Sun Bancorp (NASDAQ: SNBC) and American River Bankshares (NASDAQ:AMRB) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, earnings, valuation and risk.

Insider and Institutional Ownership

70.7% of Sun Bancorp shares are owned by institutional investors. Comparatively, 51.0% of American River Bankshares shares are owned by institutional investors. 12.5% of Sun Bancorp shares are owned by insiders. Comparatively, 12.5% of American River Bankshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Sun Bancorp and American River Bankshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sun Bancorp 72.60% 19.11% 2.75%
American River Bankshares 24.61% 6.65% 0.85%

Analyst Recommendations

This is a summary of current ratings for Sun Bancorp and American River Bankshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Bancorp 0 0 2 0 3.00
American River Bankshares 1 1 0 0 1.50

Sun Bancorp presently has a consensus target price of $27.25, suggesting a potential upside of 9.22%. American River Bankshares has a consensus target price of $12.50, suggesting a potential downside of 16.39%. Given Sun Bancorp’s stronger consensus rating and higher possible upside, equities analysts clearly believe Sun Bancorp is more favorable than American River Bankshares.

Volatility and Risk

Sun Bancorp has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500. Comparatively, American River Bankshares has a beta of 0.37, suggesting that its share price is 63% less volatile than the S&P 500.

Dividends

Sun Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.2%. American River Bankshares pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. Sun Bancorp pays out 1.2% of its earnings in the form of a dividend. American River Bankshares pays out 23.8% 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.

Valuation & Earnings

This table compares Sun Bancorp and American River Bankshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sun Bancorp $83.00 million 5.73 $61.41 million $3.23 7.72
American River Bankshares $23.20 million 4.12 $6.40 million $0.84 17.80

Sun Bancorp has higher revenue and earnings than American River Bankshares. Sun Bancorp is trading at a lower price-to-earnings ratio than American River Bankshares, indicating that it is currently the more affordable of the two stocks.

Summary

Sun Bancorp beats American River Bankshares on 13 of the 16 factors compared between the two stocks.

Sun Bancorp Company Profile

Sun Bancorp, Inc. is a bank holding company. The Company’s principal subsidiary is Sun National Bank (the Bank). Through the Bank, the Company provides an array of community banking services to consumers, small businesses and mid-size companies. The Company’s lending services to businesses include term loans, lines of credit and commercial mortgages. The Company’s commercial deposit services include business checking and money market accounts, and cash management solutions, such as online banking, electronic bill payment and wire transfer services, lockbox services, remote deposit and controlled disbursement services. The Company’s lending services to consumers consist primarily of lines of credit of overdraft sweeps. The Company’s consumer deposit services include checking accounts, savings accounts, money market accounts, certificates of deposit and individual retirement accounts.

American River Bankshares Company Profile

American River Bankshares is a bank holding company. The Company’s banking subsidiary is American River Bank (the Bank). The Bank’s primary business is serving the commercial banking needs of small to mid-sized businesses. The Bank accepts checking and savings deposits; offers money market deposit accounts and certificates of deposit; makes secured and unsecured commercial loans, secured real estate loans, and other installment and term loans, and offers other customary banking services. The Bank also conducts lease financing for various types of business equipment, from computer software to heavy earth-moving equipment. It serves various communities located in Sacramento, Placer, Yolo, El Dorado, Sonoma and Amador counties. It also serves Alameda, Contra Costa and Santa Clara Counties through loan production offices located in the Cities of San Jose and San Ramon. Its loans include real estate construction loans; lease financing receivable; agriculture loans, and consumer loans.

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