Financial Contrast: Heritage Commerce (NASDAQ:HTBK) and City Bank (OTCMKTS:CTBK)

Heritage Commerce (NASDAQ:HTBK) and City Bank (OTCMKTS:CTBK) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Insider and Institutional Ownership

75.6% of Heritage Commerce shares are owned by institutional investors. 2.7% of Heritage Commerce shares are owned by insiders. Comparatively, 37.5% of City Bank shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Heritage Commerce and City Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Commerce	0	1	4	1	3.00
City Bank	0	0	0	0	0.00

Heritage Commerce currently has a consensus target price of $11.50, suggesting a potential upside of 10.58%. Given Heritage Commerce’s stronger consensus rating and higher possible upside, research analysts plainly believe Heritage Commerce is more favorable than City Bank.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Commerce	16.31%	7.20%	0.90%
City Bank	N/A	N/A	N/A

Valuation & Earnings

This table compares Heritage Commerce and City Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Commerce	$192.71 million	3.32	$40.53 million	$0.70	14.86
City Bank	N/A	N/A	N/A	N/A	N/A

Heritage Commerce has higher revenue and earnings than City Bank.

Summary

Heritage Commerce beats City Bank on 9 of the 10 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 City Bank

As of April 17, 2010, City Bank was acquired by Whidbey Island Bank. City Bank offers commercial banking services. The company was incorporated in 1974 and is headquartered in Lynnwood, Washington.