Comparing Columbia Banking System (NASDAQ:COLB) & Arrow Financial (NASDAQ:AROW)

Arrow Financial (NASDAQ:AROW) and Columbia Banking System (NASDAQ:COLB) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Earnings and Valuation

This table compares Arrow Financial and Columbia Banking System”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arrow Financial	$242.58 million	2.78	$43.95 million	$3.10	11.73
Columbia Banking System	$3.21 billion	2.46	$550.00 million	$2.51	11.14

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

Profitability

This table compares Arrow Financial and Columbia Banking System’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arrow Financial	20.56%	12.13%	1.17%
Columbia Banking System	19.96%	11.33%	1.31%

Dividends

Arrow Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. Columbia Banking System pays an annual dividend of $1.48 per share and has a dividend yield of 5.3%. Arrow Financial pays out 38.7% of its earnings in the form of a dividend. Columbia Banking System pays out 59.0% 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. Arrow Financial has increased its dividend for 7 consecutive years and Columbia Banking System has increased its dividend for 4 consecutive years.

Volatility & Risk

Arrow Financial has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Columbia Banking System has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Institutional & Insider Ownership

46.7% of Arrow Financial shares are held by institutional investors. Comparatively, 92.5% of Columbia Banking System shares are held by institutional investors. 3.5% of Arrow Financial shares are held by company insiders. Comparatively, 0.6% of Columbia Banking System shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Arrow Financial and Columbia Banking System, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arrow Financial	0	3	3	0	2.50
Columbia Banking System	0	9	5	0	2.36

Arrow Financial presently has a consensus target price of $41.62, suggesting a potential upside of 14.49%. Columbia Banking System has a consensus target price of $33.23, suggesting a potential upside of 18.83%. Given Columbia Banking System’s higher possible upside, analysts clearly believe Columbia Banking System is more favorable than Arrow Financial.

Summary

Arrow Financial beats Columbia Banking System on 10 of the 17 factors compared between the two stocks.

About Arrow Financial

Arrow Financial Corporation, a bank holding company, provides commercial and consumer banking, and financial products and services. The company’s deposit products include demand deposits, interest-bearing checking accounts, savings deposits, time deposits, and other time deposits. Its lending activities comprise commercial loans, such as term loans, time notes, and lines of credit; and commercial real estate loans to finance real estate purchases, refinancing, expansions, and enhancement to commercial properties, as well as commercial construction and land development loans to finance projects. The company’s lending activities also include consumer installment loans to finance personal expenditures, personal lines of credit, overdraft protection, and automobile loans; and residential real estate loans, fixed home equity loans, and home equity lines of credit for consumers to finance home improvements, debt consolidation, education, and other uses. In addition, it maintains an indirect lending program. Further, the company provides retirement planning, trust, and estate administration services for individuals, as well as pension, profit-sharing, and employee benefit plan administration services for corporations. Additionally, it offers insurance agency services comprising group health care policies and life insurance, and property and casualty insurance products; and investment advisory services to its proprietary mutual funds, as well as holds a real estate investment trust. It operates in the northeastern region of New York State in Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany, and Schenectady counties. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.

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.