Critical Analysis: First Horizon (NYSE:FHN) and PCB Bancorp (NASDAQ:PCB)

PCB Bancorp (NASDAQ:PCB) and First Horizon (NYSE:FHN) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitability, analyst recommendations and dividends.

Institutional & Insider Ownership

33.0% of PCB Bancorp shares are held by institutional investors. Comparatively, 80.3% of First Horizon shares are held by institutional investors. 25.9% of PCB Bancorp shares are held by insiders. Comparatively, 0.9% of First Horizon shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares PCB Bancorp and First Horizon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PCB Bancorp	15.82%	10.58%	1.02%
First Horizon	17.10%	10.55%	1.13%

Dividends

PCB Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. First Horizon pays an annual dividend of $0.60 per share and has a dividend yield of 2.7%. PCB Bancorp pays out 37.6% of its earnings in the form of a dividend. First Horizon pays out 38.7% 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. PCB Bancorp has raised its dividend for 7 consecutive years. PCB Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for PCB Bancorp and First Horizon, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PCB Bancorp	0	2	1	0	2.33
First Horizon	0	9	10	1	2.60

PCB Bancorp currently has a consensus target price of $22.25, suggesting a potential upside of 12.15%. First Horizon has a consensus target price of $24.94, suggesting a potential upside of 11.84%. Given PCB Bancorp’s higher probable upside, equities analysts clearly believe PCB Bancorp is more favorable than First Horizon.

Volatility & Risk

PCB Bancorp has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, First Horizon has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Earnings & Valuation

This table compares PCB Bancorp and First Horizon”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PCB Bancorp	$191.91 million	1.48	$25.81 million	$2.13	9.31
First Horizon	$5.03 billion	2.25	$775.00 million	$1.55	14.39

First Horizon has higher revenue and earnings than PCB Bancorp. PCB Bancorp is trading at a lower price-to-earnings ratio than First Horizon, indicating that it is currently the more affordable of the two stocks.

Summary

First Horizon beats PCB Bancorp on 11 of the 18 factors compared between the two stocks.

About PCB Bancorp

PCB Bancorp operates as the bank holding company for PCB Bank that provides various banking products and services to small to medium-sized businesses, individuals, and professionals in Southern California. The company offers demand, savings, money market, and time deposits, as well as certificates of deposit; and trade finance, remote deposit capture, courier deposit services, positive pay services, zero balance accounts, and sweep accounts. It also provides real estate loans, including commercial and residential, Small Business Administration (SBA) property, and construction loans; commercial and industrial loans, such as commercial term and lines of credit, SBA commercial term, and SBA Paycheck Protection Program loans; and consumer loans comprising residential mortgage; and automobile loans, unsecured lines of credit, and term loans. In addition, the company offers access to account balances, online transfers, and online bill payment and electronic delivery of customer statements; and mobile banking solutions that include remote check deposit and mobile bill pay. Further, it provides automated teller machines; and banking by telephone, mail, personal appointment, debit cards, direct deposit, and cashier's checks, as well as treasury management, wire transfer, and automated clearing house services. The company operates through a network of full-service branches in Los Angeles and Orange counties, California; Carrollton and Dallas, Texas; and Englewood Cliffs and Palisade Park, New Jersey, and Bayside, New York. It also operates loan production offices in Los Angeles and Orange Counties, California; Annandale, Virginia; Atlanta, Georgia; Bellevue, Washington; Aurora, Colorado; and Carrollton, Texas. The company was formerly known as Pacific City Financial Corporation and changed its name to PCB Bancorp in July 2019. PCB Bancorp was founded in 2003 and is headquartered in Los Angeles, California.

About First Horizon

First Horizon Corporation operates as the bank holding company for First Horizon Bank that provides various financial services. The company operates through Regional Banking and Specialty Banking segments. It offers general banking services for consumers, businesses, financial institutions, and governments. The company also accepts deposits; provides underwriting services for bank-eligible securities and other fixed-income securities by financial subsidiaries; sells loans and derivatives; financial planning; and offers investment and financial advisory services. In addition, it offers mortgage banking; loan syndications; brokerage services; commercial and business banking for business enterprises, consumer banking, and private client and wealth management services; capital markets, professional commercial real estate, mortgage warehouse and asset-based lending, franchise and equipment finance, tax credit finance, energy and healthcare finance, asset management, and corporate and correspondent banking services. Further, the company provides transaction processing services including check clearing services and remittance processing, credit cards, investment, and sale of mutual fund and retail insurances, as well as trust, fiduciary, and agency services. First Horizon Corporation was founded in 1864 and is headquartered in Memphis, Tennessee.