Analyzing Solera National Bancorp (OTCMKTS:SLRK) and First Business Financial Services (NASDAQ:FBIZ)

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

Insider and Institutional Ownership

60.1% of First Business Financial Services shares are held by institutional investors. 5.1% of First Business Financial Services shares are held by insiders. Comparatively, 17.4% of Solera National Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk and Volatility

First Business Financial Services has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Solera National Bancorp has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for First Business Financial Services and Solera National Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Business Financial Services	0	0	4	0	3.00
Solera National Bancorp	0	0	0	0	0.00

First Business Financial Services presently has a consensus price target of $60.67, indicating a potential upside of 6.48%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, research analysts plainly believe First Business Financial Services is more favorable than Solera National Bancorp.

Valuation and Earnings

This table compares First Business Financial Services and Solera National Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Business Financial Services	$262.38 million	1.81	$44.24 million	$6.08	9.37
Solera National Bancorp	$75.25 million	0.82	$18.07 million	$5.22	2.74

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

Profitability

This table compares First Business Financial Services and Solera National Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Business Financial Services	18.55%	14.89%	1.24%
Solera National Bancorp	28.36%	N/A	N/A

Summary

First Business Financial Services beats Solera National Bancorp on 12 of the 14 factors compared between the two stocks.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.

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.