Critical Comparison: Western Alliance Bancorporation (NYSE:WAL) vs. Bay Commercial Bank (NASDAQ:BCML)

Bay Commercial Bank (NASDAQ:BCML) and Western Alliance Bancorporation (NYSE:WAL) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.

Valuation & Earnings

This table compares Bay Commercial Bank and Western Alliance Bancorporation”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bay Commercial Bank	$141.48 million	2.24	$23.93 million	$2.18	13.32
Western Alliance Bancorporation	$5.37 billion	1.56	$969.00 million	$8.73	8.72

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

Dividends

Bay Commercial Bank pays an annual dividend of $1.20 per share and has a dividend yield of 4.1%. Western Alliance Bancorporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.2%. Bay Commercial Bank pays out 55.0% of its earnings in the form of a dividend. Western Alliance Bancorporation pays out 19.2% 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. Bay Commercial Bank has raised its dividend for 3 consecutive years and Western Alliance Bancorporation has raised its dividend for 5 consecutive years.

Profitability

This table compares Bay Commercial Bank and Western Alliance Bancorporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bay Commercial Bank	16.92%	7.18%	0.92%
Western Alliance Bancorporation	18.04%	13.33%	1.10%

Insider and Institutional Ownership

66.2% of Bay Commercial Bank shares are owned by institutional investors. Comparatively, 79.2% of Western Alliance Bancorporation shares are owned by institutional investors. 6.5% of Bay Commercial Bank shares are owned by insiders. Comparatively, 2.7% of Western Alliance Bancorporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Bay Commercial Bank and Western Alliance Bancorporation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bay Commercial Bank	0	2	2	0	2.50
Western Alliance Bancorporation	0	5	10	0	2.67

Bay Commercial Bank currently has a consensus price target of $34.00, indicating a potential upside of 17.08%. Western Alliance Bancorporation has a consensus price target of $93.27, indicating a potential upside of 22.48%. Given Western Alliance Bancorporation’s stronger consensus rating and higher possible upside, analysts plainly believe Western Alliance Bancorporation is more favorable than Bay Commercial Bank.

Risk & Volatility

Bay Commercial Bank has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500. Comparatively, Western Alliance Bancorporation has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.

Summary

Western Alliance Bancorporation beats Bay Commercial Bank on 13 of the 17 factors compared between the two stocks.

About Bay Commercial Bank

BayCom Corp operates as the bank holding company for United Business Bank that provides various financial services to small and mid-sized businesses, service professionals, and individuals. The company provides demand, savings, money market, and time deposit accounts. It offers commercial and multifamily real estate loans, including owner-occupied and investor real estate loans; commercial and industrial loans, such as equipment loans and working capital lines of credit; small business administration loans; construction and land loans; agriculture-related loans; and consumer loans comprising installment loans, unsecured and secured personal lines of credit, and overdraft protection. In addition, the company provides online and mobile banking, automated teller machine, remote deposit capture, night depository, courier, direct deposit, treasury management, wire transfer, automated clearing house, debit cards, cashier's and travelers checks, letters of credit, lockbox, positive pay, reverse positive pay, and account reconciliation services, as well as zero balance accounts and sweep accounts, including loan sweep. It operates through a network of full-service banking branches in Northern and Southern California; Las Vegas, Nevada; Denver, Colorado; Custer, Delta, and Grand counties, Colorado; and Seattle, Washington and Central New Mexico. The company was formerly known as Bay Commercial Bank and changed its name to BayCom Corp in January 2017. BayCom Corp was incorporated in 2004 and is headquartered in Walnut Creek, California.

About Western Alliance Bancorporation

Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada. It operates through Commercial and Consumer Related segments. The company offers deposit products, including checking, savings, and money market accounts, as well as fixed-rate and fixed maturity certificates of deposit accounts; demand deposits; and treasury management and residential mortgage products and services. It also provides commercial and industrial loan products, such as working capital lines of credit, loans to technology companies, inventory and accounts receivable lines, mortgage warehouse lines, equipment loans and leases, and other commercial loans; commercial real estate loans, which are secured by multi-family residential properties, professional offices, industrial facilities, retail centers, hotels, and other commercial properties; construction and land development loans for single family and multi-family residential projects, industrial/warehouse properties, office buildings, retail centers, medical office facilities, and residential lot developments; and consumer loans. In addition, the company provides other financial services, such as internet banking, wire transfers, electronic bill payment and presentment, funds transfer and other digital payment offerings, lock box services, courier, and cash management services. Further, the company holds certain investment securities, municipal and non-profit loans, and leases; invests primarily in low-income housing tax credits and small business investment corporations; and holds certain real estate loans and related securities. Western Alliance Bancorporation was founded in 1994 and is headquartered in Phoenix, Arizona.