Head to Head Contrast: Hanmi Financial (NASDAQ:HAFC) and Sierra Bancorp (NASDAQ:BSRR)

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

Insider and Institutional Ownership

55.4% of Sierra Bancorp shares are owned by institutional investors. Comparatively, 88.7% of Hanmi Financial shares are owned by institutional investors. 11.9% of Sierra Bancorp shares are owned by insiders. Comparatively, 1.9% of Hanmi Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	19.70%	11.21%	1.09%
Hanmi Financial	16.53%	9.59%	0.93%

Analyst Recommendations

This is a summary of current ratings for Sierra Bancorp and Hanmi Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	2	2	0	2.50
Hanmi Financial	0	3	2	1	2.67

Sierra Bancorp presently has a consensus target price of $34.50, suggesting a potential upside of 21.22%. Hanmi Financial has a consensus target price of $28.50, suggesting a potential upside of 6.15%. Given Sierra Bancorp’s higher possible upside, equities analysts clearly believe Sierra Bancorp is more favorable than Hanmi Financial.

Volatility and Risk

Sierra Bancorp has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Dividends

Sierra Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.5%. Hanmi Financial pays an annual dividend of $1.08 per share and has a dividend yield of 4.0%. Sierra Bancorp pays out 34.8% of its earnings in the form of a dividend. Hanmi Financial pays out 45.2% 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. Sierra Bancorp has increased its dividend for 2 consecutive years and Hanmi Financial has increased its dividend for 1 consecutive years.

Earnings & Valuation

This table compares Sierra Bancorp 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
Sierra Bancorp	$141.20 million	2.74	$40.56 million	$2.87	9.92
Hanmi Financial	$259.79 million	3.11	$62.20 million	$2.39	11.23

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

Summary

Sierra Bancorp beats Hanmi Financial on 9 of the 17 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

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.