NasdaqGS:PMBC

Stock Analysis Report

Pacific Mercantile Bancorp

Executive Summary

Pacific Mercantile Bancorp operates as the holding company for Pacific Mercantile Bank that provides a range of commercial banking products and services to small and medium-size businesses, professional firms, and individuals in Southern California, the United States.

Rewards

Trading at 25.7% below its fair value

Earnings are forecast to grow 34.63% per year

Risk Analysis

Profit margins (12.3%) are lower than last year (49.9%)

Shareholders have been diluted in the past year



Snowflake Analysis

Excellent balance sheet and good value.


Similar Companies

Share Price & News

How has Pacific Mercantile Bancorp's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PMBC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.9%

PMBC

0.5%

US Banks

1.5%

US Market


1 Year Return

-20.5%

PMBC

12.1%

US Banks

20.1%

US Market

Return vs Industry: PMBC underperformed the US Banks industry which returned 12.1% over the past year.

Return vs Market: PMBC underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

PMBCIndustryMarket
7 Day2.9%0.5%1.5%
30 Day-6.2%-1.3%1.4%
90 Day-1.3%1.2%8.7%
1 Year-20.5%-20.5%15.4%12.1%22.7%20.1%
3 Year-8.2%-8.2%25.2%16.2%50.1%40.5%
5 Year-0.4%-0.4%75.9%55.9%73.1%54.1%

Price Volatility Vs. Market

How volatile is Pacific Mercantile Bancorp's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Pacific Mercantile Bancorp undervalued compared to its fair value and its price relative to the market?

25.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PMBC ($7.07) is trading below our estimate of fair value ($9.52)

Significantly Below Fair Value: PMBC is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PMBC is poor value based on its PE Ratio (29.2x) compared to the Banks industry average (12.6x).

PE vs Market: PMBC is poor value based on its PE Ratio (29.2x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: PMBC is good value based on its PEG Ratio (0.8x)


Price to Book Ratio

PB vs Industry: PMBC is good value based on its PB Ratio (1.1x) compared to the US Banks industry average (1.2x).


Next Steps

Future Growth

How is Pacific Mercantile Bancorp forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

34.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PMBC's forecast earnings growth (34.6% per year) is above the savings rate (1.7%).

Earnings vs Market: PMBC's earnings (34.6% per year) are forecast to grow faster than the US market (14.5% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: PMBC's revenue (12% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: PMBC's revenue (12% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PMBC's Return on Equity is forecast to be low in 3 years time (8.1%).


Next Steps

Past Performance

How has Pacific Mercantile Bancorp performed over the past 5 years?

32.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PMBC has high quality earnings.

Growing Profit Margin: PMBC's current net profit margins (12.3%) are lower than last year (49.9%).


Past Earnings Growth Analysis

Earnings Trend: PMBC has become profitable over the past 5 years, growing earnings by 32% per year.

Accelerating Growth: PMBC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PMBC had negative earnings growth (-78.7%) over the past year, making it difficult to compare to the Banks industry average (12.1%).


Return on Equity

High ROE: PMBC's Return on Equity (3.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Pacific Mercantile Bancorp's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: PMBC has a low level of unsold assets or inventory.

Debt Coverage by Assets: PMBC's debt is covered by short term assets (assets are 6.4x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: PMBC is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: PMBC is profitable, therefore cash runway is not a concern.


Financial Institutions Analysis

Asset Level: PMBC's level of assets compared to its equity is low.

Allowance for Bad Loans: PMBC has a low allowance for bad loans.

Low Risk Liabilities: PMBC's liabilities are made up of primarily low risk sources of funding.

Loan Level: PMBC has an acceptable proportion of non-loan assets held.

Low Risk Deposits: PMBC's loans are broadly funded by customer deposits.

Level of Bad Loans: PMBC has an appropriate level of bad loans (1.39%)


Next Steps

Dividend

What is Pacific Mercantile Bancorp's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage2.8%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate PMBC's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate PMBC's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if PMBC's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if PMBC's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of PMBC's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

6.2yrs

Average management tenure


CEO

Brad Dinsmore (56yo)

0.4yrs

Tenure

0

Mr. Bradford R. Dinsmore, also known as Brad, has been the President, Chief Executive Officer and Director of Pacific Mercantile Bancorp. and Pacific Mercantile Bank since September 3, 2019. Mr. Dinsmore s ...


Leadership Team

NamePositionTenureCompensationOwnership
Curt Christianssen
Executive VP6.2yrsUS$435.79k0.38% $637.2k
Bradford Dinsmore
CEO, President & Director0.4yrsno data0.13% $219.2k
Nancy Gray
Chief Accounting Officer6.2yrsUS$250.65k0.026% $43.0k
Maxwell Sinclair
Executive VP & Chief Compliance Officer9.1yrsUS$331.15k0.14% $235.4k
Robert Anderson
Executive VP & Chief Banking Officer and Interim Chief Credit Officer of Pacific Mercantile Bank0yrsUS$317.63k0.44% $727.4k

6.2yrs

Average Tenure

56yo

Average Age

Experienced Management: PMBC's management team is seasoned and experienced (6.2 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Bradford Dinsmore
CEO, President & Director0.4yrsno data0.13% $219.2k
Michael Hoopis
Independent Director7.8yrsUS$62.50k0.049% $81.2k
David Munio
Independent Director4.2yrsUS$62.50k0.039% $65.5k
Stephen Yost
Independent Director6.9yrsUS$90.63k0.093% $155.8k
Manish Dutta
Director0.3yrsno data0.0018% $3.0k
Denis Kalscheur
Independent Director5yrsUS$70.00k0.053% $88.4k
Edward Carpenter
Chairman of the Board7.8yrsUS$82.50k0.065% $108.2k
James Deutsch
Independent Director1.3yrsUS$5.00kno data
Shannon Eusey
Independent Director0.8yrsno data0.0055% $9.2k
Michele Miyakawa
Independent Director0.8yrsno data0.0055% $9.2k

2.7yrs

Average Tenure

68yo

Average Age

Experienced Board: PMBC's board of directors are not considered experienced ( 2.7 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: PMBC insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.1%.


Top Shareholders

Company Information

Pacific Mercantile Bancorp's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Pacific Mercantile Bancorp
  • Ticker: PMBC
  • Exchange: NasdaqGS
  • Founded: 2000
  • Industry: Regional Banks
  • Sector: Banks
  • Market Cap: US$166.665m
  • Shares outstanding: 23.57m
  • Website: https://www.pmbank.com

Number of Employees


Location

  • Pacific Mercantile Bancorp
  • 949 South Coast Drive
  • Suite 300
  • Costa Mesa
  • California
  • 92626
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PMBCNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDDec 1999

Biography

Pacific Mercantile Bancorp operates as the holding company for Pacific Mercantile Bank that provides a range of commercial banking products and services to small and medium-size businesses, professional firms, and individuals in Southern California, the United States. The company’s deposit products include checking accounts, interest-bearing term deposit accounts, savings and money market deposits, and time deposits. It also offers various loan products, such as commercial loans and credit lines, accounts receivable and inventory financing, small business administration guaranteed business loans, owner-occupied commercial real estate loans, working capital lines of credit and asset based lending, growth capital loans, equipment financing, letters of credit, and corporate credit cards. In addition, the company provides cash and treasury management solutions, automated clearinghouse payment and wire solutions, fraud protection services, remote deposit capture services, courier services, and online banking services; and letters of credit and import/export financing services. As of March 6, 2019, it operated seven locations in Orange, Los Angeles, San Diego, and San Bernardino counties, Southern California. The company was incorporated in 2000 and is based in Costa Mesa, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 23:49
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.