Critical Review: NASB Financial (OTCMKTS:NASB) versus ServisFirst Bancshares (NYSE:SFBS)

NASB Financial (OTCMKTS:NASB) and ServisFirst Bancshares (NYSE:SFBS) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Dividends

NASB Financial pays an annual dividend of $1.40 per share and has a dividend yield of 3.5%. ServisFirst Bancshares pays an annual dividend of $1.52 per share and has a dividend yield of 2.0%. NASB Financial pays out 30.9% of its earnings in the form of a dividend. ServisFirst Bancshares pays out 28.0% 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. ServisFirst Bancshares has increased its dividend for 10 consecutive years.

Institutional & Insider Ownership

67.3% of ServisFirst Bancshares shares are owned by institutional investors. 47.0% of NASB Financial shares are owned by company insiders. Comparatively, 6.5% of ServisFirst Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares NASB Financial and ServisFirst Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NASB Financial	16.14%	7.65%	1.11%
ServisFirst Bancshares	28.80%	16.95%	1.74%

Earnings & Valuation

This table compares NASB Financial and ServisFirst Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NASB Financial	$178.01 million	1.61	$28.72 million	$4.53	8.89
ServisFirst Bancshares	$582.95 million	7.18	$276.60 million	$5.42	14.14

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

Analyst Recommendations

This is a summary of current ratings for NASB Financial and ServisFirst Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NASB Financial	0	0	0	0	0.00
ServisFirst Bancshares	0	2	2	1	2.80

ServisFirst Bancshares has a consensus target price of $94.33, suggesting a potential upside of 23.13%. Given ServisFirst Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe ServisFirst Bancshares is more favorable than NASB Financial.

Risk and Volatility

NASB Financial has a beta of 0.03, meaning that its share price is 97% less volatile than the S&P 500. Comparatively, ServisFirst Bancshares has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Summary

ServisFirst Bancshares beats NASB Financial on 16 of the 18 factors compared between the two stocks.

About NASB Financial

NASB Financial, Inc. operates as a unitary thrift holding company for North American Savings Bank, F.S.B. that provides various banking products and services in the United States. The company offers checking, savings, money market, and certificate of deposit accounts. It also mortgages and refinancing products, including conventional, veterans administration, federal housing administration, jumbo, and IRA residential real-estate loans. In addition, the company provides commercial real estate development and commercial loans, such as multifamily, retail, single-tenant, multi-tenant, office, industrial, and other loans; investment property loans; and construction and development loans. The company was founded in 1927 and is based in Grandview, Missouri.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.