Reviewing Heritage Commerce (NASDAQ:HTBK) & PCB Bancorp (NASDAQ:PCB)

PCB Bancorp (NASDAQ:PCB) and Heritage Commerce (NASDAQ:HTBK) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Risk & Volatility

PCB Bancorp has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Heritage Commerce has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500.

Earnings and Valuation

This table compares PCB Bancorp and Heritage Commerce’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PCB Bancorp	$161.86 million	1.32	$30.70 million	$1.75	8.55
Heritage Commerce	$243.30 million	2.00	$64.44 million	$0.92	8.63

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

Profitability

This table compares PCB Bancorp and Heritage Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PCB Bancorp	14.69%	9.09%	0.93%
Heritage Commerce	22.84%	8.36%	1.05%

Analyst Recommendations

This is a breakdown of recent ratings for PCB Bancorp and Heritage Commerce, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PCB Bancorp	0	1	0	0	2.00
Heritage Commerce	0	1	3	0	2.75

PCB Bancorp presently has a consensus target price of $17.00, indicating a potential upside of 13.56%. Heritage Commerce has a consensus target price of $10.50, indicating a potential upside of 32.24%. Given Heritage Commerce’s stronger consensus rating and higher possible upside, analysts plainly believe Heritage Commerce is more favorable than PCB Bancorp.

Dividends

PCB Bancorp pays an annual dividend of $0.72 per share and has a dividend yield of 4.8%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 6.5%. PCB Bancorp pays out 41.1% of its earnings in the form of a dividend. Heritage Commerce pays out 56.5% 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.

Insider and Institutional Ownership

33.0% of PCB Bancorp shares are held by institutional investors. Comparatively, 75.6% of Heritage Commerce shares are held by institutional investors. 25.0% of PCB Bancorp shares are held by company insiders. Comparatively, 4.0% of Heritage Commerce shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Heritage Commerce beats PCB Bancorp on 12 of the 16 factors compared between the two stocks.

About PCB Bancorp

PCB Bancorp operates as the bank holding company for PCB Bank that provides various banking products and services to small to medium-sized businesses, individuals, and professionals in Southern California. The company offers demand, savings, money market, and time deposits, as well as certificates of deposit; and trade finance, remote deposit capture, courier deposit services, positive pay services, zero balance accounts, and sweep accounts. It also provides real estate loans, including commercial and residential, Small Business Administration (SBA) property, and construction loans; commercial and industrial loans, such as commercial term and lines of credit, SBA commercial term, and SBA Paycheck Protection Program loans; and consumer loans comprising residential mortgage; and automobile loans, unsecured lines of credit, and term loans. In addition, the company offers access to account balances, online transfers, and online bill payment and electronic delivery of customer statements; and mobile banking solutions that include remote check deposit and mobile bill pay. Further, it provides automated teller machines; and banking by telephone, mail, personal appointment, debit cards, direct deposit, and cashier's checks, as well as treasury management, wire transfer, and automated clearing house services. The company operates through a network of full-service branches in Los Angeles and Orange counties, California; Carrollton and Dallas, Texas; and Englewood Cliffs and Palisade Park, New Jersey, and Bayside, New York. It also operates loan production offices in Los Angeles and Orange Counties, California; Annandale, Virginia; Atlanta, Georgia; Bellevue, Washington; Aurora, Colorado; and Carrollton, Texas. The company was formerly known as Pacific City Financial Corporation and changed its name to PCB Bancorp in July 2019. PCB Bancorp was founded in 2003 and is headquartered in Los Angeles, California.

About Heritage Commerce

Heritage Commerce Corp operates as the bank holding company for Heritage Bank of Commerce that provides various commercial and personal banking services to residents and the business/professional community in California. Its deposit products for business banking and retail markets include interest and non-interest-bearing demand, savings, and money market accounts, as well as certificates of deposit and time deposits. The company's loan portfolio comprises commercial loans, such as operating secured and unsecured loans advanced for working capital, equipment purchases, and other business purposes; commercial real estate loans; commercial construction loans for rental properties, commercial buildings, and homes; small business administration loans; home equity lines of credit; multifamily loans on residential properties; residential mortgage loans; and consumer loans consisting of loans for financing automobiles, various consumer goods, and other personal purposes. In addition, it offers other banking services, including cashier's checks, bank by mail, night depositories, safe deposit boxes, direct deposit, automated payroll, electronic funds transfer, online bill pay, homeowner association, remote deposit capture, automated clearing house origination, electronic data interchange, and check imaging services, as well as other customary banking, factoring financing, and electronic banking services. Heritage Commerce Corp was founded in 1994 and is headquartered in San Jose, California.