Critical Review: Byline Bancorp (NYSE:BY) vs. Eastern Bankshares (NASDAQ:EBC)

Byline Bancorp (NYSE:BY) and Eastern Bankshares (NASDAQ:EBC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Insider and Institutional Ownership

67.7% of Byline Bancorp shares are owned by institutional investors. Comparatively, 71.7% of Eastern Bankshares shares are owned by institutional investors. 28.8% of Byline Bancorp shares are owned by insiders. Comparatively, 1.3% of Eastern Bankshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Byline Bancorp and Eastern Bankshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Byline Bancorp	$449.96 million	3.79	$130.05 million	$3.07	12.25
Eastern Bankshares	$1.33 billion	3.84	$88.22 million	$1.78	12.40

Byline Bancorp has higher earnings, but lower revenue than Eastern Bankshares. Byline Bancorp is trading at a lower price-to-earnings ratio than Eastern Bankshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Byline Bancorp and Eastern Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Byline Bancorp	21.86%	11.56%	1.47%
Eastern Bankshares	26.28%	8.42%	1.21%

Volatility and Risk

Byline Bancorp has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Eastern Bankshares has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Byline Bancorp and Eastern Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Byline Bancorp	0	1	2	1	3.00
Eastern Bankshares	0	2	7	0	2.78

Byline Bancorp presently has a consensus price target of $36.00, indicating a potential downside of 4.26%. Eastern Bankshares has a consensus price target of $23.08, indicating a potential upside of 4.59%. Given Eastern Bankshares’ higher probable upside, analysts clearly believe Eastern Bankshares is more favorable than Byline Bancorp.

Dividends

Byline Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 1.3%. Eastern Bankshares pays an annual dividend of $0.60 per share and has a dividend yield of 2.7%. Byline Bancorp pays out 15.6% of its earnings in the form of a dividend. Eastern Bankshares pays out 33.7% 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. Byline Bancorp has raised its dividend for 1 consecutive years and Eastern Bankshares has raised its dividend for 5 consecutive years. Eastern Bankshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About Byline Bancorp

Byline Bancorp, Inc. operates as the bank holding company for Byline Bank that provides various banking products and services for small and medium sized businesses, commercial real estate and financial sponsors, and consumers in the United States. It offers various retail deposit products, including non-interest-bearing accounts, money market demand accounts, savings accounts, interest-bearing checking accounts, and time deposits; ATM and debit cards; and online, mobile, and text banking services, as well as commercial deposits. The company also provides term loans, revolving lines of credit, and construction financing services; senior secured financing solutions to private equity backed lower middle market companies; small business administration and united states department of agriculture loans; and treasury management products and services. In addition, it offers financing solutions for equipment vendors and their end users; syndication services; and investment, trust, and wealth management services that include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services for foundations and endowments, and high net worth individuals. The company was formerly known as Metropolitan Bank Group, Inc. and changed its name to Byline Bancorp, Inc. in 2015. Byline Bancorp, Inc. was founded in 1914 and is headquartered in Chicago, Illinois.

About Eastern Bankshares

Eastern Bankshares, Inc. operates as the bank holding company for Eastern Bank that provides banking products and services primarily to retail, commercial, and small business customers. The company provides deposit accounts, interest checking accounts, money market accounts, savings accounts, and time certificates of deposit accounts. It also offers commercial and industrial, commercial real estate and construction, small business, residential real estate, and home equity loans; lines of credit; and other consumer loans comprising unsecured personal lines of credit, overdraft protection, automobile loans, home improvement loans, airplane loans, and other personal loans. In addition, the company provides trust, financial planning and portfolio management, automated lock box collection, cash management, and account reconciliation services; personal, business, and employee benefits insurance products. Eastern Bankshares, Inc. was founded in 1818 and is headquartered in Boston, Massachusetts.