Head to Head Contrast: Third Coast Bancshares (NASDAQ:TCBX) versus Heritage Commerce (NASDAQ:HTBK)

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

Analyst Ratings

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

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

Third Coast Bancshares currently has a consensus target price of $47.75, indicating a potential upside of 3.83%. Heritage Commerce has a consensus target price of $13.12, indicating a potential downside of 2.42%. Given Third Coast Bancshares’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Third Coast Bancshares is more favorable than Heritage Commerce.

Institutional and Insider Ownership

36.9% of Third Coast Bancshares shares are owned by institutional investors. Comparatively, 75.6% of Heritage Commerce shares are owned by institutional investors. 10.5% of Third Coast Bancshares shares are owned by insiders. Comparatively, 2.7% of Heritage Commerce shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

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

Profitability

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

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

Valuation & Earnings

This table compares Third Coast Bancshares and Heritage Commerce”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Third Coast Bancshares	$234.99 million	3.25	$47.67 million	$4.01	11.47
Heritage Commerce	$197.46 million	4.20	$47.83 million	$0.78	17.24

Heritage Commerce has lower revenue, but higher earnings 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.

Dividends

Third Coast Bancshares pays an annual dividend of $16.87 per share and has a dividend yield of 36.7%. Heritage Commerce pays an annual dividend of $0.52 per share and has a dividend yield of 3.9%. 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. Heritage Commerce pays out 66.7% of its earnings in the form of a dividend.

Summary

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

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.

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.