Comparing Silvergate Capital (NYSE:SI) & First Business Financial Services (NASDAQ:FBIZ)

Silvergate Capital (NYSE:SI) and First Business Financial Services (NASDAQ:FBIZ) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.

Profitability

This table compares Silvergate Capital and First Business Financial Services’ 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%
First Business Financial Services	16.86%	14.33%	1.16%

Risk & Volatility

Silvergate Capital has a beta of 2.23, meaning that its share price is 123% more volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Earnings & Valuation

This table compares Silvergate Capital and First Business Financial Services”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
First Business Financial Services	$153.46 million	2.47	$44.24 million	$5.22	8.75

First Business Financial Services has higher revenue and earnings than Silvergate Capital. Silvergate Capital 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.

Analyst Recommendations

This is a summary of current ratings and target prices for Silvergate Capital and First Business Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Silvergate Capital	0	0	0	0	0.00
First Business Financial Services	0	0	4	0	3.00

First Business Financial Services has a consensus target price of $58.75, suggesting a potential upside of 28.56%. Given First Business Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe First Business Financial Services is more favorable than Silvergate Capital.

Insider & Institutional Ownership

94.4% of Silvergate Capital shares are owned by institutional investors. Comparatively, 60.1% of First Business Financial Services shares are owned by institutional investors. 1.7% of Silvergate Capital shares are owned by insiders. Comparatively, 5.1% of First Business Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Silvergate Capital pays an annual dividend of $2.94 per share and has a dividend yield of 840.6%. First Business Financial Services pays an annual dividend of $1.16 per share and has a dividend yield of 2.5%. Silvergate Capital pays out -9.8% of its earnings in the form of a dividend. First Business Financial Services pays out 22.2% 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. First Business Financial Services has increased its dividend for 13 consecutive years. Silvergate Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

First Business Financial Services beats Silvergate Capital on 12 of the 17 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 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.