Head-To-Head Analysis: First Defiance Financial (FDEF) and Northrim BanCorp (NASDAQ:NRIM)

Northrim BanCorp (NASDAQ: NRIM) and First Defiance Financial (NASDAQ:FDEF) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Northrim BanCorp and First Defiance Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northrim BanCorp 0 0 0 0 N/A
First Defiance Financial 0 1 1 0 2.50

First Defiance Financial has a consensus price target of $62.00, indicating a potential downside of 1.02%. Given First Defiance Financial’s higher probable upside, analysts clearly believe First Defiance Financial is more favorable than Northrim BanCorp.

Dividends

Northrim BanCorp pays an annual dividend of $0.96 per share and has a dividend yield of 2.5%. First Defiance Financial pays an annual dividend of $1.20 per share and has a dividend yield of 1.9%. Northrim BanCorp pays out 47.1% of its earnings in the form of a dividend. First Defiance Financial pays out 34.2% 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.

Institutional and Insider Ownership

70.6% of Northrim BanCorp shares are owned by institutional investors. Comparatively, 65.1% of First Defiance Financial shares are owned by institutional investors. 2.8% of Northrim BanCorp shares are owned by company insiders. Comparatively, 3.1% of First Defiance Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Northrim BanCorp and First Defiance Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Northrim BanCorp $100.58 million 2.66 $13.15 million $2.04 19.09
First Defiance Financial $148.18 million 4.31 $32.26 million $3.51 17.85

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

Volatility & Risk

Northrim BanCorp has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, First Defiance Financial has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares Northrim BanCorp and First Defiance Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northrim BanCorp 13.47% 8.45% 1.08%
First Defiance Financial 25.37% 10.53% 1.32%

Summary

First Defiance Financial beats Northrim BanCorp on 12 of the 15 factors compared between the two stocks.

Northrim BanCorp Company Profile

Northrim BanCorp, Inc. operates as the bank holding company for Northrim Bank that provides commercial banking products and services to businesses and professionals in Alaska. The company operates in two segments, Community Banking and Home Mortgage Lending. It offers various deposit products, including noninterest-bearing checking accounts and interest-bearing time deposits, checking accounts, and savings accounts, as well as money market deposit accounts, certificates of deposit, and courier noncash deposits. The company also provides family residential mortgages; commercial loans, such as secured and unsecured loans for working capital and expansion; commercial real estate loans; construction loans for commercial real estate projects, and land development and residential subdivision construction loans; and consumer loans comprising loans for automobiles, recreational vehicles, boats, and other consumer purchases, as well as home equity and commercial credit lines, and factoring services. In addition, it offers other services comprising consumer online banking, mobile app and mobile deposit, mobile Web and text banking, business online banking, personal finance, online documents, consumer and business debit cards, personalized checks at account opening, telebanking, automated teller, overdraft protection from a savings account, commercial drive-up banking, automatic transfers and payments, wire transfers, direct payroll deposit, electronic tax payments, automated clearing house origination and receipt, remote deposit capture, merchant, and cash management services, as well as annuity products, and long term investment portfolios. As of January 29, 2018, the company operated 14 branches in Anchorage, the Matanuska Valley, Juneau, Fairbanks, Ketchikan, and Sitka. Northrim BanCorp, Inc. was founded in 1990 and is headquartered in Anchorage, Alaska.

First Defiance Financial Company Profile

First Defiance Financial Corp. operates as a unitary thrift holding company that provides community-based financial services in northwest Ohio, northeast Indiana, and southeastern Michigan. It offers checking accounts, money market accounts, savings accounts, term certificate accounts, and certificates of deposit, as well as Certificate of Deposit Account Registry Service; and consumer finance, 1-4 family residential real estate, commercial real estate, construction, consumer, commercial, and home equity and improvement loans. The company also offers trust and wealth management services, as well as online banking services. In addition, it sells various property and casualty, group health and life, and individual health and life insurance products. The company operates through 43 full service banking centers, as well as 1 loan production office. First Defiance Financial Corp. was incorporated in 1995 and is headquartered in Defiance, Ohio.

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