CoBiz Financial (NASDAQ: COBZ) and First Financial Northwest (NASDAQ:FFNW) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Dividends

CoBiz Financial pays an annual dividend of $0.22 per share and has a dividend yield of 1.1%. First Financial Northwest pays an annual dividend of $0.28 per share and has a dividend yield of 1.7%. CoBiz Financial pays out 24.2% of its earnings in the form of a dividend. First Financial Northwest pays out 32.2% 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.

Insider & Institutional Ownership

83.2% of CoBiz Financial shares are owned by institutional investors. Comparatively, 44.8% of First Financial Northwest shares are owned by institutional investors. 9.9% of CoBiz Financial shares are owned by company insiders. Comparatively, 7.3% of First Financial Northwest shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares CoBiz Financial and First Financial Northwest’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CoBiz Financial $161.94 million 5.21 $34.89 million $0.91 21.96
First Financial Northwest $44.36 million 3.92 $8.89 million $0.87 18.59

CoBiz Financial has higher revenue and earnings than First Financial Northwest. First Financial Northwest is trading at a lower price-to-earnings ratio than CoBiz Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for CoBiz Financial and First Financial Northwest, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CoBiz Financial 0 2 2 0 2.50
First Financial Northwest 0 0 0 0 N/A

CoBiz Financial currently has a consensus price target of $18.83, indicating a potential downside of 5.74%. Given CoBiz Financial’s higher possible upside, equities analysts clearly believe CoBiz Financial is more favorable than First Financial Northwest.

Risk & Volatility

CoBiz Financial has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500. Comparatively, First Financial Northwest has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500.

Profitability

This table compares CoBiz Financial and First Financial Northwest’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CoBiz Financial 21.95% 12.06% 1.01%
First Financial Northwest 18.74% 6.45% 0.84%

Summary

CoBiz Financial beats First Financial Northwest on 14 of the 15 factors compared between the two stocks.

About CoBiz Financial

CoBiz Financial Inc. is a financial holding company. The Company provides a range of banking and related services through its subsidiaries, CoBiz Bank (Bank), CoBiz Insurance, Inc. and CoBiz IM, Inc. (CoBiz IM). The Company’s segments include Commercial Banking, Fee-Based Lines, and Corporate Support and Other. Its Commercial Banking segment consists of the operations of the Bank, a full-service business banking institution that offers commercial, real estate and private banking, as well as treasury management, interest-rate hedging and depository products. Its Fee-Based Lines segment consists of the operations of CoBiz Wealth, LLC and CoBiz Insurance, Inc. CoBiz Wealth, LLC provides investment management advisory services to individuals, families and businesses. CoBiz Insurance, Inc. offers property and casualty (P&C) and employee benefit group insurance (EB) broker agency to small to mid-sized employers, commercial enterprises and individual lines to their owners.

About First Financial Northwest

First Financial Northwest, Inc. (First Financial Northwest) is a holding company for First Financial Northwest Bank (the Bank). The Bank primarily serves the greater Puget Sound region of King and to a lesser extent, Pierce, Snohomish and Kitsap Counties, Washington through its full-service banking office located in Renton, Washington and branch office in Mill Creek, Washington. The Bank’s business consists of attracting deposits from the public and utilizing these funds to originate one- to four-family residential, multifamily, commercial real estate, construction/land development, business and consumer loans. It focuses on its lending activities primarily on loans secured by commercial real estate, construction/land development, first mortgages on one- to four-family residences, multifamily and business lending. Its investment portfolio consisted principally of mortgage-backed securities, municipal bonds, the United States Government Agency obligations and corporate bonds.

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