Critical Contrast: West Bancorporation (NASDAQ:WTBA) and City (NASDAQ:CHCO)

West Bancorporation (NASDAQ:WTBA) and City (NASDAQ:CHCO) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings for West Bancorporation and City, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Bancorporation	0	3	1	0	2.25
City	0	3	0	1	2.50

West Bancorporation currently has a consensus price target of $29.00, indicating a potential downside of 4.73%. City has a consensus price target of $139.33, indicating a potential downside of 1.88%. Given City’s stronger consensus rating and higher probable upside, analysts plainly believe City is more favorable than West Bancorporation.

Risk & Volatility

West Bancorporation has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, City has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Dividends

West Bancorporation pays an annual dividend of $1.04 per share and has a dividend yield of 3.4%. City pays an annual dividend of $4.00 per share and has a dividend yield of 2.8%. West Bancorporation pays out 46.6% of its earnings in the form of a dividend. City pays out 43.8% 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. City has increased its dividend for 6 consecutive years.

Insider & Institutional Ownership

44.3% of West Bancorporation shares are owned by institutional investors. Comparatively, 72.4% of City shares are owned by institutional investors. 4.6% of West Bancorporation shares are owned by insiders. Comparatively, 1.8% of City shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares West Bancorporation and City’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Bancorporation	18.75%	15.48%	1.03%
City	32.58%	16.34%	1.95%

Earnings and Valuation

This table compares West Bancorporation and City”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Bancorporation	$202.45 million	2.56	$32.56 million	$2.23	13.65
City	$398.98 million	5.00	$130.49 million	$9.14	15.54

City has higher revenue and earnings than West Bancorporation. West Bancorporation is trading at a lower price-to-earnings ratio than City, indicating that it is currently the more affordable of the two stocks.

Summary

City beats West Bancorporation on 14 of the 18 factors compared between the two stocks.

About West Bancorporation

West Bancorporation, Inc. operates as the financial holding company provides community banking and trust services to individuals and small- to medium-sized businesses in the United States. It offers deposit services, including checking, savings, and money market accounts, as well as time certificates of deposit. The company also provides loan products comprising commercial real estate loans, construction and land development loans, commercial lines of credit, and commercial term loans; consumer loans, including loans extended to individuals for household, family, and other personal expenditures not secured by real estate; and 1-4 family residential mortgages and home equity loans. In addition, it offers online and mobile banking, treasury management services including cash management, client-generated automated clearing house transactions, remote deposit, and fraud protection services; merchant credit card processing and corporate credit cards; and administration of estates, conservatorships, personal trusts, and agency accounts. The company was founded in 1893 and is headquartered in West Des Moines, Iowa.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.