Reviewing Silvergate Capital (NYSE:SI) & F & M Bank (OTCMKTS:FMBM)

Silvergate Capital (NYSE:SI) and F & M Bank (OTCMKTS:FMBM) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Profitability

This table compares Silvergate Capital and F & M Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Silvergate Capital	45.10%	8.87%	0.81%
F & M Bank	4.20%	4.94%	0.28%

Risk and Volatility

Silvergate Capital has a beta of 2.23, meaning that its stock price is 123% more volatile than the S&P 500. Comparatively, F & M Bank has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500.

Earnings & Valuation

This table compares Silvergate Capital and F & M Bank’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Silvergate Capital	-$609.47 million	-0.02	-$937.91 million	($29.96)	-0.01
F & M Bank	$66.48 million	0.83	$2.77 million	$0.79	20.00

F & M Bank has higher revenue and earnings than Silvergate Capital. Silvergate Capital is trading at a lower price-to-earnings ratio than F & M Bank, indicating that it is currently the more affordable of the two stocks.

Dividends

Silvergate Capital pays an annual dividend of $2.94 per share and has a dividend yield of 735.5%. F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 6.6%. Silvergate Capital pays out -9.8% of its earnings in the form of a dividend. F & M Bank pays out 131.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Silvergate Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings for Silvergate Capital and F & M Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Silvergate Capital	0	0	0	0	N/A
F & M Bank	0	0	0	0	N/A

Insider and Institutional Ownership

94.4% of Silvergate Capital shares are held by institutional investors. Comparatively, 3.8% of F & M Bank shares are held by institutional investors. 1.7% of Silvergate Capital shares are held by company insiders. Comparatively, 8.6% of F & M Bank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Silvergate Capital beats F & M Bank on 7 of the 13 factors compared between the two stocks.

About Silvergate Capital

Silvergate Capital Corporation operates as a bank holding company for Silvergate Bank that provides banking products and services to business and individual clients in the United States. The company accepts deposit products, including interest and noninterest bearing demand accounts, money market and savings accounts, and certificates of deposit accounts. Its loan products comprise one-to-four family real estate loans, multi-family real estate loans, commercial real estate loans, construction loans, commercial and industrial loans, mortgage warehouse loans, and reverse mortgage loans, as well as consumer loans and other loans secured by personal property. The company also provides cash management services for digital currency-related businesses. Silvergate Capital Corporation was founded in 1988 and is headquartered in La Jolla, California.

About F & M Bank

F & M Bank Corp. operates as the bank holding company for Farmers & Merchants Bank that provides commercial banking services in Virginia. The company offers commercial and individual demand and time deposit accounts, savings accounts, checking accounts, money market accounts, internet and mobile banking services, and drive-in banking services. It also provides construction loans, including residential, and land acquisition and development loans; commercial real estate loans; business loans; consumer loans, such as personal loans and lines of credit, automobile loans, deposit account loans, installment and demand loans, and home equity loans; residential mortgage loans; credit cards; dealer finance; farmland loans; multi-family loans; and commercial and industrial loans. In addition, the company offers brokerage services; and life, and commercial and personal insurance products. Further, it originates conventional and government sponsored mortgages; and title insurance and real estate settlement services. The company was founded in 1908 and is headquartered in Timberville, Virginia.