Reviewing Timberland Bancorp (NASDAQ:TSBK) and Northpointe Bancshares (NYSE:NPB)

Timberland Bancorp (NASDAQ:TSBK) and Northpointe Bancshares (NYSE:NPB) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Timberland Bancorp and Northpointe Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Timberland Bancorp	0	0	1	0	3.00
Northpointe Bancshares	1	1	2	0	2.25

Northpointe Bancshares has a consensus price target of $18.92, indicating a potential upside of 14.78%. Given Northpointe Bancshares’ higher probable upside, analysts clearly believe Northpointe Bancshares is more favorable than Timberland Bancorp.

Dividends

Timberland Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 3.3%. Northpointe Bancshares pays an annual dividend of $0.10 per share and has a dividend yield of 0.6%. Timberland Bancorp pays out 30.4% of its earnings in the form of a dividend. Northpointe Bancshares pays out 6.4% 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. Timberland Bancorp has raised its dividend for 13 consecutive years. Timberland Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Timberland Bancorp and Northpointe Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Timberland Bancorp	$78.42 million	3.39	$24.28 million	$3.68	9.14
Northpointe Bancshares	$220.22 million	2.57	$55.16 million	$1.57	10.50

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

Institutional and Insider Ownership

65.5% of Timberland Bancorp shares are held by institutional investors. 3.7% of Timberland Bancorp shares are held by insiders. Comparatively, 18.4% of Northpointe Bancshares shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Timberland Bancorp and Northpointe Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Timberland Bancorp	24.19%	10.79%	1.40%
Northpointe Bancshares	N/A	N/A	N/A

Summary

Timberland Bancorp beats Northpointe Bancshares on 9 of the 16 factors compared between the two stocks.

About Timberland Bancorp

Timberland Bancorp, Inc. operates as the bank holding company for Timberland Bank that provides various community banking services in Washington. It offers various deposit products, including money market deposit, checking, and regular savings accounts, as well as certificates of deposit. The company also provides one-to four-family residential, multi-family, and commercial real estate loans; and construction lending products, such as custom and owner/builder, speculative one- to four-family, commercial, multi-family, land development, and land development. In addition, it offers consumer loans comprising home equity lines of credit and second mortgage loans, automobile loans, boat loans, motorcycle loans, recreational vehicle loans, savings account loans, and unsecured loans; and commercial business loans. Timberland Bancorp, Inc. was founded in 1915 and is headquartered in Hoquiam, Washington.

About Northpointe Bancshares

Northpointe Bancshares, Inc. operates as a bank holding company. It offers a nationwide mortgage purchase program, residential mortgage loans, digital deposit banking to retail customers and custodial deposit services. The company was founded by Charles A. Williams in 1998 and is headquartered in Grand Rapids, MI.