Pacific Alliance Bank (OTCMKTS:PFBN) and FS Bancorp (NASDAQ:FSBW) Critical Survey

FS Bancorp (NASDAQ:FSBW) and Pacific Alliance Bank (OTCMKTS:PFBN) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Institutional and Insider Ownership

63.9% of FS Bancorp shares are owned by institutional investors. 12.9% of FS Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for FS Bancorp and Pacific Alliance Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS Bancorp	1	2	1	0	2.00
Pacific Alliance Bank	0	0	0	0	0.00

FS Bancorp presently has a consensus target price of $45.00, suggesting a potential upside of 3.50%. Given FS Bancorp’s stronger consensus rating and higher possible upside, research analysts plainly believe FS Bancorp is more favorable than Pacific Alliance Bank.

Profitability

This table compares FS Bancorp and Pacific Alliance Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS Bancorp	14.88%	10.86%	1.05%
Pacific Alliance Bank	N/A	N/A	N/A

Risk and Volatility

FS Bancorp has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, Pacific Alliance Bank has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500.

Dividends

FS Bancorp pays an annual dividend of $1.16 per share and has a dividend yield of 2.7%. Pacific Alliance Bank pays an annual dividend of $0.10 per share and has a dividend yield of 1.1%. FS Bancorp pays out 26.7% of its earnings in the form of a dividend. FS Bancorp has increased its dividend for 12 consecutive years. FS Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares FS Bancorp and Pacific Alliance Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS Bancorp	$219.52 million	1.47	$33.35 million	$4.34	10.02
Pacific Alliance Bank	$26.40 million	1.14	$2.30 million	N/A	N/A

FS Bancorp has higher revenue and earnings than Pacific Alliance Bank.

Summary

FS Bancorp beats Pacific Alliance Bank on 14 of the 15 factors compared between the two stocks.

About FS Bancorp

FS Bancorp, Inc. operates as a bank holding company for 1st Security Bank of Washington that provides banking and financial services to local families, local and regional businesses, and industry niches. The company operates in two segments, Commercial and Consumer Banking; and Home Lending. It offers various deposit instruments, including checking accounts, money market deposit accounts, savings accounts, and certificates of deposit. The company provides one-to-four-family residential first mortgages, second mortgage/home equity loan products, non-mortgage commercial business loans, commercial real estate loans, and construction and development loans, as well as consumer loans, which primarily include personal lines of credit, credit cards, automobile, direct home improvement, loans on deposit, and recreational loans. It operates full bank service branches and home loan production offices in suburban communities in the greater Puget Sound area, including Snohomish, King, Pierce, Jefferson, Kitsap, Clallam, Grays Harbor, and Thurston counties; and a loan production office in the market area of the Tri-Cities. FS Bancorp, Inc. was founded in 1936 and is headquartered in Mountlake Terrace, Washington.

About Pacific Alliance Bank

Pacific Alliance Bank provides commercial and consumer banking products and services for small to midsize business owners, and employees in the United States. It offers checking, money market, savings, and individual retirement accounts; and certificates of deposit. The company also provides mortgage, commercial, term, commercial real estate, construction, and SBA loans; and lines of credit. In addition, it offers personal and business online services; and casher checks, check reorder, night deposit, direct deposit, safe deposit boxes, positive pay/check reconciliation, wire, debit card, and other services. The company was founded in 2006 and is headquartered in San Gabriel, California.