Northrim BanCorp (NASDAQ:NRIM) and Heritage Commerce (NASDAQ:HTBK) Head to Head Contrast

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

Valuation & Earnings

This table compares Northrim BanCorp and Heritage Commerce”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northrim BanCorp	$195.96 million	2.27	$36.97 million	$2.00	10.06
Heritage Commerce	$251.45 million	2.34	$40.53 million	$0.63	15.21

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

Dividends

Northrim BanCorp pays an annual dividend of $0.64 per share and has a dividend yield of 3.2%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 5.4%. Northrim BanCorp pays out 32.0% of its earnings in the form of a dividend. Heritage Commerce pays out 82.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Northrim BanCorp has increased its dividend for 16 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and price targets for Northrim BanCorp and Heritage Commerce, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northrim BanCorp	0	0	2	0	3.00
Heritage Commerce	1	1	3	0	2.40

Northrim BanCorp presently has a consensus target price of $26.00, indicating a potential upside of 29.22%. Heritage Commerce has a consensus target price of $10.75, indicating a potential upside of 12.21%. Given Northrim BanCorp’s stronger consensus rating and higher probable upside, analysts plainly believe Northrim BanCorp is more favorable than Heritage Commerce.

Insider and Institutional Ownership

66.0% of Northrim BanCorp shares are held by institutional investors. Comparatively, 75.6% of Heritage Commerce shares are held by institutional investors. 3.9% of Northrim BanCorp shares are held by company insiders. Comparatively, 2.7% of Heritage Commerce shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Northrim BanCorp has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, Heritage Commerce has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northrim BanCorp	20.11%	16.35%	1.45%
Heritage Commerce	15.00%	6.61%	0.82%

Summary

Northrim BanCorp beats Heritage Commerce on 10 of the 17 factors compared between the two stocks.

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.

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.