Critical Survey: National Bank (NBHC) versus Hanmi Financial (HAFC)

National Bank (NYSE:NBHC) and Hanmi Financial (NASDAQ:HAFC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Profitability

This table compares National Bank and Hanmi Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Bank 12.64% 9.62% 1.11%
Hanmi Financial 22.82% 10.92% 1.16%

Institutional & Insider Ownership

93.7% of National Bank shares are owned by institutional investors. Comparatively, 89.3% of Hanmi Financial shares are owned by institutional investors. 6.4% of National Bank shares are owned by insiders. Comparatively, 2.7% of Hanmi Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for National Bank and Hanmi Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Bank 0 4 1 0 2.20
Hanmi Financial 0 3 1 0 2.25

National Bank presently has a consensus price target of $39.20, suggesting a potential upside of 14.09%. Hanmi Financial has a consensus price target of $27.67, suggesting a potential upside of 30.56%. Given Hanmi Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Hanmi Financial is more favorable than National Bank.

Earnings & Valuation

This table compares National Bank and Hanmi Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Bank $203.63 million 5.19 $14.57 million $1.26 27.27
Hanmi Financial $242.74 million 2.84 $54.66 million $1.81 11.71

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

Dividends

National Bank pays an annual dividend of $0.56 per share and has a dividend yield of 1.6%. Hanmi Financial pays an annual dividend of $0.96 per share and has a dividend yield of 4.5%. National Bank pays out 44.4% of its earnings in the form of a dividend. Hanmi Financial pays out 53.0% 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. National Bank has increased its dividend for 2 consecutive years and Hanmi Financial has increased its dividend for 4 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

National Bank has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Summary

Hanmi Financial beats National Bank on 11 of the 16 factors compared between the two stocks.

National Bank Company Profile

National Bank Holdings Corporation operates as the bank holding company for NBH Bank, N.A. that provides various banking products and financial services to commercial, business, and consumer clients in the United States. The company offers deposit products, including checking accounts, savings accounts, money market accounts, and other deposit accounts, including fixed-rate and fixed maturity time deposits. It also provides commercial and industrial loans and leases, such as working capital loans, equipment loans, lender finance loans, agriculture loans, government and non-profit loans, owner occupied commercial real estate loans, and other commercial loans and leases. The company also offers non-owner occupied commercial real estate loans consisting of loans on multi-family construction properties; commercial properties, such as office buildings, retail centers, or free-standing commercial properties; and multi-family and investor properties, as well as raw land development loans. In addition, it offers treasury management solutions comprising online and mobile banking, commercial credit card, wire transfer, automated clearing house, electronic bill payment, lock box, remote deposit capture, merchant processing, cash vault, controlled disbursements, and fraud prevention services, as well as other auxiliary services, including account reconciliation, collections, repurchase accounts, zero balance accounts, and sweep accounts. As of December 31, 2017, the company operated through a network of 85 banking centers located in Colorado, the greater Kansas City area, New Mexico, and Texas. It also operates 106 ATMs. The company was formerly known as NBH Holdings Corp. and changed its name to National Bank Holdings Corporation in March 2012. National Bank Holdings Corporation was incorporated in 2009 and is headquartered in Greenwood Village, Colorado.

Hanmi Financial Company Profile

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. The company offers various deposit products, including noninterest-bearing checking accounts, interest-bearing checking and savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. It also provides real estate loans, including commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit, as well as international finance, and trade services and products comprising letters of credit, and import and export financing. In addition, the company offers consumer loans that include automobile loans, secured and unsecured personal loans, home improvement loans, home equity lines of credit, unsecured lines of credit, and credit cards; and 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. As of January 25, 2018, it operated a network of 40 full-service branches and 8 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington, and Georgia. The company was founded in 2000 and is headquartered in Los Angeles, California.

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