Contrasting HMN Financial (NASDAQ:HMNF) & Trinity Bank, N.A. (OTCMKTS:TYBT)

HMN Financial (NASDAQ:HMNF) and Trinity Bank, N.A. (OTCMKTS:TYBT) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for HMN Financial and Trinity Bank, N.A., as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HMN Financial	0	0	0	0	N/A
Trinity Bank, N.A.	0	0	0	0	N/A

Profitability

This table compares HMN Financial and Trinity Bank, N.A.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HMN Financial	9.33%	5.28%	0.49%
Trinity Bank, N.A.	29.77%	N/A	N/A

Insider & Institutional Ownership

78.3% of HMN Financial shares are held by institutional investors. 8.2% of HMN Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

HMN Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Trinity Bank, N.A. pays an annual dividend of $1.76 per share and has a dividend yield of 2.1%. HMN Financial pays out 31.0% of its earnings in the form of a dividend. Trinity Bank, N.A. pays out 24.6% 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. HMN Financial has raised its dividend for 2 consecutive years. Trinity Bank, N.A. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares HMN Financial and Trinity Bank, N.A.’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HMN Financial	$38.21 million	3.15	$6.01 million	$1.29	20.88
Trinity Bank, N.A.	$24.78 million	3.61	$8.02 million	$7.14	11.62

Trinity Bank, N.A. has lower revenue, but higher earnings than HMN Financial. Trinity Bank, N.A. is trading at a lower price-to-earnings ratio than HMN Financial, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

HMN Financial has a beta of 0.21, suggesting that its share price is 79% less volatile than the S&P 500. Comparatively, Trinity Bank, N.A. has a beta of 0.01, suggesting that its share price is 99% less volatile than the S&P 500.

Summary

HMN Financial beats Trinity Bank, N.A. on 8 of the 14 factors compared between the two stocks.

About HMN Financial

HMN Financial, Inc. operates as a bank holding company for Home Federal Savings Bank that provides various retail banking products and services. The company offers various deposit accounts, such as savings, interest bearing checking, non-interest-bearing checking, money market, individual retirement, and certificate accounts. It also provides various loan products comprising single family residential loans; commercial real estate and multi-family mortgage loans; construction loans; consumer loans, such as home equity, automobile, recreational vehicle, mobile home, and lot loans, as well as loans secured by deposit accounts, and other loans for household and personal purposes; and commercial business loans. In addition, the company offers financial planning products and services; and invests in mortgage-backed and related securities, the United States government agency obligations, and other permissible investments. It operates community banking and loan production offices in Minnesota, Iowa, and Wisconsin. HMN Financial, Inc. was founded in 1934 and is headquartered in Rochester, Minnesota.

About Trinity Bank, N.A.

Trinity Bank, N.A. provides personal and business banking products and services in Texas. It provides personal and business deposits, such as checking and money market accounts; treasury tax and loan deposits; mobile deposits; certificates of deposit; and automobile, secured/unsecured, home improvement, lots and interim construction, installment/term, equipment, and real estate loans, as well as revolving lines of credit. The company also offers cash management, internet and mobile banking, remote capture, CD ROM delivery, foreign and domestic wire transfer, and bill pay services, as well as ATM or Visa check cards, merchant cards, and debit cards. Trinity Bank, N.A. was founded in 2003 and is based in Fort Worth, Texas.