Analyzing Bank of N.T. Butterfield & Son (NYSE:NTB) and VersaBank (NASDAQ:VBNK)

VersaBank (NASDAQ:VBNK) and Bank of N.T. Butterfield & Son (NYSE:NTB) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, dividends, earnings and risk.

Earnings and Valuation

This table compares VersaBank and Bank of N.T. Butterfield & Son”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VersaBank	$217.14 million	2.13	$20.32 million	$0.65	22.25
Bank of N.T. Butterfield & Son	$815.73 million	2.99	$216.32 million	$5.28	9.72

Bank of N.T. Butterfield & Son has higher revenue and earnings than VersaBank. Bank of N.T. Butterfield & Son is trading at a lower price-to-earnings ratio than VersaBank, indicating that it is currently the more affordable of the two stocks.

Dividends

VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.5%. Bank of N.T. Butterfield & Son pays an annual dividend of $2.00 per share and has a dividend yield of 3.9%. VersaBank pays out 10.8% of its earnings in the form of a dividend. Bank of N.T. Butterfield & Son pays out 37.9% 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.

Volatility & Risk

VersaBank has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, Bank of N.T. Butterfield & Son has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.

Insider and Institutional Ownership

56.9% of VersaBank shares are held by institutional investors. Comparatively, 62.7% of Bank of N.T. Butterfield & Son shares are held by institutional investors. 1.2% of Bank of N.T. Butterfield & Son shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares VersaBank and Bank of N.T. Butterfield & Son’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
VersaBank	9.33%	7.02%	0.69%
Bank of N.T. Butterfield & Son	28.27%	21.94%	1.65%

Analyst Ratings

This is a summary of recent recommendations and price targets for VersaBank and Bank of N.T. Butterfield & Son, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VersaBank	0	4	1	0	2.20
Bank of N.T. Butterfield & Son	0	2	2	1	2.80

VersaBank currently has a consensus target price of $12.13, suggesting a potential downside of 16.09%. Bank of N.T. Butterfield & Son has a consensus target price of $50.67, suggesting a potential downside of 1.27%. Given Bank of N.T. Butterfield & Son’s stronger consensus rating and higher probable upside, analysts clearly believe Bank of N.T. Butterfield & Son is more favorable than VersaBank.

Summary

Bank of N.T. Butterfield & Son beats VersaBank on 14 of the 17 factors compared between the two stocks.

About VersaBank

VersaBank provides various banking products and services in Canada and the United States. It offers deposit products, such as web-based chequing accounts, guaranteed investment certificates, registered retirement savings plans, and tax-free savings accounts, as well as deposit insurance products. The company also provides lending services, including point of sale financing that covers purchasing loan and lease receivables from finance companies operating in various industries; commercial banking services comprising commercial real estate, public sector/infrastructure financing, and condominium financing; and residential mortgages. In addition, it offers cybersecurity services. The company was formerly known as Pacific & Western Bank of Canada and changed its name to VersaBank in May 2016. VersaBank was incorporated in 1979 and is headquartered in London, Canada.

About Bank of N.T. Butterfield & Son

The Bank of N.T. Butterfield & Son Ltd. provides community banking and wealth management business. The firm operates through the following geographical segments: Bermuda, the Cayman Islands, Channel Islands and the UK, and Other. The Bermuda and Cayman segments offer retail banking and wealth management. The Channel Islands and the UK segment refers to the retail and corporate banking and wealth management. The Other segment includes operations in the jurisdictions of The Bahamas, Canada, Mauritius, Singapore and Switzerland. The company was founded in 1858 and is headquartered in Hamilton, Bermuda.