Columbia Banking System (NASDAQ:COLB) and Western Alliance Bancorporation (NYSE:WAL) Critical Survey

Columbia Banking System (NASDAQ:COLB) and Western Alliance Bancorporation (NYSE:WAL) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Valuation and Earnings

This table compares Columbia Banking System and Western Alliance Bancorporation”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Columbia Banking System	$2.97 billion	1.82	$533.67 million	$2.52	10.17
Western Alliance Bancorporation	$3.21 billion	2.83	$787.70 million	$7.61	10.82

Western Alliance Bancorporation has higher revenue and earnings than Columbia Banking System. Columbia Banking System is trading at a lower price-to-earnings ratio than Western Alliance Bancorporation, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

92.5% of Columbia Banking System shares are owned by institutional investors. Comparatively, 79.2% of Western Alliance Bancorporation shares are owned by institutional investors. 0.7% of Columbia Banking System shares are owned by insiders. Comparatively, 2.7% of Western Alliance Bancorporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Columbia Banking System has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Profitability

This table compares Columbia Banking System and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Columbia Banking System	17.98%	11.31%	1.15%
Western Alliance Bancorporation	16.39%	12.62%	1.02%

Dividends

Columbia Banking System pays an annual dividend of $1.44 per share and has a dividend yield of 5.6%. Western Alliance Bancorporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.8%. Columbia Banking System pays out 57.1% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 20.0% 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. Columbia Banking System has raised its dividend for 4 consecutive years and Western Alliance Bancorporation has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Columbia Banking System and Western Alliance Bancorporation, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Columbia Banking System	0	14	3	1	2.28
Western Alliance Bancorporation	1	0	13	0	2.86

Columbia Banking System presently has a consensus target price of $29.20, suggesting a potential upside of 13.88%. Western Alliance Bancorporation has a consensus target price of $102.14, suggesting a potential upside of 24.02%. Given Western Alliance Bancorporation’s stronger consensus rating and higher probable upside, analysts clearly believe Western Alliance Bancorporation is more favorable than Columbia Banking System.

Summary

Western Alliance Bancorporation beats Columbia Banking System on 13 of the 18 factors compared between the two stocks.

About Columbia Banking System

Columbia Banking System, Inc. operates as the holding company of Umpqua Bank that provides banking, private banking, mortgage, and other financial services in the United States. The company offers deposit products, including business, non-interest bearing checking, interest-bearing checking and savings, money market, and certificate of deposit accounts; and insured cash sweep and other investment sweep solutions. It also provides commercial lending products, such as commercial lines of credit and term loans, accounts receivable and inventory financing, international trade finance, commercial property loans, multifamily loans, equipment loans, commercial equipment leases, real estate construction loans and permanent financing, and small business administration program financing, as well as capital markets. In addition, the company offers wealth management comprising financial planning, investment, trust, and insurance; treasury management, which includes digital and mobile banking solutions, ACH, wires, positive pay, remote deposit capture, integrated payments, integrated receivables, lockbox, cash vault, real-time payments, commercial card, and foreign exchange and international banking related products, as well as merchant services; and brokerage services, residential real estate loans and consumer loans. It serves its products to corporate, institutional, small business, and individual customers. The company was founded in 1953 and is headquartered in Tacoma, Washington.

About Western Alliance Bancorporation

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.