Financial Survey: Sound Financial Bancorp (NASDAQ:SFBC) versus Summit State Bank (NASDAQ:SSBI)

Sound Financial Bancorp (NASDAQ:SFBC) and Summit State Bank (NASDAQ:SSBI) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.

Profitability

This table compares Sound Financial Bancorp and Summit State Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sound Financial Bancorp	11.64%	6.70%	0.67%
Summit State Bank	11.55%	N/A	N/A

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Sound Financial Bancorp and Summit State Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sound Financial Bancorp	0	1	0	0	2.00
Summit State Bank	0	1	0	0	2.00

Risk & Volatility

Sound Financial Bancorp has a beta of 0.05, meaning that its share price is 95% less volatile than the S&P 500. Comparatively, Summit State Bank has a beta of 0.18, meaning that its share price is 82% less volatile than the S&P 500.

Dividends

Sound Financial Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.0%. Summit State Bank pays an annual dividend of $0.16 per share and has a dividend yield of 1.2%. Sound Financial Bancorp pays out 30.3% of its earnings in the form of a dividend. Summit State Bank pays out 15.8% 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. Sound Financial Bancorp has increased its dividend for 2 consecutive years. Sound Financial Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

68.9% of Sound Financial Bancorp shares are owned by institutional investors. 12.4% of Sound Financial Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Sound Financial Bancorp and Summit State Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sound Financial Bancorp	$61.52 million	1.75	$7.16 million	$2.77	15.10
Summit State Bank	$34.99 million	2.50	$6.80 million	$1.01	12.77

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

Summary

Sound Financial Bancorp beats Summit State Bank on 11 of the 14 factors compared between the two stocks.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.

About Summit State Bank

Summit State Bank engages in providing an array of financial services to small and medium-sized businesses, their owners and employees, entrepreneurs, high net worth families, foundations, estates, and individual consumers. It specializes in business services, personal accounts, nonprofit programs, and mobile banking ranging from lending, checking, merchant, eBanking, automated teller machines, equity loans, and others. The company was founded on December 20, 1982 and is headquartered in Santa Rosa, CA.