Critical Survey: Hanmi Financial (NASDAQ:HAFC) versus East West Bancorp (NASDAQ:EWBC)

Hanmi Financial (NASDAQ:HAFC) and East West Bancorp (NASDAQ:EWBC) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Dividends

Hanmi Financial pays an annual dividend of $1.08 per share and has a dividend yield of 4.6%. East West Bancorp pays an annual dividend of $2.40 per share and has a dividend yield of 2.3%. Hanmi Financial pays out 50.2% of its earnings in the form of a dividend. East West Bancorp pays out 28.0% 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 East West Bancorp has increased its dividend for 8 consecutive years.

Insider and Institutional Ownership

88.7% of Hanmi Financial shares are owned by institutional investors. Comparatively, 89.5% of East West Bancorp shares are owned by institutional investors. 1.9% of Hanmi Financial shares are owned by company insiders. Comparatively, 1.0% of East West Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Hanmi Financial and East West Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanmi Financial	$430.37 million	1.64	$62.20 million	$2.15	10.88
East West Bancorp	$4.53 billion	3.15	$1.17 billion	$8.56	12.10

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

Volatility and Risk

Hanmi Financial has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, East West Bancorp has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Hanmi Financial and East West Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanmi Financial	15.11%	8.77%	0.84%
East West Bancorp	26.06%	15.09%	1.56%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Hanmi Financial and East West Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanmi Financial	0	3	2	0	2.40
East West Bancorp	0	5	8	0	2.62

Hanmi Financial presently has a consensus target price of $26.00, suggesting a potential upside of 11.11%. East West Bancorp has a consensus target price of $114.15, suggesting a potential upside of 10.18%. Given Hanmi Financial’s higher possible upside, research analysts plainly believe Hanmi Financial is more favorable than East West Bancorp.

Summary

East West Bancorp beats Hanmi Financial on 14 of the 17 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 East West Bancorp

East West Bancorp, Inc. operates as the bank holding company for East West Bank that provides a range of personal and commercial banking services to businesses and individuals in the United States. The company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. It accepts various deposit products, such as personal and business checking and savings accounts, money market, and time deposits. The company’s loan products include mortgage and home equity, commercial and residential real estate, working capital lines of credit, construction finance, trade finance, letters of credit, commercial business, affordable housing loans, asset-based lending, asset-backed finance, project finance, loan syndication, and equipment financing, as well as financing services for clients to facilitate their business transactions between the United States and Asia. It also provides various wealth management, treasury management, foreign exchange, and interest rate and commodity risk hedging services; and mobile and online banking services. The company was founded in 1973 and is headquartered in Pasadena, California.