Financial Contrast: TriCo Bancshares (TCBK) vs. Preferred Bank (PFBC)

TriCo Bancshares (NASDAQ: TCBK) and Preferred Bank (NASDAQ:PFBC) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Earnings and Valuation

This table compares TriCo Bancshares and Preferred Bank’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TriCo Bancshares $231.42 million 3.95 $40.55 million $2.08 19.12
Preferred Bank $163.42 million 5.14 $43.39 million $3.42 18.63

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

Dividends

TriCo Bancshares pays an annual dividend of $0.68 per share and has a dividend yield of 1.7%. Preferred Bank pays an annual dividend of $0.88 per share and has a dividend yield of 1.4%. TriCo Bancshares pays out 32.7% of its earnings in the form of a dividend. Preferred Bank pays out 25.7% 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.

Profitability

This table compares TriCo Bancshares and Preferred Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TriCo Bancshares 17.99% 10.06% 1.08%
Preferred Bank 28.88% 16.74% 1.53%

Risk & Volatility

TriCo Bancshares has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Preferred Bank has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Institutional & Insider Ownership

71.1% of TriCo Bancshares shares are owned by institutional investors. Comparatively, 86.9% of Preferred Bank shares are owned by institutional investors. 14.2% of TriCo Bancshares 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.

Analyst Ratings

This is a summary of current recommendations and price targets for TriCo Bancshares and Preferred Bank, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TriCo Bancshares 0 1 4 0 2.80
Preferred Bank 0 0 4 2 3.33

TriCo Bancshares presently has a consensus target price of $43.50, suggesting a potential upside of 9.38%. Preferred Bank has a consensus target price of $72.50, suggesting a potential upside of 13.76%. Given Preferred Bank’s stronger consensus rating and higher probable upside, analysts plainly believe Preferred Bank is more favorable than TriCo Bancshares.

Summary

Preferred Bank beats TriCo Bancshares on 12 of the 16 factors compared between the two stocks.

About TriCo Bancshares

TriCo Bancshares operates as a bank holding company for Tri Counties Bank that provides commercial banking services to retail customers and small to medium-sized businesses. It accepts demand, savings, and money market accounts, as well as time deposits; and provides residential and commercial real estate mortgage, consumer, commercial, agricultural, and real estate construction loans. The company also offers installment note collection services; issues cashier's checks; sells travelers checks; and provides safe deposit boxes and other customary banking services. In addition, it provides independent financial and broker-dealer services. The company operates 57 traditional branches, 9 in-store branches, and 2 loan production offices in northern and central California. TriCo Bancshares was founded in 1974 and is headquartered in Chico, California.

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 in the United States. The company's deposit products include checking, savings, negotiable order of withdrawal, 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 and term loans for capital expenditures; and commercial and export letters of credit, import lines of credit, documentary collections, international wire transfers, export financing products, bills purchase programs, and acceptances/trust receipt financing products, as well as standby letters of credit and foreign exchange services for importers and exporters. In addition, it offers various high-wealth banking services to wealthy individuals residing in the Pacific Rim area with residences, real estate investments, or businesses in Southern California. Further, it provides various banking services to physicians, accountants, attorneys, business managers, and other professionals; and safe deposit boxes, account reconciliation, courier service, and cash management services to the manufacturing, service, and distribution companies. Additionally, it offers remote deposit capture, and Internet and mobile banking services. As of December 31, 2017, it had 13 full-service branch offices in Alhambra, Arcadia, Century City, City of Industry, Diamond Bar, Los Angeles, Pico Rivera, San Francisco, Tarzana, Torrance, Anaheim, and Irvine, California; and Flushing, New York. The company was founded in 1991 and is headquartered in Los Angeles, California.

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