Financial Review: City Bank (OTCMKTS:CTBK) & Heritage Commerce (NASDAQ:HTBK)

City Bank (OTCMKTS:CTBK) and Heritage Commerce (NASDAQ:HTBK) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.

Insider and Institutional Ownership

75.6% of Heritage Commerce shares are held by institutional investors. 37.5% of City Bank shares are held by insiders. Comparatively, 2.7% of Heritage Commerce shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares City Bank and Heritage Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City Bank	N/A	N/A	N/A
Heritage Commerce	16.31%	7.20%	0.90%

Analyst Recommendations

This is a summary of current ratings and target prices for City Bank and Heritage Commerce, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City Bank	0	0	0	0	0.00
Heritage Commerce	0	1	4	1	3.00

Heritage Commerce has a consensus target price of $11.50, suggesting a potential upside of 9.84%. Given Heritage Commerce’s stronger consensus rating and higher possible upside, analysts clearly believe Heritage Commerce is more favorable than City Bank.

Earnings & Valuation

This table compares City Bank and Heritage Commerce”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City Bank	N/A	N/A	N/A	N/A	N/A
Heritage Commerce	$192.71 million	3.34	$40.53 million	$0.70	14.96

Heritage Commerce has higher revenue and earnings than City Bank.

Summary

Heritage Commerce beats City Bank on 9 of the 10 factors compared between the two stocks.

About City Bank

As of April 17, 2010, City Bank was acquired by Whidbey Island Bank. City Bank offers commercial banking services. The company was incorporated in 1974 and is headquartered in Lynnwood, Washington.

About Heritage Commerce

Heritage Commerce Corp operates as the bank holding company for Heritage Bank of Commerce that provides various commercial and personal banking services to residents and the business/professional community in California. Its deposit products for business banking and retail markets include interest and non-interest-bearing demand, savings, and money market accounts, as well as certificates of deposit and time deposits. The company’s loan portfolio comprises commercial loans, such as operating secured and unsecured loans advanced for working capital, equipment purchases, and other business purposes; commercial real estate loans; commercial construction loans for rental properties, commercial buildings, and homes; small business administration loans; home equity lines of credit; multifamily loans on residential properties; residential mortgage loans; and consumer loans consisting of loans for financing automobiles, various consumer goods, and other personal purposes. In addition, it offers other banking services, including cashier’s checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll, electronic funds transfer, online bill pay, homeowner association, remote deposit capture, automated clearing house origination, electronic data interchange, and check imaging services, as well as other customary banking, factoring financing, and electronic banking services. Heritage Commerce Corp was founded in 1994 and is headquartered in San Jose, California.