Hanmi Financial (NASDAQ: HAFC) and International Bancshares (NASDAQ:IBOC) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Profitability

This table compares Hanmi Financial and International Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hanmi Financial 24.54% 10.60% 1.18%
International Bancshares 26.36% 8.34% 1.23%

Analyst Recommendations

This is a breakdown of recent ratings for Hanmi Financial and International Bancshares, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hanmi Financial 0 2 1 0 2.33
International Bancshares 0 0 0 0 N/A

Hanmi Financial currently has a consensus price target of $31.00, indicating a potential upside of 1.47%. Given Hanmi Financial’s higher possible upside, research analysts clearly believe Hanmi Financial is more favorable than International Bancshares.

Institutional & Insider Ownership

90.5% of Hanmi Financial shares are owned by institutional investors. Comparatively, 57.0% of International Bancshares shares are owned by institutional investors. 3.7% of Hanmi Financial shares are owned by insiders. Comparatively, 17.9% of International Bancshares shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk & Volatility

Hanmi Financial has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, International Bancshares has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Valuation and Earnings

This table compares Hanmi Financial and International Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hanmi Financial $211.55 million 4.68 $56.48 million $1.79 17.07
International Bancshares $549.62 million 4.78 $133.93 million $2.21 17.99

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

Dividends

Hanmi Financial pays an annual dividend of $0.84 per share and has a dividend yield of 2.7%. International Bancshares pays an annual dividend of $0.66 per share and has a dividend yield of 1.7%. Hanmi Financial pays out 46.9% of its earnings in the form of a dividend. International Bancshares pays out 29.9% 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.

Summary

International Bancshares beats Hanmi Financial on 10 of the 15 factors compared between the two stocks.

Hanmi Financial Company Profile

Hanmi Financial Corporation is the holding company for Hanmi Bank (the Bank). The Bank is a community bank conducting general business banking, with its primary market encompassing the Korean-American community, as well as other ethnic communities across California, Colorado, Georgia, Illinois, New York, Texas, Virginia and Washington. The Bank’s client base reflects the multi-ethnic composition of these communities. The Bank maintains a branch network of full-service branch offices in California, Illinois, New Jersey, New York, Texas and Virginia, and loan production offices in California, Colorado, Texas, Virginia and Washington State. Its lending activities include real estate loans (commercial property, construction and residential property), commercial and industrial loans (commercial term loans, commercial lines of credit and international), and consumer loans and small business administration (SBA) loans. Its revenues are derived from interest and fees on its loans.

International Bancshares Company Profile

International Bancshares Corporation is a financial holding company. The Company, through its subsidiaries, is primarily engaged in the business of banking, including the acceptance of checking and savings deposits, and the making of commercial, real estate, personal, home improvement, automobile, and other installment and term loans. The primary markets of the Company are South, Central and Southeast Texas, an area bordered on the east by the Galveston area, to the northwest by Round Rock, to the southwest by Del Rio and to the southeast by Brownsville, as well as the State of Oklahoma. Its banking subsidiaries facilitate international trade along the United States’ border with Mexico and elsewhere. The Bank’s subsidiaries primarily focus on providing commercial banking services to small and medium sized businesses located in their trade areas. The Company’s bank subsidiaries include International Bank of Commerce (IBC); Commerce Bank, and International Bank of Commerce, Zapata.

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