Financial Survey: 1st Century Bancshares (FCTY) & Heritage Commerce Corp (HTBK)

1st Century Bancshares (NASDAQ: FCTY) and Heritage Commerce Corp (NASDAQ:HTBK) are both commercial banks companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for 1st Century Bancshares and Heritage Commerce Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
1st Century Bancshares 0 0 0 0 N/A
Heritage Commerce Corp 0 1 1 0 2.50

Heritage Commerce Corp has a consensus target price of $15.50, indicating a potential upside of 5.30%. Given Heritage Commerce Corp’s higher possible upside, analysts plainly believe Heritage Commerce Corp is more favorable than 1st Century Bancshares.

Dividends

Heritage Commerce Corp pays an annual dividend of $0.40 per share and has a dividend yield of 2.7%. 1st Century Bancshares does not pay a dividend. Heritage Commerce Corp pays out 51.9% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares 1st Century Bancshares and Heritage Commerce Corp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
1st Century Bancshares N/A N/A N/A $0.25 44.88
Heritage Commerce Corp $106.06 million 5.30 $27.38 million $0.77 19.12

Heritage Commerce Corp has higher revenue and earnings than 1st Century Bancshares. Heritage Commerce Corp is trading at a lower price-to-earnings ratio than 1st Century Bancshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares 1st Century Bancshares and Heritage Commerce Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
1st Century Bancshares 3.91% 1.67% 0.15%
Heritage Commerce Corp 26.40% 11.15% 1.10%

Insider & Institutional Ownership

69.3% of Heritage Commerce Corp shares are held by institutional investors. 5.7% of Heritage Commerce Corp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Heritage Commerce Corp beats 1st Century Bancshares on 10 of the 11 factors compared between the two stocks.

About 1st Century Bancshares

1st Century Bancshares, Inc. is the bank holding company for 1st Century Bank, National Association (the Bank). The Bank is a full service commercial bank. The Bank’s primary focus is relationship banking to family and middle market businesses, professional service firms, and high net worth individuals, real estate investors and entrepreneurs. It offers various loan products, including business and personal lines of credit and term loans; tenant improvement and equipment financing; bridge and specific purpose loans; commercial, industrial, multi-family residential real estate lending; personal home equity loans and lines of credit, and credit cards for business and personal use. Its deposit products include business checking, money market and certificates of deposit; personal checking, money market and certificates of deposits; attorney-client trust accounts, trust accounts, and cash management. Its loan and deposit activities are based in the Los Angeles metropolitan area.

About Heritage Commerce Corp

Heritage Commerce Corp is a bank holding company. The Company, through its subsidiary Heritage Bank of Commerce (the Bank), provides a range of banking services. The Bank is a California state-chartered multi-community independent bank that offers a range of commercial banking services to small and medium-sized businesses and their owners, managers and employees. As of December 31, 2016, the Company operated through 11 service branch offices located in the southern and eastern regions of the general San Francisco Bay Area of California in the counties of Santa Clara, Alameda, Contra Costa and San Benito. The Company’s subsidiary, CSNK Working Capital Finance Corp., doing business as Bay View Funding, provides business-essential working capital factoring financing to various industries across the United States. As of December 31, 2016, the Bank operated automated teller machines (ATMs) at five different locations.

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