Contrasting Northrim BanCorp (NASDAQ:NRIM) and East West Bancorp (NASDAQ:EWBC)

Northrim BanCorp (NASDAQ:NRIM) and East West Bancorp (NASDAQ:EWBC) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northrim BanCorp	25.32%	18.12%	1.64%
East West Bancorp	27.16%	15.55%	1.63%

Volatility and Risk

Northrim BanCorp has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, East West Bancorp has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Northrim BanCorp and East West Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northrim BanCorp	0	1	2	0	2.67
East West Bancorp	1	4	11	0	2.63

Northrim BanCorp presently has a consensus price target of $33.00, suggesting a potential upside of 14.03%. East West Bancorp has a consensus price target of $126.38, suggesting a potential upside of 9.68%. Given Northrim BanCorp’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Northrim BanCorp is more favorable than East West Bancorp.

Earnings & Valuation

This table compares Northrim BanCorp 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
Northrim BanCorp	$195.96 million	3.26	$36.97 million	$2.81	10.30
East West Bancorp	$2.81 billion	5.64	$1.17 billion	$9.07	12.70

East West Bancorp has higher revenue and earnings than Northrim BanCorp. Northrim BanCorp 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.

Insider and Institutional Ownership

66.0% of Northrim BanCorp shares are owned by institutional investors. Comparatively, 89.5% of East West Bancorp shares are owned by institutional investors. 3.9% of Northrim BanCorp shares are owned by insiders. Comparatively, 1.0% of East West Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Northrim BanCorp pays an annual dividend of $0.64 per share and has a dividend yield of 2.2%. East West Bancorp pays an annual dividend of $2.40 per share and has a dividend yield of 2.1%. Northrim BanCorp pays out 22.8% of its earnings in the form of a dividend. East West Bancorp pays out 26.5% 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. Northrim BanCorp has increased its dividend for 16 consecutive years and East West Bancorp has increased its dividend for 8 consecutive years. Northrim BanCorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Northrim BanCorp beats East West Bancorp on 9 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 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.