California BanCorp (NASDAQ:BCAL) and American Business Bank (OTCMKTS:AMBZ) Critical Analysis

American Business Bank (OTCMKTS:AMBZ) and California BanCorp (NASDAQ:BCAL) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Institutional and Insider Ownership

9.9% of American Business Bank shares are held by institutional investors. Comparatively, 55.4% of California BanCorp shares are held by institutional investors. 14.8% of California BanCorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for American Business Bank and California BanCorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Business Bank	0	0	0	0	0.00
California BanCorp	0	0	3	2	3.40

California BanCorp has a consensus target price of $20.33, suggesting a potential upside of 3.53%. Given California BanCorp’s stronger consensus rating and higher possible upside, analysts clearly believe California BanCorp is more favorable than American Business Bank.

Profitability

This table compares American Business Bank and California BanCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Business Bank	26.10%	N/A	N/A
California BanCorp	26.26%	11.85%	1.59%

Risk and Volatility

American Business Bank has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500. Comparatively, California BanCorp has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Earnings and Valuation

This table compares American Business Bank and California BanCorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Business Bank	$183.26 million	2.98	$43.28 million	$5.58	11.02
California BanCorp	$184.56 million	3.44	$5.43 million	$1.94	10.12

American Business Bank has higher earnings, but lower revenue than California BanCorp. California BanCorp is trading at a lower price-to-earnings ratio than American Business Bank, indicating that it is currently the more affordable of the two stocks.

Summary

California BanCorp beats American Business Bank on 12 of the 15 factors compared between the two stocks.

About American Business Bank

American Business Bank, a California-chartered bank, provides banking products and services to small and medium-sized firms, non-profits, business executives, and professionals in Southern California. The company offers credit and depository; treasury management; asset-based lending; SBA lending; international banking comprising money transfers, import and export commercial letters of credit, standby letters of credit, documentary and clean collections, and foreign currency exchange services; and consulting and referral services. It operates regional loan production offices located in North Orange County, Orange County, South Bay, San Fernando Valley, Riverside County, Inland Empire, and Long Beach. American Business Bank was incorporated in 1998 and is headquartered in Los Angeles, California.

About California BanCorp

Southern California Bancorp operates as the holding company for Bank of Southern California, N.A. that provides various financial products to individuals, professionals, and small-to medium-sized businesses. The company offers checking, personal and business savings, and money market accounts, as well as certificates of deposit. It also provides home equity lines of credit, business loans and lines of credit, commercial real estate and construction loans, small business administration loans, letters of credit, and personal and business credit cards. In addition, the company provides cash vault, sweep accounts, and remote deposit capture services; online and mobile banking services; courier service; lockbox services; and merchant services. It operates branches in San Diego, Orange, Ventura, Los Angeles, and Riverside counties, as well as the Inland Empire. The company was founded in 2001 and is headquartered in San Diego, California.