Head-To-Head Contrast: Columbia Banking System (NASDAQ:COLB) versus Arrow Financial (NASDAQ:AROW)

Columbia Banking System (NASDAQ:COLB) and Arrow Financial (NASDAQ:AROW) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Columbia Banking System and Arrow Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Columbia Banking System	0	9	5	0	2.36
Arrow Financial	0	3	3	0	2.50

Columbia Banking System currently has a consensus price target of $33.23, indicating a potential upside of 18.83%. Arrow Financial has a consensus price target of $41.62, indicating a potential upside of 14.49%. Given Columbia Banking System’s higher possible upside, equities research analysts plainly believe Columbia Banking System is more favorable than Arrow Financial.

Dividends

Columbia Banking System pays an annual dividend of $1.48 per share and has a dividend yield of 5.3%. Arrow Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. Columbia Banking System pays out 59.0% of its earnings in the form of a dividend. Arrow Financial pays out 38.7% 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. Columbia Banking System has increased its dividend for 4 consecutive years and Arrow Financial has increased its dividend for 7 consecutive years.

Profitability

This table compares Columbia Banking System and Arrow Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Columbia Banking System	19.96%	11.33%	1.31%
Arrow Financial	20.56%	12.13%	1.17%

Earnings & Valuation

This table compares Columbia Banking System and Arrow Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Columbia Banking System	$3.21 billion	2.46	$550.00 million	$2.51	11.14
Arrow Financial	$242.58 million	2.78	$43.95 million	$3.10	11.73

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

Insider and Institutional Ownership

92.5% of Columbia Banking System shares are owned by institutional investors. Comparatively, 46.7% of Arrow Financial shares are owned by institutional investors. 0.6% of Columbia Banking System shares are owned by company insiders. Comparatively, 3.5% of Arrow Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Columbia Banking System has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Arrow Financial has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.

Summary

Arrow Financial beats Columbia Banking System on 10 of the 17 factors compared between the two stocks.

About Columbia Banking System

Columbia Banking System, Inc. operates as the holding company of Umpqua Bank that provides banking, private banking, mortgage, and other financial services in the United States. The company offers deposit products, including business, non-interest bearing checking, interest-bearing checking and savings, money market, and certificate of deposit accounts; and insured cash sweep and other investment sweep solutions. It also provides commercial lending products, such as commercial lines of credit and term loans, accounts receivable and inventory financing, international trade finance, commercial property loans, multifamily loans, equipment loans, commercial equipment leases, real estate construction loans and permanent financing, and small business administration program financing, as well as capital markets. In addition, the company offers wealth management comprising financial planning, investment, trust, and insurance; treasury management, which includes digital and mobile banking solutions, ACH, wires, positive pay, remote deposit capture, integrated payments, integrated receivables, lockbox, cash vault, real-time payments, commercial card, and foreign exchange and international banking related products, as well as merchant services; and brokerage services, residential real estate loans and consumer loans. It serves its products to corporate, institutional, small business, and individual customers. The company was founded in 1953 and is headquartered in Tacoma, Washington.

About Arrow Financial

Arrow Financial Corporation, a bank holding company, provides commercial and consumer banking, and financial products and services. The company’s deposit products include demand deposits, interest-bearing checking accounts, savings deposits, time deposits, and other time deposits. Its lending activities comprise commercial loans, such as term loans, time notes, and lines of credit; and commercial real estate loans to finance real estate purchases, refinancing, expansions, and enhancement to commercial properties, as well as commercial construction and land development loans to finance projects. The company’s lending activities also include consumer installment loans to finance personal expenditures, personal lines of credit, overdraft protection, and automobile loans; and residential real estate loans, fixed home equity loans, and home equity lines of credit for consumers to finance home improvements, debt consolidation, education, and other uses. In addition, it maintains an indirect lending program. Further, the company provides retirement planning, trust, and estate administration services for individuals, as well as pension, profit-sharing, and employee benefit plan administration services for corporations. Additionally, it offers insurance agency services comprising group health care policies and life insurance, and property and casualty insurance products; and investment advisory services to its proprietary mutual funds, as well as holds a real estate investment trust. It operates in the northeastern region of New York State in Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany, and Schenectady counties. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.