Analyzing Solera National Bancorp (OTCMKTS:SLRK) and Independent Bank (NASDAQ:IBCP)

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

Risk & Volatility

Independent Bank has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Solera National Bancorp has a beta of 0.36, indicating that its share price is 64% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Independent Bank	21.73%	14.20%	1.26%
Solera National Bancorp	27.46%	N/A	N/A

Insider and Institutional Ownership

79.4% of Independent Bank shares are held by institutional investors. 5.9% of Independent Bank shares are held by company insiders. Comparatively, 17.4% of Solera National Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Independent Bank and Solera National Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$315.38 million	2.09	$68.54 million	$3.28	9.75
Solera National Bancorp	$83.83 million	0.90	$23.02 million	$5.35	3.27

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Independent Bank and Solera National Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	3	1	0	2.25
Solera National Bancorp	0	0	0	0	0.00

Independent Bank currently has a consensus price target of $36.67, indicating a potential upside of 14.65%. Given Independent Bank’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Independent Bank is more favorable than Solera National Bancorp.

Summary

Independent Bank beats Solera National Bancorp on 11 of the 14 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based 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.