Westamerica Bancorporation (NASDAQ:WABC) versus Provident Financial Services (NYSE:PFS) Critical Survey

Westamerica Bancorporation (NASDAQ:WABC) and Provident Financial Services (NYSE:PFS) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Insider and Institutional Ownership

81.9% of Westamerica Bancorporation shares are held by institutional investors. Comparatively, 72.0% of Provident Financial Services shares are held by institutional investors. 5.9% of Westamerica Bancorporation shares are held by company insiders. Comparatively, 3.0% of Provident Financial Services shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Westamerica Bancorporation and Provident Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westamerica Bancorporation	0	1	1	0	2.50
Provident Financial Services	0	2	4	1	2.86

Westamerica Bancorporation currently has a consensus target price of $65.00, suggesting a potential upside of 7.65%. Provident Financial Services has a consensus target price of $26.79, suggesting a potential upside of 15.88%. Given Provident Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Provident Financial Services is more favorable than Westamerica Bancorporation.

Dividends

Westamerica Bancorporation pays an annual dividend of $1.92 per share and has a dividend yield of 3.2%. Provident Financial Services pays an annual dividend of $0.96 per share and has a dividend yield of 4.2%. Westamerica Bancorporation pays out 41.4% of its earnings in the form of a dividend. Provident Financial Services pays out 40.3% 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. Westamerica Bancorporation has increased its dividend for 34 consecutive years. Provident Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Westamerica Bancorporation and Provident Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westamerica Bancorporation	$271.77 million	5.13	$116.17 million	$4.64	13.01
Provident Financial Services	$1.38 billion	2.18	$291.16 million	$2.38	9.71

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

Profitability

This table compares Westamerica Bancorporation and Provident Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westamerica Bancorporation	41.63%	12.80%	1.89%
Provident Financial Services	21.73%	10.82%	1.22%

Risk and Volatility

Westamerica Bancorporation has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Provident Financial Services has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500.

About Westamerica Bancorporation

Westamerica Bancorporation operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers. The company accepts various deposit products, including retail savings and checking accounts, as well as certificates of deposit. Its loan portfolio includes commercial, commercial and residential real estate, real estate construction, and consumer installment loans, as well as indirect automobile loans. The company was formerly known as Independent Bankshares Corporation and changed its name to Westamerica Bancorporation in 1983. The company was founded in 1884 and is headquartered in San Rafael, California.

About Provident Financial Services

Provident Financial Services, Inc. operates as the bank holding company for Provident Bank that provides various banking products and services to individuals, families, and businesses in the United States. Its deposit products include savings, checking, interest-bearing checking, money market deposit, and certificate of deposit accounts, as well as IRA products. The company's loan portfolio comprises commercial real estate loans that are secured by properties, such as multi-family apartment buildings, office buildings, retail and industrial properties, and office buildings; commercial business loans; fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate properties; commercial construction loans; and consumer loans consisting of home equity loans, home equity lines of credit, personal loans and unsecured lines of credit, and auto and recreational vehicle loans. It also offers cash management, remote deposit capture, payroll origination, escrow account management, and online and mobile banking services; and business credit cards. In addition, the company provides wealth management services comprising investment management, trust and estate administration, financial planning, and tax compliance and planning. Further, it sells insurance and investment products, including annuities; operates as a real estate investment trust for acquiring mortgage loans and other real estate related assets; and manages and sells real estate properties acquired through foreclosure. The company was founded in 1839 and is headquartered in Jersey City, New Jersey.