Sound Financial Bancorp (NASDAQ:SFBC) vs. RBB Bancorp (NASDAQ:RBB) Critical Review

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

Volatility & Risk

Sound Financial Bancorp has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500. Comparatively, RBB Bancorp has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Profitability

This table compares Sound Financial Bancorp and RBB Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	8.12%	4.89%	0.48%
RBB Bancorp	9.16%	4.10%	0.53%

Insider & Institutional Ownership

68.9% of Sound Financial Bancorp shares are held by institutional investors. Comparatively, 40.1% of RBB Bancorp shares are held by institutional investors. 12.6% of Sound Financial Bancorp shares are held by company insiders. Comparatively, 4.6% of RBB Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for Sound Financial Bancorp and RBB Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	0	0	0	0.00
RBB Bancorp	0	4	0	0	2.00

RBB Bancorp has a consensus price target of $21.25, indicating a potential upside of 15.05%. Given RBB Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe RBB Bancorp is more favorable than Sound Financial Bancorp.

Earnings & Valuation

This table compares Sound Financial Bancorp and RBB Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$62.03 million	1.96	$4.64 million	$1.95	24.25
RBB Bancorp	$232.00 million	1.41	$26.67 million	$1.16	15.92

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

Dividends

Sound Financial Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 1.6%. RBB Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 3.5%. Sound Financial Bancorp pays out 39.0% of its earnings in the form of a dividend. RBB Bancorp pays out 55.2% 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. Sound Financial Bancorp has raised its dividend for 2 consecutive years.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.

About RBB Bancorp

RBB Bancorp operates as the bank holding company for Royal Business Bank that provides various banking products and services to the Chinese-American, Korean-American, and other Asian-American communities. Its deposit products include checking, savings, and money market accounts, as well as certificates of deposit. The company also offers commercial and industrial lines of credit, term loans, mortgage warehouse lines, and international trade discounts; commercial real estate loans; residential, commercial, and land acquisition and development construction loans; small business administration loans; and single-family residential mortgage loans. In addition, it provides international letters of credit, SWIFT, export advisory, trade finance discount, and foreign exchange services; and remote deposit, e-banking, and mobile banking services. The company serves individuals, businesses, municipalities, and other entities. It operates branches in the Western region with branches in Los Angeles County, California; Orange County, California; Ventura County, California; Clark County, Nevada; Honolulu, Hawaii, as well as in Eastern region with branches in Manhattan, Brooklyn and Queens, New York; Chicago, Illinois; and Edison, New Jersey. RBB Bancorp was founded in 2008 and is headquartered in Los Angeles, California.