Reviewing Prosperity Bancshares (NYSE:PB) & Pinnacle Bank (OTCMKTS:PBNK)

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prosperity Bancshares	$1.74 billion	3.96	$542.84 million	$5.73	12.66
Pinnacle Bank	$50.63 million	2.03	$5.45 million	$0.91	18.97

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Prosperity Bancshares and Pinnacle Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prosperity Bancshares	1	7	7	0	2.40
Pinnacle Bank	0	0	0	0	0.00

Prosperity Bancshares presently has a consensus target price of $78.77, indicating a potential upside of 8.60%. Given Prosperity Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Prosperity Bancshares is more favorable than Pinnacle Bank.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prosperity Bancshares	31.22%	7.11%	1.40%
Pinnacle Bank	10.76%	5.25%	0.61%

Insider & Institutional Ownership

80.7% of Prosperity Bancshares shares are held by institutional investors. Comparatively, 8.4% of Pinnacle Bank shares are held by institutional investors. 4.2% of Prosperity Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Prosperity Bancshares has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500. Comparatively, Pinnacle Bank has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Summary

Prosperity Bancshares beats Pinnacle Bank on 13 of the 14 factors compared between the two stocks.

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.

About Pinnacle Bank

Pinnacle Bank, a commercial bank, provides various depository and credit services in Santa Clara, San Benito, and Monterey counties. The company offers checking, savings, money market, sweep, and individual retirement accounts, as well as certificates of deposit and certificates of deposit account registry services. It also provides home equity lines of credit and single family home construction loans; and loans and lines of credit, letters of credit, commercial real estate, and government assisted loans, as well as credit cards. In addition, the company offers automated teller machine cards/debit cards, debit card protection products, and safe deposit boxes; cash management products, such as online and mobile banking, online bill payment, mobile check deposit, automated clearing house (ACH) origination, remote deposit capture, night depository box, positive pay, ACH fraud filter, merchant card processing, wire transfer, and foreign currency services; and asset based lending covering accounts receivable financing, factoring, and purchase order financing services. It serves individual and business customers, as well as nonprofit organizations in Morgan Hill, Gilroy, Salinas, and Campbell. Pinnacle Bank was founded in 2006 and is headquartered in Gilroy, California.