Head to Head Comparison: Cullen/Frost Bankers (NYSE:CFR) & American Business Bank (OTCMKTS:AMBZ)

American Business Bank (OTCMKTS:AMBZ) and Cullen/Frost Bankers (NYSE:CFR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares American Business Bank and Cullen/Frost Bankers”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Business Bank	$183.26 million	2.39	$43.28 million	$5.18	9.41
Cullen/Frost Bankers	$2.85 billion	2.80	$582.54 million	$9.11	13.61

Cullen/Frost Bankers has higher revenue and earnings than American Business Bank. American Business Bank is trading at a lower price-to-earnings ratio than Cullen/Frost Bankers, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares American Business Bank and Cullen/Frost Bankers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Business Bank	25.23%	N/A	N/A
Cullen/Frost Bankers	26.82%	15.61%	1.18%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for American Business Bank and Cullen/Frost Bankers, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Business Bank	0	0	0	0	0.00
Cullen/Frost Bankers	3	9	2	0	1.93

Cullen/Frost Bankers has a consensus target price of $134.07, indicating a potential upside of 8.13%. Given Cullen/Frost Bankers’ stronger consensus rating and higher probable upside, analysts clearly believe Cullen/Frost Bankers is more favorable than American Business Bank.

Insider & Institutional Ownership

9.9% of American Business Bank shares are owned by institutional investors. Comparatively, 86.9% of Cullen/Frost Bankers shares are owned by institutional investors. 2.9% of Cullen/Frost Bankers shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

American Business Bank has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, Cullen/Frost Bankers has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Dividends

American Business Bank pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Cullen/Frost Bankers pays an annual dividend of $4.00 per share and has a dividend yield of 3.2%. American Business Bank pays out 19.3% of its earnings in the form of a dividend. Cullen/Frost Bankers pays out 43.9% 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. Cullen/Frost Bankers has increased its dividend for 32 consecutive years. Cullen/Frost Bankers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Cullen/Frost Bankers beats American Business Bank on 16 of the 17 factors compared between the two stocks.

About American Business Bank

American Business Bank, a California-chartered bank, provides banking products and services to small and medium-sized firms, non-profits, business executives, and professionals in Southern California. The company offers credit and depository; treasury management; asset-based lending; SBA lending; international banking comprising money transfers, import and export commercial letters of credit, standby letters of credit, documentary and clean collections, and foreign currency exchange services; and consulting and referral services. It operates regional loan production offices located in North Orange County, Orange County, South Bay, San Fernando Valley, Riverside County, Inland Empire, and Long Beach. American Business Bank was incorporated in 1998 and is headquartered in Los Angeles, California.

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. operates as the bank holding company for Frost Bank that provides commercial and consumer banking services in Texas. The company offers commercial banking services to corporations, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; and treasury management services, as well as originates commercial leasing services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, first mortgage loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds transmitting, and foreign exchange services; correspondent banking activities, including check clearing, transfer of funds, fixed income security services, and securities custody and clearance services. Further, it offers trust, investment, agency, and custodial services for individual and corporate clients; capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and support for international business activities, including foreign exchange, letters of credit, export-import financing, and other related activities. Additionally, the company offers insurance and securities brokerage services; holding of securities for investment purposes; and investment management services for mutual funds, institutions, and individuals. It serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. The company was founded in 1868 and is headquartered in San Antonio, Texas.