Western Alliance Bancorporation (NYSE:WAL) vs. Preferred Bank (NASDAQ:PFBC) Head-To-Head Analysis

Preferred Bank (NASDAQ:PFBC) and Western Alliance Bancorporation (NYSE:WAL) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, institutional ownership and earnings.

Risk and Volatility

Preferred Bank has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Preferred Bank	26.41%	17.31%	1.82%
Western Alliance Bancorporation	18.04%	13.33%	1.10%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Preferred Bank and Western Alliance Bancorporation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Preferred Bank	0	4	3	0	2.43
Western Alliance Bancorporation	0	5	10	0	2.67

Preferred Bank presently has a consensus target price of $100.50, indicating a potential upside of 6.87%. Western Alliance Bancorporation has a consensus target price of $93.27, indicating a potential upside of 19.54%. Given Western Alliance Bancorporation’s stronger consensus rating and higher possible upside, analysts plainly believe Western Alliance Bancorporation is more favorable than Preferred Bank.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Preferred Bank	$505.97 million	2.68	$133.63 million	$10.38	9.06
Western Alliance Bancorporation	$3.47 billion	2.47	$969.00 million	$8.73	8.94

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

Insider & Institutional Ownership

72.8% of Preferred Bank shares are owned by institutional investors. Comparatively, 79.2% of Western Alliance Bancorporation shares are owned by institutional investors. 2.8% of Western Alliance Bancorporation shares are owned by 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.

Dividends

Preferred Bank pays an annual dividend of $3.20 per share and has a dividend yield of 3.4%. Western Alliance Bancorporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.2%. Preferred Bank pays out 30.8% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 19.2% 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. Preferred Bank has raised its dividend for 5 consecutive years and Western Alliance Bancorporation has raised its dividend for 5 consecutive years.

Summary

Western Alliance Bancorporation beats Preferred Bank on 9 of the 16 factors compared between the two stocks.

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.

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.