Critical Contrast: PacWest Bancorp (NASDAQ:PACW) versus BancFirst (NASDAQ:BANF)

PacWest Bancorp (NASDAQ:PACW) and BancFirst (NASDAQ:BANF) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, risk, earnings, dividends, valuation and profitability.

Earnings & Valuation

This table compares PacWest Bancorp and BancFirst’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PacWest Bancorp $1.31 billion 3.34 $465.34 million $3.72 9.95
BancFirst $428.40 million 4.80 $125.81 million $3.82 16.47

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

Dividends

PacWest Bancorp pays an annual dividend of $2.40 per share and has a dividend yield of 6.5%. BancFirst pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. PacWest Bancorp pays out 64.5% of its earnings in the form of a dividend. BancFirst pays out 33.5% 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. PacWest Bancorp has increased its dividend for 8 consecutive years and BancFirst has increased its dividend for 17 consecutive years.

Profitability

This table compares PacWest Bancorp and BancFirst’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PacWest Bancorp 33.80% 9.61% 1.77%
BancFirst 28.48% 14.27% 1.72%

Volatility and Risk

PacWest Bancorp has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500. Comparatively, BancFirst has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Institutional and Insider Ownership

86.3% of PacWest Bancorp shares are owned by institutional investors. Comparatively, 35.1% of BancFirst shares are owned by institutional investors. 1.2% of PacWest Bancorp shares are owned by insiders. Comparatively, 38.3% of BancFirst shares are owned 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.

Analyst Recommendations

This is a breakdown of current ratings for PacWest Bancorp and BancFirst, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PacWest Bancorp 0 4 3 0 2.43
BancFirst 0 1 0 0 2.00

PacWest Bancorp presently has a consensus target price of $41.50, suggesting a potential upside of 12.16%. Given PacWest Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe PacWest Bancorp is more favorable than BancFirst.

Summary

PacWest Bancorp beats BancFirst on 10 of the 17 factors compared between the two stocks.

About PacWest Bancorp

PacWest Bancorp operates as the holding company for Pacific Western Bank, a state chartered bank that provides commercial banking products and services. The company accepts demand, money market, and time deposits. It also provides real estate loans to professional developers and real estate investors for the acquisition, refinancing, and construction of commercial real estate properties; small business administration loans; asset-based loans for working capital needs; venture capital loans to support the start-up operations of entrepreneurial companies; and equipment-secured loans and leases. In addition, the company offers consumer loans comprising personal loans, auto loans, home equity lines of credit, revolving lines of credit, and other loans. Further, it provides international banking and multi-state deposit services; money market sweep products; investment advisory and asset management services; treasury and cash management services; telephone banking, and online and mobile banking services; and foreign exchange and ATM services. The company offers its products and services to small and mid-sized companies, entrepreneurial businesses and their venture capital, private equity investors, professionals, and other individuals. As of January 31, 2019, it had 74 full-service branches located throughout the state of California; and 1 branch in Durham, North Carolina. The company was formerly known as First Community Bancorp and changed its name to PacWest Bancorp in April 2008. PacWest Bancorp was founded in 1999 and is headquartered in Beverly Hills, California.

About BancFirst

BancFirst Corporation operates as the bank holding company for BancFirst that provides a range of commercial banking services to retail customers, and small to medium-sized businesses. It operates through Metropolitan Banks, Community Banks, and Other Financial Services segments. The company offers checking accounts, negotiable order of withdrawal accounts, savings accounts, money market accounts, sweep accounts, club accounts, individual retirement accounts, and certificates of deposit, as well as overdraft protection and auto draft services. It also provides commercial, financial, and other loans for working capital, facilities acquisition or expansion, purchase of equipment, and other needs; construction, farmland, one-to-four family residence, multifamily residential property, and commercial real estate loans; and loans to finance purchases of consumer goods, such as automobiles, boats, household goods, vacations, and education. In addition, the company engages in the investment management and administration of trusts for individuals, corporations, and employee benefit plans, as well as bond trustee and paying agent business for various Oklahoma municipalities and governmental entities; and provision of item processing, research, and other correspondent banking services for financial institutions and governmental units. Further, it is involved in real estate investment and insurance agency services; and providing funds transfer, collection, safe deposit box, cash management, retail brokerage, and other services for individual and corporate customers. The company serves customers in non-metropolitan trade centers and cities in the metropolitan statistical areas of Oklahoma. It operates through 107 banking locations serving 58 communities in Oklahoma. The company was formerly known as United Community Corporation and changed its name to BancFirst Corporation in November 1988. BancFirst Corporation was incorporated in 1984 and is based in Oklahoma City, Oklahoma.

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