Pathfinder Bancorp (NASDAQ:PBHC – Get Free Report) and VersaBank (NASDAQ:VBNK – Get Free Report) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.
Profitability
This table compares Pathfinder Bancorp and VersaBank’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Pathfinder Bancorp | -1.70% | -1.08% | -0.09% |
| VersaBank | 9.92% | 8.66% | 0.75% |
Valuation & Earnings
This table compares Pathfinder Bancorp and VersaBank”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Pathfinder Bancorp | $79.15 million | 1.06 | -$1.93 million | ($0.21) | -81.48 |
| VersaBank | $217.14 million | 3.32 | $20.32 million | $0.76 | 29.33 |
VersaBank has higher revenue and earnings than Pathfinder Bancorp. Pathfinder Bancorp is trading at a lower price-to-earnings ratio than VersaBank, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
26.7% of Pathfinder Bancorp shares are held by institutional investors. Comparatively, 56.9% of VersaBank shares are held by institutional investors. 15.7% of Pathfinder Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Risk & Volatility
Pathfinder Bancorp has a beta of 0.13, indicating that its share price is 87% less volatile than the S&P 500. Comparatively, VersaBank has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings for Pathfinder Bancorp and VersaBank, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Pathfinder Bancorp | 0 | 1 | 0 | 0 | 2.00 |
| VersaBank | 0 | 2 | 2 | 0 | 2.50 |
VersaBank has a consensus price target of $24.00, indicating a potential upside of 7.67%. Given VersaBank’s stronger consensus rating and higher probable upside, analysts plainly believe VersaBank is more favorable than Pathfinder Bancorp.
Dividends
Pathfinder Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.3%. VersaBank pays an annual dividend of $0.07 per share and has a dividend yield of 0.3%. Pathfinder Bancorp pays out -190.5% of its earnings in the form of a dividend. VersaBank pays out 9.2% 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. Pathfinder Bancorp has increased its dividend for 1 consecutive years. Pathfinder Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
VersaBank beats Pathfinder Bancorp on 13 of the 17 factors compared between the two stocks.
About Pathfinder Bancorp
Pathfinder Bancorp, Inc. operates as a bank holding company for Pathfinder Bank that provides various banking and financial products and services in New York. The company's deposit products include checking, savings, and money market deposit accounts; certificates of deposit; and demand and time deposits. Its loan portfolio comprises commercial real estate, commercial, residential real estate, construction, and tax-exempt loans; home equity loans and junior liens; and consumer loans comprising automobile, recreational vehicles, and unsecured personal loans, as well as unsecured lines of credit and loans secured by deposit accounts. The company is also involved in the property, casualty, and life insurance brokerage business. It primarily serves individuals, families, small to mid-size businesses, and municipalities. The company was founded in 1859 and is headquartered in Oswego, New York.
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.
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