Head to Head Comparison: American Business Bank (OTCMKTS:AMBZ) & Prosperity Bancshares (NYSE:PB)

American Business Bank (OTCMKTS:AMBZ) and Prosperity Bancshares (NYSE:PB) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Institutional and Insider Ownership

9.9% of American Business Bank shares are owned by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are owned by institutional investors. 4.2% of Prosperity Bancshares shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares American Business Bank and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Business Bank	26.10%	N/A	N/A
Prosperity Bancshares	30.28%	7.06%	1.37%

Dividends

American Business Bank pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.6%. American Business Bank pays out 17.9% of its earnings in the form of a dividend. Prosperity Bancshares pays out 42.8% 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. Prosperity Bancshares has increased its dividend for 27 consecutive years. Prosperity Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

American Business Bank has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500.

Earnings and Valuation

This table compares American Business Bank and Prosperity Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Business Bank	$183.26 million	2.87	$43.28 million	$5.58	10.56
Prosperity Bancshares	$1.19 billion	5.32	$479.39 million	$5.61	11.90

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

Analyst Ratings

This is a summary of recent ratings for American Business Bank and Prosperity Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Business Bank	0	0	0	0	0.00
Prosperity Bancshares	0	6	11	0	2.65

Prosperity Bancshares has a consensus price target of $80.21, indicating a potential upside of 20.12%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, analysts plainly believe Prosperity Bancshares is more favorable than American Business Bank.

Summary

Prosperity Bancshares beats American Business Bank on 16 of the 17 factors compared between the two stocks.

About American Business Bank

American Business Bank, a California-chartered bank, provides banking products and services to small and medium-sized firms, non-profits, business executives, and professionals in Southern California. The company offers credit and depository; treasury management; asset-based lending; SBA lending; international banking comprising money transfers, import and export commercial letters of credit, standby letters of credit, documentary and clean collections, and foreign currency exchange services; and consulting and referral services. It operates regional loan production offices located in North Orange County, Orange County, South Bay, San Fernando Valley, Riverside County, Inland Empire, and Long Beach. American Business Bank was incorporated in 1998 and is headquartered in Los Angeles, California.

About Prosperity Bancshares

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts, as well as and certificates of deposit. The company also offers 1-4 family residential mortgage, commercial real estate and multifamily residential, commercial and industrial, agricultural, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; term loans and lines of credit; and consumer durables and home equity loans, as well as loans for working capital, business expansion, and purchase of equipment and machinery. In addition, it provides internet banking, mobile banking, trust and wealth management, retail brokerage, mortgage services, and treasury management, as well as debit and credit cards. The company was incorporated in 1983 and is headquartered in Houston, Texas.