Reviewing Prosperity Bancshares (NYSE:PB) and BANCORP 34 (OTCMKTS:BCTF)

BANCORP 34 (OTCMKTS:BCTF) and Prosperity Bancshares (NYSE:PB) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Volatility & Risk

BANCORP 34 has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Dividends

BANCORP 34 pays an annual dividend of $0.28 per share and has a dividend yield of 2.1%. Prosperity Bancshares pays an annual dividend of $2.40 per share and has a dividend yield of 3.6%. BANCORP 34 pays out 31.8% 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 raised 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.

Earnings & Valuation

This table compares BANCORP 34 and Prosperity Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BANCORP 34	$56.34 million	1.63	$1.69 million	$0.88	15.34
Prosperity Bancshares	$1.19 billion	5.33	$479.39 million	$5.61	11.92

Prosperity Bancshares has higher revenue and earnings than BANCORP 34. Prosperity Bancshares is trading at a lower price-to-earnings ratio than BANCORP 34, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

6.5% of BANCORP 34 shares are held by institutional investors. Comparatively, 80.7% of Prosperity Bancshares shares are held by institutional investors. 7.4% of BANCORP 34 shares are held by insiders. Comparatively, 4.2% of Prosperity Bancshares shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares BANCORP 34 and Prosperity Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BANCORP 34	11.27%	4.26%	0.40%
Prosperity Bancshares	30.28%	7.06%	1.37%

Analyst Ratings

This is a summary of current ratings and price targets for BANCORP 34 and Prosperity Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BANCORP 34	0	0	0	0	0.00
Prosperity Bancshares	0	6	11	0	2.65

Prosperity Bancshares has a consensus target price of $80.50, suggesting a potential upside of 20.35%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than BANCORP 34.

Summary

Prosperity Bancshares beats BANCORP 34 on 14 of the 17 factors compared between the two stocks.

About BANCORP 34

Bancorp 34, Inc. operates as the holding company for Bank 34 that offers various banking products and services to individuals and businesses in the United States. It accepts various deposit products, such as savings accounts, checking accounts, money market accounts, demand and time deposits, NOW accounts, and individual retirement accounts, as well as certificates of deposit. The company also provides term, working capital, construction, USDA, small business administration, equipment, assisted living and skilled nursing, renewable energy and solar equipment, and commercial real estate loans; and small to medium size business and business acquisitions financing; lines of credit; multi-family finance; and employee stock ownership plans, HOA lending, and investor pools of single family rentals. In addition, it offers credit and debit cards; safe deposit boxes; treasury management products; and merchant card processing, cash management, e-banking, mobile and online banking, bill payment, and merchant capture services. The company operates through its network of full-service branches in Scottsdale and Arizona, as well as Alamogordo and Las Cruces, New Mexico. Bancorp 34, Inc. was founded in 1934 and is headquartered in Scottsdale, Arizona.

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.