Critical Contrast: PacWest Bancorp (PACW) vs. National Commerce (NCOM)

National Commerce (NASDAQ:NCOM) and PacWest Bancorp (NASDAQ:PACW) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitability.

Insider & Institutional Ownership

45.4% of National Commerce shares are held by institutional investors. Comparatively, 87.4% of PacWest Bancorp shares are held by institutional investors. 14.2% of National Commerce shares are held by company insiders. Comparatively, 1.0% of PacWest Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for National Commerce and PacWest Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Commerce 0 2 0 0 2.00
PacWest Bancorp 0 6 5 2 2.69

National Commerce presently has a consensus price target of $46.50, indicating a potential upside of 14.11%. PacWest Bancorp has a consensus price target of $55.36, indicating a potential upside of 13.54%. Given National Commerce’s higher probable upside, analysts plainly believe National Commerce is more favorable than PacWest Bancorp.

Profitability

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

Net Margins Return on Equity Return on Assets
National Commerce 18.14% 7.97% 1.25%
PacWest Bancorp 33.41% 8.70% 1.74%

Volatility & Risk

National Commerce has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, PacWest Bancorp has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500.

Valuation and Earnings

This table compares National Commerce and PacWest Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Commerce $129.83 million 6.47 $20.06 million $1.97 20.69
PacWest Bancorp $1.18 billion 5.05 $357.81 million $2.92 16.70

PacWest Bancorp has higher revenue and earnings than National Commerce. PacWest Bancorp is trading at a lower price-to-earnings ratio than National Commerce, 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 4.9%. National Commerce does not pay a dividend. PacWest Bancorp pays out 82.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PacWest Bancorp has raised its dividend for 7 consecutive years.

Summary

PacWest Bancorp beats National Commerce on 13 of the 18 factors compared between the two stocks.

National Commerce Company Profile

National Commerce Corporation operates as the bank holding company for National Bank of Commerce that provides various financial services to businesses, business owners, and professionals. The company offers deposit products, including interest and noninterest-bearing demand deposits, money market accounts, interest-bearing transaction accounts, savings and time deposits, checking accounts, and certificates of deposit, as well as negotiable orders of withdrawal accounts. It also provides real estate loans, such as commercial real estate term, residential mortgage, and construction and land development loans, as well as home equity lines of credit secured by residential property; commercial and industrial loans; and consumer loans to purchase automobiles and other consumer durable goods. In addition, the company provides factoring, invoicing, collection, and accounts receivable management services to transportation companies, and automotive parts and service providers; and electronic banking services, including commercial and retail online banking, automated bill payment, mobile banking, and remote deposit capture. The company offers its services through 7 full-service banking offices in Birmingham, Huntsville, Auburn-Opelika, and Baldwin County, Alabama; 21 full-service banking offices in central and northeast Florida, including United Legacy Bank, Reunion Bank of Florida, Patriot Bank, and FirstAtlantic Bank names; and 2 full-service banking offices and a loan production office in Atlanta, Georgia. National Commerce Corporation was founded in 2004 and is headquartered in Birmingham, Alabama.

PacWest Bancorp Company Profile

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 February 1, 2018, it had 76 full-service branches located throughout the state of California; and one 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.

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