Westamerica Bancorporation (NASDAQ:WABC) vs. Preferred Bank (NASDAQ:PFBC) Financial Comparison

Westamerica Bancorporation (NASDAQ:WABC) and Preferred Bank (NASDAQ:PFBC) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Dividends

Westamerica Bancorporation pays an annual dividend of $1.84 per share and has a dividend yield of 3.8%. Preferred Bank pays an annual dividend of $3.00 per share and has a dividend yield of 3.3%. Westamerica Bancorporation pays out 38.5% of its earnings in the form of a dividend. Preferred Bank pays out 31.7% 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. Westamerica Bancorporation has increased its dividend for 34 consecutive years and Preferred Bank has increased its dividend for 5 consecutive years. Westamerica Bancorporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

81.9% of Westamerica Bancorporation shares are owned by institutional investors. Comparatively, 72.8% of Preferred Bank shares are owned by institutional investors. 5.3% of Westamerica Bancorporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Westamerica Bancorporation has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, Preferred Bank has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500.

Profitability

This table compares Westamerica Bancorporation and Preferred Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westamerica Bancorporation	43.69%	13.81%	2.09%
Preferred Bank	25.04%	16.64%	1.80%

Valuation & Earnings

This table compares Westamerica Bancorporation and Preferred Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westamerica Bancorporation	$311.17 million	3.92	$138.64 million	$4.78	10.04
Preferred Bank	$522.66 million	2.49	$130.66 million	$9.46	9.52

Westamerica Bancorporation has higher earnings, but lower revenue than Preferred Bank. Preferred Bank is trading at a lower price-to-earnings ratio than Westamerica Bancorporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Westamerica Bancorporation and Preferred Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westamerica Bancorporation	0	3	0	0	2.00
Preferred Bank	0	2	2	0	2.50

Westamerica Bancorporation presently has a consensus price target of $52.00, suggesting a potential upside of 8.40%. Preferred Bank has a consensus price target of $103.67, suggesting a potential upside of 15.15%. Given Preferred Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Preferred Bank is more favorable than Westamerica Bancorporation.

Summary

Westamerica Bancorporation beats Preferred Bank on 9 of the 17 factors compared between the two stocks.

About Westamerica Bancorporation

Westamerica Bancorporation operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers. The company accepts various deposit products, including retail savings and checking accounts, as well as certificates of deposit. Its loan portfolio includes commercial, commercial and residential real estate, real estate construction, and consumer installment loans, as well as indirect automobile loans. The company was formerly known as Independent Bankshares Corporation and changed its name to Westamerica Bancorporation in 1983. The company was founded in 1884 and is headquartered in San Rafael, California.

About Preferred Bank

Preferred Bank provides various commercial banking products and services to small and mid-sized businesses and their owners, entrepreneurs, real estate developers and investors, professionals, and high net worth individuals. The company accepts checking, savings, and money market deposit accounts; fixed-rate and fixed maturity retail, and non-retail certificates of deposit; and individual retirement accounts. It also provides real estate mortgage loans that are secured by retail, industrial, office, special purpose, and residential single and multi-family properties; real estate construction loans; commercial loans comprising lines of credit for working capital, term loans for capital expenditures, and commercial and stand-by letters of credit; and small business administration loans. In addition, the company offers trade finance services, including commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, acceptances/trust receipt financing products, export financing, and bills purchase programs. Further, it provides cash management services; and internet, mobile, and tablet banking services. The company operates through full-service branch offices in the California counties of Los Angeles, Orange and San Francisco; Flushing, New York; Houston suburb of Sugar Land, Texas; and a satellite office in Manhattan, New York. The company was incorporated in 1991 and is headquartered in Los Angeles, California.