Pacific Premier Bancorp (NASDAQ: TOWN) and TowneBank (NASDAQ:TOWN) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitability, risk, institutional ownership and valuation.

Insider & Institutional Ownership

67.9% of Pacific Premier Bancorp shares are owned by institutional investors. Comparatively, 43.2% of TowneBank shares are owned by institutional investors. 4.1% of Pacific Premier Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

TowneBank pays an annual dividend of $0.64 per share and has a dividend yield of 2.0%. Pacific Premier Bancorp does not pay a dividend. TowneBank pays out 41.0% of its earnings in the form of a dividend. TowneBank has raised its dividend for 6 consecutive years.

Risk and Volatility

Pacific Premier Bancorp has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, TowneBank has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.

Earnings and Valuation

This table compares Pacific Premier Bancorp and TowneBank’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pacific Premier Bancorp $301.12 million 7.99 $60.10 million $1.77 21.78
TowneBank $493.23 million 4.76 $87.66 million $1.56 20.90

TowneBank has higher revenue and earnings than Pacific Premier Bancorp. TowneBank is trading at a lower price-to-earnings ratio than Pacific Premier Bancorp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Pacific Premier Bancorp and TowneBank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pacific Premier Bancorp 24.60% 8.61% 1.33%
TowneBank 18.11% 9.46% 1.27%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Pacific Premier Bancorp and TowneBank, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pacific Premier Bancorp 0 1 1 0 2.50
TowneBank 0 4 1 0 2.20

Pacific Premier Bancorp currently has a consensus target price of $49.00, indicating a potential upside of 27.11%. TowneBank has a consensus target price of $33.67, indicating a potential upside of 3.27%. Given Pacific Premier Bancorp’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Pacific Premier Bancorp is more favorable than TowneBank.

Summary

Pacific Premier Bancorp beats TowneBank on 10 of the 16 factors compared between the two stocks.

About Pacific Premier Bancorp

Pacific Premier Bancorp, Inc. operates as the bank holding company for Pacific Premier Bank that provides banking services to businesses, professionals, real estate investors, and non-profit organizations. Its deposit products include checking, money market, and savings accounts. The company's loan portfolio comprises commercial business loans, lines of credit, small business administration loans, commercial real estate loans, agribusiness loans, home equity lines of credit, construction loans, farmland, and consumer loans, as well as multi-family residential, one-to-four family real estate, commercial and industrial, and franchise lending; warehouse repurchase facilities; and credit facilities to Home Owners' Associations (HOA) and HOA management companies. It also offers cash management, electronic banking, and online bill payment services. The company conducts business through 33 full-service depository branches in the counties of Orange, Los Angeles, Riverside, San Bernardino, San Diego, San Luis Obispo, and Santa Barbara, California, as well as Clark County, Nevada. Pacific Premier Bancorp, Inc. was founded in 1983 and is headquartered in Irvine, California.

About TowneBank

TowneBank provides retail and commercial banking services for small- and medium-size businesses, professionals, and individuals. The company operates in three segments: Banking, Realty, and Insurance. It accepts various deposits products, including demand deposits, negotiable order of withdrawal accounts, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate construction and acquisition loans. In addition, it provides other services, such as safe deposit boxes, cash management services, travelers' checks, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as Internet, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; asset management and commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options, such as alternative investments, annuities, margin accounts, convertible bonds, and pension and profit sharing plans. Additionally, it provides residential real estate, relocation, property management, vacations rental, and title and settlement services; and originates residential mortgage loans. The company offers life, property, casualty, and vehicle insurance services; travel, medical, and baggage protection insurance for travelers; and employee benefit programs, such as medical, dental, vision, and disability insurance. As of February 28, 2018, it operated 40 banking offices in Virginia and North Carolina. TowneBank was founded in 1998 and is based in Portsmouth, Virginia.

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