Financial Review: Provident Financial (PROV) & Cortland Bancorp (CLDB)

Provident Financial (NASDAQ:PROV) and Cortland Bancorp (OTCMKTS:CLDB) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Profitability

This table compares Provident Financial and Cortland Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Provident Financial 6.63% 5.37% 0.55%
Cortland Bancorp 21.28% 13.13% 1.18%

Dividends

Provident Financial pays an annual dividend of $0.56 per share and has a dividend yield of 3.2%. Cortland Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. Provident Financial pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Provident Financial has increased its dividend for 7 consecutive years. Provident Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Provident Financial has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, Cortland Bancorp has a beta of 0.17, indicating that its share price is 83% less volatile than the S&P 500.

Institutional and Insider Ownership

56.6% of Provident Financial shares are owned by institutional investors. Comparatively, 1.3% of Cortland Bancorp shares are owned by institutional investors. 14.4% of Provident Financial shares are owned by company insiders. Comparatively, 9.5% of Cortland Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for Provident Financial and Cortland Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Provident Financial 0 2 0 0 2.00
Cortland Bancorp 0 0 0 0 N/A

Provident Financial currently has a consensus target price of $19.50, indicating a potential upside of 11.75%. Given Provident Financial’s higher possible upside, research analysts clearly believe Provident Financial is more favorable than Cortland Bancorp.

Earnings and Valuation

This table compares Provident Financial and Cortland Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Provident Financial $64.61 million 2.03 $2.13 million $0.70 24.93
Cortland Bancorp $28.65 million 3.27 $4.35 million N/A N/A

Cortland Bancorp has lower revenue, but higher earnings than Provident Financial.

Summary

Provident Financial beats Cortland Bancorp on 8 of the 14 factors compared between the two stocks.

About Provident Financial

Provident Financial Holdings, Inc. operates as the holding company for Provident Savings Bank, F.S.B. that provides community and mortgage banking services to consumers and small to mid-sized businesses in the Inland Empire region of Southern California. It operates through two segments, Provident Bank and Provident Bank Mortgage. The company's deposit products include checking, savings, and money market accounts, as well as time deposits; and loan portfolio consists of single-family, multi-family, commercial real estate, construction, commercial business, consumer, and other mortgage loans. It also originates, purchases, and sells single-family mortgage loans, including second mortgages and equity lines of credit. In addition, the company offers investment services comprising the sale of investment products, such as annuities and mutual funds; and trustee services for real estate transactions. It operates through 13 full-service banking offices in Riverside County and 1 full-service banking office in San Bernardino County. The company was founded in 1956 and is based in Riverside, California.

About Cortland Bancorp

Cortland Bancorp operates as the bank holding company for The Cortland Savings and Banking Company that provides commercial and retail banking services in Northeastern Ohio and Western Pennsylvania. Its deposit products include demand deposits, savings, money market, time deposit, and checking accounts. The company's loan portfolio comprises commercial loans consisting of commercial, financial loans, real estate construction and development loans, commercial real estate loans, small business lending, and trade financing; and consumer loans, such as residential real estate, home equity, and installment loans. It also provides brokerage and investment services; asset management services; night depository services, automated teller services, safe deposit boxes, and other services; and Internet and mobile banking options. As of January 29, 2018, it operated 13 full-service community banking offices located in the counties of Trumbull, Mahoning, Portage, Ashtabula, and Summit in Northeastern Ohio, as well as 2 financial services centers in Beachwood and Fairlawn, Ohio. The company was founded in 1892 and is headquartered in Cortland, Ohio.

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