Gains Capital Holdings (GCAP) and Peoples Bancorp (PEBO) Financial Analysis

Peoples Bancorp

Introduction

Peoples Bancorp is a financial Institution that runs as Peoples Bank holding company. The bank provides retail and profitable banking services. The company is in the business of accepting deposits comprising demand deposit accounts, money market financial records, Savings accounts, as well as a certificate of deposits. It also provides for-profit real estate mortgages, real estate constructions loans, and residential real estate lending among other financial products. Further, it also provides brokerage services via non-affiliated brokers and credit cards to businesses and consumers. As of February 24, 2017, Peoples Bancorp Company operates 80 offices, that is, bank branches that operate on full-service and more than78 automated tellers machines (ATM) in different states of the United States.

 

Financial performance

Return on Assets

ROA = Net Income / Total Assets

=31,157/3,432,348 *100 = 0.91%

The company is an averagely high performing company with a return on Assets invested (ROA) at 0.91% for 2017.

Return on Equity

Return on Equity = Net income/shareholders’ equity

=31,157/435,261*100 =7.16%

The company also had a return on Equity 7.16% which is relatively low, reporting an equity multiplier of 7.67 times which is quite low as well. Although the company appears to have a low performance, it can be seen to be performing well compared to its previous performance with annual revenues increasing by 7.49% up from $15.5 million. Also, the company’s net income from continuing operations increased incredibly by 184.7% up from $ 10.9 million. The Banks performance reflects a profit margin of 22.84%, and an asset utilization of 3.32% which is relatively low as the company’s revenues are quite low compared to its total assets.

Risk Analysis

Regarding risk analysis, the company has a relatively high liquidity risk as it has invested minimally in short-term securities. The company spends most of its resources in long-term securities with investments increasing by 4.9% from $ 2.9 billion. It is quite evident that the company majors in Wholesale business that is commercial estate loans, real estate construction loans as a source of revenue. The company also has a relatively low capital risk of $ 2.9 billion, and it is highly leveraged. Be it as it may, the company has great prospects of performance with the real estate industry forecasting greater performance with demand expected to increase despite the real estate’s industry risk such as a change in demand,  change of priority for building management companies and other macroeconomic factors.

Gain Capital Holdings

Introduction

Gain Capital Holdings Inc. is a financial provider, majoring in solutions to retail and trading services and offering institutional and future service customers throughout the world. The company works in three faces: Institutional, Retail, and Futures. Its key interest is on exchange-traded markets and over the counter and offering to a variety of financial of financial products, such as precious metals trading and spot foreign exchange, besides contracts for differences on indices, commodities, currencies, bonds, individual equities, and interest rate products: spread bets and over the counter options on FOREX, together with provision for trading of exchange-traded options and futures.

Financial performance

The company’s revenue is derived mostly from interest income, particularly loans offered to its clients to proportions of 84%, as investment and securities together with other interest and dividend income contributing the remainder. GCAP appears to be in excellent shape as its aggregate profitability is above average with limited capital risk.

Return on Assets

ROA = Net Income / Total Assets

35,272 / 1,430,084*100 =2.47%

The institutions ROA reflects profit margin of 0.94% and an asset utilization of 0.45% such that its profit margin is equal to 2%. Both the profit margin and the asset utilization are quite low showing minimal performance indicating the company’s increased expenses that reduce the profits considerably.

Return on Equity

Return on Equity = Net income/shareholders’ equity

35,272 / 294,182*100

The return on equity is also relatively low at 4.68%. It’s evident that the company’s financial performance highly depends on Loans offered both commercial and personal loans.

Risk Analysis

It’s important also to note that due to this, the bank may highly benefit from problem loans that arise due to the difficult economic status of the country. However, it is highly plausible that future performance may be affected by credit risk. GCAP has less liquidity risk with the company having a good percentage of short-term securities whose value almost match their fair value. The company has great access to borrowed funds, hence the high leverage enabling it to carry out its activities. Though the company’s performance is low, it would be at a better level if it diversified its markets more or gain access to new funds.

Appendix

Summary of financial ratios and performance measures

Summary GCAP PBO
PE ratio 23.68 16.8
Market capitalization 327.716 617.17
EPS 0.31 2.01
Profit Margin 3.84 22.84
Return on Assets 0.94 1.07
Return on Equity 4.68 8.21
Equity Multiplier 4.98 7.67
Asset utilization 0.45 3.32

 

Work cited

Sgueo, Gianluca. “Converging Methods of Governance at the Supranational Level. The Role     of Civil Society Coalitions.” (2017).

Abraham, Tara Marling. “From Merchant to Manufacturer.” (2017).

 

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