Head-To-Head Analysis: Third Coast Bancshares (NASDAQ:TCBX) vs. Heritage Commerce (NASDAQ:HTBK)

Heritage Commerce (NASDAQ:HTBK) and Third Coast Bancshares (NASDAQ:TCBX) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, risk, earnings, dividends, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares Heritage Commerce and Third Coast Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Commerce	17.77%	8.07%	1.01%
Third Coast Bancshares	16.30%	12.05%	1.17%

Dividends

Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. Third Coast Bancshares pays an annual dividend of $16.87 per share and has a dividend yield of 37.6%. Heritage Commerce pays out 66.7% of its earnings in the form of a dividend. Third Coast Bancshares pays out 420.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

75.6% of Heritage Commerce shares are owned by institutional investors. Comparatively, 36.9% of Third Coast Bancshares shares are owned by institutional investors. 2.7% of Heritage Commerce shares are owned by insiders. Comparatively, 10.5% of Third Coast Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Heritage Commerce has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500. Comparatively, Third Coast Bancshares has a beta of 0.32, indicating that its stock price is 68% less volatile than the S&P 500.

Earnings and Valuation

This table compares Heritage Commerce and Third Coast Bancshares”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Commerce	$197.46 million	4.20	$47.83 million	$0.78	17.24
Third Coast Bancshares	$234.99 million	3.17	$47.67 million	$4.01	11.19

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Heritage Commerce and Third Coast Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Commerce	0	5	2	0	2.29
Third Coast Bancshares	0	2	4	0	2.67

Heritage Commerce presently has a consensus price target of $13.12, suggesting a potential downside of 2.42%. Third Coast Bancshares has a consensus price target of $47.75, suggesting a potential upside of 6.43%. Given Third Coast Bancshares’ stronger consensus rating and higher possible upside, analysts plainly believe Third Coast Bancshares is more favorable than Heritage Commerce.

Summary

Third Coast Bancshares beats Heritage Commerce on 9 of the 16 factors compared between the two stocks.

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.

About Third Coast Bancshares

Third Coast Bancshares, Inc. operates as a bank holding company for Third Coast Bank, SSB that provides various commercial banking solutions to small and medium-sized businesses, and professionals. The company's deposit products include checking, savings, individual retirement, and money market accounts, as well as certificates of deposit. It also offers commercial and industrial loans, equipment loans, working capital lines of credit, guaranteed loans, auto finance, letters of credit, commercial and residential real estate, and construction, development, and other loans. In addition, the company provides retail and commercial online banking platforms, mobile banking apps, mortgage, treasury management solutions, merchant card services, and customer digital solutions, as well as debit and credit cards. Third Coast Bancshares, Inc. was founded in 2008 and is headquartered in Humble, Texas.