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

Dividends

American National BankShares pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. Hanmi Financial pays an annual dividend of $0.96 per share and has a dividend yield of 4.2%. American National BankShares pays out 37.2% of its earnings in the form of a dividend. Hanmi Financial pays out 50.5% 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. American National BankShares has increased its dividend for 3 consecutive years and Hanmi Financial has increased its dividend for 5 consecutive years. Hanmi Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares American National BankShares and Hanmi Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American National BankShares $82.04 million 4.95 $22.58 million $2.69 13.51
Hanmi Financial $258.92 million 2.71 $57.87 million $1.90 11.96

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

Insider and Institutional Ownership

30.4% of American National BankShares shares are held by institutional investors. Comparatively, 90.6% of Hanmi Financial shares are held by institutional investors. 5.0% of American National BankShares shares are held by insiders. Comparatively, 2.9% of Hanmi Financial shares are held 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 American National BankShares and Hanmi Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American National BankShares 27.24% 10.73% 1.28%
Hanmi Financial 21.65% 10.71% 1.10%

Analyst Recommendations

This is a summary of current ratings for American National BankShares and Hanmi Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American National BankShares 0 0 2 0 3.00
Hanmi Financial 0 3 0 0 2.00

American National BankShares presently has a consensus price target of $41.50, indicating a potential upside of 14.23%. Hanmi Financial has a consensus price target of $25.50, indicating a potential upside of 12.24%. Given American National BankShares’ stronger consensus rating and higher possible upside, equities research analysts clearly believe American National BankShares is more favorable than Hanmi Financial.

Risk & Volatility

American National BankShares has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Summary

American National BankShares beats Hanmi Financial on 11 of the 17 factors compared between the two stocks.

About American National BankShares

American National Bankshares Inc. operates as the bank holding company for American National Bank and Trust Company that provides financial products and services. The company operates through two segments, Community Banking, and Trust and Investment Services. It accepts deposit products, including checking, money market, savings, and consumer and commercial time deposits, as well as certificates of deposit. The company's loan products comprise commercial and residential real estate loans, commercial loans to small and medium-sized businesses, construction and land development loans, home equity loans, mortgage loans, and consumer loans. It also offers trust and investment services, such as estate planning, trust account administration, investment management, and retail brokerage services; online and telephone banking services; insurance services; and investment management services, including purchasing equity, fixed income, and mutual fund investments for customer accounts, as well as operates 34 automated teller machines. As of December 31, 2018, it operated 24 banking offices and 2 loan production offices in Roanoke, Virginia and Raleigh, North Carolina. American National Bankshares Inc. was founded in 1909 and is headquartered in Danville, Virginia.

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. 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 24, 2019, it operated a network of 39 full-service branches and 9 loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington, and Georgia. The company was incorporated in 2000 and is headquartered in Los Angeles, California.

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