Critical Comparison: Independent Bank Group (IBTX) & Bank of Marin Bancorp (BMRC)

Independent Bank Group (NASDAQ: IBTX) and Bank of Marin Bancorp (NASDAQ:BMRC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current recommendations and price targets for Independent Bank Group and Bank of Marin Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independent Bank Group 0 1 5 0 2.83
Bank of Marin Bancorp 0 3 0 0 2.00

Independent Bank Group currently has a consensus target price of $72.00, suggesting a potential upside of 5.03%. Bank of Marin Bancorp has a consensus target price of $73.67, suggesting a potential upside of 12.13%. Given Bank of Marin Bancorp’s higher possible upside, analysts plainly believe Bank of Marin Bancorp is more favorable than Independent Bank Group.

Earnings & Valuation

This table compares Independent Bank Group and Bank of Marin Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Independent Bank Group $349.20 million 5.55 $76.51 million $2.99 22.93
Bank of Marin Bancorp $84.86 million 5.36 $15.98 million $2.58 25.47

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

Profitability

This table compares Independent Bank Group and Bank of Marin Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Independent Bank Group 21.91% 8.26% 1.13%
Bank of Marin Bancorp 18.83% 8.57% 0.98%

Risk & Volatility

Independent Bank Group has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Bank of Marin Bancorp has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.

Insider and Institutional Ownership

46.3% of Independent Bank Group shares are owned by institutional investors. Comparatively, 41.7% of Bank of Marin Bancorp shares are owned by institutional investors. 7.7% of Independent Bank Group shares are owned by company insiders. Comparatively, 5.2% of Bank of Marin Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Independent Bank Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Bank of Marin Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 1.8%. Independent Bank Group pays out 13.4% of its earnings in the form of a dividend. Bank of Marin Bancorp pays out 45.0% 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.

Summary

Independent Bank Group beats Bank of Marin Bancorp on 13 of the 16 factors compared between the two stocks.

About Independent Bank Group

Independent Bank Group, Inc. is a bank holding company. Through the Company’s subsidiary, Independent Bank (the Bank), the Company provides a range of commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. As of December 31, 2016, the Company operated 41 banking offices in the Dallas/North Texas area, the Austin/Central Texas area, and the Houston metropolitan area. The Company offers residential mortgages through its mortgage brokerage division. As a mortgage broker, the Company originates residential mortgages, which are sold into the secondary market shortly after closing. The Company also provides wealth management services to its customers, including investment advisory and other related services. The Company offers a range of commercial and retail lending products to businesses, professionals and individuals. Deposits are the Company’s principal source of funds for use in lending and other general banking purposes.

About Bank of Marin Bancorp

Bank of Marin Bancorp (Bancorp) is the holding company for Bank of Marin (the Bank). The Company’s business banking focus is on small to medium-sized businesses, professionals and not-for-profit organizations. The Company operates through 23 offices in Marin, Sonoma, San Francisco, Napa and Alameda counties. It makes international banking services available to its customers indirectly through other financial institutions, with whom it has correspondent banking relationships. The Company offers a range of commercial and retail deposit and lending programs. Its lending categories include commercial real estate loans, commercial and industrial loans, construction financing, consumer loans and home equity lines of credit. The Company offers a range of personal and business checking and savings accounts, and time deposit alternatives.

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