Heritage Commerce (NASDAQ:HTBK) vs. United Security Bancshares (NASDAQ:UBFO) Head-To-Head Review

United Security Bancshares (NASDAQ:UBFO) and Heritage Commerce (NASDAQ:HTBK) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Insider and Institutional Ownership

30.9% of United Security Bancshares shares are owned by institutional investors. Comparatively, 75.6% of Heritage Commerce shares are owned by institutional investors. 22.1% of United Security Bancshares shares are owned by insiders. Comparatively, 2.7% of Heritage Commerce shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

United Security Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 5.1%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 5.1%. United Security Bancshares pays out 71.6% of its earnings in the form of a dividend. Heritage Commerce pays out 74.3% 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. United Security Bancshares has increased its dividend for 2 consecutive years. United Security Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Security Bancshares	$52.64 million	3.13	$14.78 million	$0.67	13.99
Heritage Commerce	$189.76 million	3.31	$40.53 million	$0.70	14.63

Heritage Commerce has higher revenue and earnings than United Security Bancshares. United Security 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 recommmendations for United Security Bancshares and Heritage Commerce, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Security Bancshares	0	0	1	0	3.00
Heritage Commerce	0	1	4	1	3.00

Heritage Commerce has a consensus price target of $11.50, suggesting a potential upside of 12.30%. Given Heritage Commerce’s higher possible upside, analysts clearly believe Heritage Commerce is more favorable than United Security Bancshares.

Profitability

This table compares United Security Bancshares and Heritage Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Security Bancshares	17.51%	8.58%	0.94%
Heritage Commerce	16.31%	7.20%	0.90%

Volatility & Risk

United Security Bancshares has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500. Comparatively, Heritage Commerce has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Summary

Heritage Commerce beats United Security Bancshares on 10 of the 17 factors compared between the two stocks.

About United Security Bancshares

United Security Bancshares operates as the bank holding company for United Security Bank, a state-chartered bank that provides a range of commercial banking services to the business and professional community, and individuals in California. The company accepts various deposit products, including personal and business checking accounts, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit. It also provides real estate mortgage, commercial and industrial, real estate construction and development, and consumer loans, as well as agricultural, installment, and student loans. In addition, the company offers online and mobile banking, safe deposit boxes, wire transfers, payroll direct deposit, cashier's check, cash management, and foreign draft services, as well as interactive teller machines; and person-to-person and bank-to-bank transfers for consumer customers. United Security Bancshares was founded in 1987 and is headquartered in Fresno, California.

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.