Comparing Hanmi Financial (NASDAQ:HAFC) & Northrim BanCorp (NASDAQ:NRIM)

Hanmi Financial (NASDAQ:HAFC) and Northrim BanCorp (NASDAQ:NRIM) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Dividends

Hanmi Financial pays an annual dividend of $1.12 per share and has a dividend yield of 3.9%. Northrim BanCorp pays an annual dividend of $0.64 per share and has a dividend yield of 2.7%. Hanmi Financial pays out 41.8% of its earnings in the form of a dividend. Northrim BanCorp pays out 22.2% 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. Hanmi Financial has increased its dividend for 1 consecutive years and Northrim BanCorp has increased its dividend for 16 consecutive years.

Earnings and Valuation

This table compares Hanmi Financial and Northrim BanCorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanmi Financial	$444.90 million	1.95	$76.09 million	$2.68	10.85
Northrim BanCorp	$255.58 million	2.04	$64.61 million	$2.88	8.14

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

Profitability

This table compares Hanmi Financial and Northrim BanCorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanmi Financial	18.05%	10.31%	1.03%
Northrim BanCorp	24.91%	16.99%	1.63%

Institutional and Insider Ownership

88.7% of Hanmi Financial shares are owned by institutional investors. Comparatively, 66.0% of Northrim BanCorp shares are owned by institutional investors. 2.1% of Hanmi Financial shares are owned by company insiders. Comparatively, 2.4% of Northrim BanCorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Hanmi Financial and Northrim BanCorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanmi Financial	0	3	2	0	2.40
Northrim BanCorp	0	1	2	0	2.67

Hanmi Financial presently has a consensus target price of $32.17, suggesting a potential upside of 10.58%. Northrim BanCorp has a consensus target price of $33.00, suggesting a potential upside of 40.85%. Given Northrim BanCorp’s stronger consensus rating and higher probable upside, analysts plainly believe Northrim BanCorp is more favorable than Hanmi Financial.

Volatility and Risk

Hanmi Financial has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Northrim BanCorp has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Summary

Northrim BanCorp beats Hanmi Financial on 11 of the 16 factors compared between the two stocks.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.

About Northrim BanCorp

Northrim BanCorp, Inc. operates as the bank holding company for Northrim Bank that provides commercial banking products and services to businesses and professional individuals. It operates through two segments, Community Banking and Home Mortgage Lending. The company offers noninterest-bearing checking accounts and interest-bearing time deposits, checking and savings accounts, individual retirement and money market deposit accounts, certificates of deposit, and business sweep accounts. It also provides short and medium-term commercial loans, commercial credit lines, construction and real estate loans, and consumer loans, as well as short-term working capital. In addition, the company offers other services comprising consumer and business online banking, mobile app, and mobile deposits; and debit and credit cards. Further, it provides mobile web and app banking, consumer online account opening, personal finance, online documents, consumer debit cards, business debit cards, my rewards for consumer debit cards, retail lockbox, card control, corporate purchase cards, integrated payables, home equity advantage access cards, telebanking, and automated teller services. Additionally, the company offers personalized checks at account opening, overdraft protection from a savings account, commercial drive-up banking, automatic transfer and payment, People Pay, external transfer, Bill Pay, wire transfer, direct payroll deposit, electronic tax payment, Automated Clearing House origination and receipt, remote deposit capture, account reconciliation and positive pay, merchant, cash management, annuity, and long-term investment portfolio products and services. It also provides investment advisory, trust, wealth management, factoring, and mortgage services. The company was founded in 1990 and is headquartered in Anchorage, Alaska.