CVB Financial (NASDAQ:CVBF) vs. Banner (NASDAQ:BANR) Critical Review

Banner (NASDAQ:BANR) and CVB Financial (NASDAQ:CVBF) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Valuation and Earnings

This table compares Banner and CVB Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banner	$594.20 million	3.87	$183.62 million	$4.78	13.96
CVB Financial	$508.02 million	5.83	$221.43 million	$1.43	14.83

CVB Financial has lower revenue, but higher earnings than Banner. Banner is trading at a lower price-to-earnings ratio than CVB Financial, indicating that it is currently the more affordable of the two stocks.

Dividends

Banner pays an annual dividend of $1.92 per share and has a dividend yield of 2.9%. CVB Financial pays an annual dividend of $0.80 per share and has a dividend yield of 3.8%. Banner pays out 40.2% of its earnings in the form of a dividend. CVB Financial pays out 55.9% 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.

Profitability

This table compares Banner and CVB Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banner	20.28%	10.22%	1.10%
CVB Financial	28.29%	9.80%	1.30%

Institutional and Insider Ownership

87.3% of Banner shares are owned by institutional investors. Comparatively, 74.2% of CVB Financial shares are owned by institutional investors. 1.6% of Banner shares are owned by company insiders. Comparatively, 6.0% of CVB Financial 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 summary of recent ratings for Banner and CVB Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banner	0	3	3	0	2.50
CVB Financial	0	4	2	0	2.33

Banner currently has a consensus target price of $67.00, suggesting a potential upside of 0.37%. CVB Financial has a consensus target price of $21.80, suggesting a potential upside of 2.83%. Given CVB Financial’s higher possible upside, analysts plainly believe CVB Financial is more favorable than Banner.

Risk and Volatility

Banner has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, CVB Financial has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500.

About Banner

Banner Corporation operates as the bank holding company for Banner Bank that engages in the provision of commercial banking and financial products and services to individuals, businesses, and public sector entities in the United States. It accepts various deposit instruments, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, regular savings accounts, and certificates of deposit, as well as treasury management services and retirement savings plans. The company also provides commercial real estate loans, including owner-occupied, investment properties, and multifamily residential real estate loans; construction, land, and land development loans; one- to four-family residential real estate lending; commercial business loans; agricultural loans; consumer and other loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts; and small business administration loans. In addition, it provides electronic and digital banking services comprising debit cards and ATMs, internet banking, remote deposit, and mobile banking services. The company was founded in 1890 and is based in Walla Walla, Washington.

About CVB Financial

CVB Financial Corp. operates as a bank holding company for Citizens Business Bank, a state-chartered bank that provides banking and financial services to small to mid-sized businesses and individuals. It offers checking, savings, money market, and time certificates of deposit products for business and personal accounts; and serves as a federal tax depository for business customers. The company also provides commercial lending products comprising lines of credit and other working capital financing, accounts receivable lending, and letters of credit; agriculture loans to finance the operating needs of wholesale dairy farm operations, cattle feeders, livestock raisers, and farmers; lease financing services for municipal governments; commercial real estate and construction loans; and consumer financing products, including automobile leasing and financing, lines of credit, credit cards, home mortgages, and home equity loans and lines of credit. In addition, it offers various specialized services, such as treasury management systems for monitoring cash flow, merchant card processing program, armored pick-up and delivery, payroll services, remote deposit capture, electronic funds transfers, wires and automated clearinghouse, and online account access. Further, the company provides trust services, such as fiduciary services, mutual funds, annuities, 401(k) plans, and individual investment accounts. CVB Financial Corp. was founded in 1974 and is headquartered in Ontario, California.