.7%. United Security Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 4.4%. Bank of Marin Bancorp pays out -44.4% of its earnings in the form of a dividend. United Security Bancshares pays out 67.6% 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. United Security Bancshares has raised its dividend for 2 consecutive years. United Security Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

52.3% of Bank of Marin Bancorp shares are owned by institutional investors. Comparatively, 30.9% of United Security Bancshares shares are owned by institutional investors. 5.7% of Bank of Marin Bancorp shares are owned by insiders. Comparatively, 22.1% of United Security Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Bank of Marin Bancorp has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, United Security Bancshares has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Bank of Marin Bancorp and United Security Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Marin Bancorp	0	2	3	1	2.83
United Security Bancshares	0	0	1	0	3.00

Bank of Marin Bancorp currently has a consensus price target of $30.10, suggesting a potential upside of 10.50%. Given Bank of Marin Bancorp’s higher probable upside, equities research analysts plainly believe Bank of Marin Bancorp is more favorable than United Security Bancshares.

Valuation & Earnings

This table compares Bank of Marin Bancorp and United Security Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Marin Bancorp	$163.98 million	2.67	-$35.67 million	($2.25)	-12.11
United Security Bancshares	$65.90 million	2.93	$12.29 million	$0.71	15.45

United Security Bancshares has lower revenue, but higher earnings than Bank of Marin Bancorp. Bank of Marin Bancorp is trading at a lower price-to-earnings ratio than United Security Bancshares, indicating that it is currently the more affordable of the two stocks.

Summary

United Security Bancshares beats Bank of Marin Bancorp on 11 of the 18 factors compared between the two stocks.

About Bank of Marin Bancorp

Bank of Marin Bancorp operates as the holding company for Bank of Marin that provides a range of financial services primarily to small to medium-sized businesses, not-for-profit organizations, and commercial real estate investors in the United States. The company offers personal and business checking and savings accounts; and individual retirement, health savings, and demand deposit marketplace accounts, as well as time certificates of deposit, certificate of deposit account registry, and insured cash sweep services. It also provides commercial real estate, commercial and industrial, and consumer loans, as well as construction financing and home equity lines of credit. In addition, the company offers merchant and payroll services; commercial equipment leasing program; payment solutions; treasury management services; credit cards; and mobile deposit, remote deposit capture, automated clearing house, wire transfer, and image lockbox services. Further, it provides wealth management and trust services comprising customized investment portfolio management, financial planning, trust administration, estate settlement, and custody services, as well as 401(k) plan services; and automated teller machines, and telephone and digital banking services. The company was incorporated in 1989 and is headquartered in Novato, California.

About United Security Bancshares

United Security Bancshares operates as the bank holding company for United Security Bank, a state-chartered bank that provides a range of commercial banking services to the business and professional community, and individuals in California. The company accepts various deposit products, including personal and business checking accounts, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit. It also provides real estate mortgage, commercial and industrial, real estate construction and development, and consumer loans, as well as agricultural, installment, and student loans. In addition, the company offers online and mobile banking, safe deposit boxes, wire transfers, payroll direct deposit, cashier's check, cash management, and foreign draft services, as well as interactive teller machines; and person-to-person and bank-to-bank transfers for consumer customers. United Security Bancshares was founded in 1987 and is headquartered in Fresno, California.