Pathfinder Bancorp (NASDAQ:PBHC) and Waterstone Financial (NASDAQ:WSBF) Financial Survey

Waterstone Financial (NASDAQ:WSBF) and Pathfinder Bancorp (NASDAQ:PBHC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Dividends

Waterstone Financial pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.8%. Waterstone Financial pays out 45.1% of its earnings in the form of a dividend. Pathfinder Bancorp pays out 33.3% 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. Pathfinder Bancorp has raised its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of current recommendations for Waterstone Financial and Pathfinder Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterstone Financial	0	0	1	0	3.00
Pathfinder Bancorp	0	1	0	0	2.00

Profitability

This table compares Waterstone Financial and Pathfinder Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterstone Financial	12.08%	6.99%	1.07%
Pathfinder Bancorp	9.09%	6.37%	0.53%

Volatility & Risk

Waterstone Financial has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500. Comparatively, Pathfinder Bancorp has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500.

Earnings and Valuation

This table compares Waterstone Financial and Pathfinder Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterstone Financial	$202.47 million	1.54	$18.69 million	$1.33	12.74
Pathfinder Bancorp	$87.92 million	0.77	$3.38 million	$1.20	11.84

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

Insider and Institutional Ownership

62.7% of Waterstone Financial shares are held by institutional investors. Comparatively, 26.7% of Pathfinder Bancorp shares are held by institutional investors. 7.4% of Waterstone Financial shares are held by insiders. Comparatively, 15.4% of Pathfinder Bancorp shares are held 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.

Summary

Waterstone Financial beats Pathfinder Bancorp on 13 of the 16 factors compared between the two stocks.

About Waterstone Financial

Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. It also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. The company was founded in 1921 and is based in Wauwatosa, Wisconsin.

About Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.