Critical Contrast: Sound Financial Bancorp (NASDAQ:SFBC) & TriCo Bancshares (NASDAQ:TCBK)

TriCo Bancshares (NASDAQ:TCBK) and Sound Financial Bancorp (NASDAQ:SFBC) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, profitability and earnings.

Insider and Institutional Ownership

59.1% of TriCo Bancshares shares are owned by institutional investors. Comparatively, 68.9% of Sound Financial Bancorp shares are owned by institutional investors. 4.8% of TriCo Bancshares shares are owned by insiders. Comparatively, 12.4% of Sound Financial Bancorp 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.

Earnings & Valuation

This table compares TriCo Bancshares and Sound Financial Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TriCo Bancshares	$531.04 million	2.98	$114.87 million	$3.56	13.69
Sound Financial Bancorp	$62.03 million	1.81	$4.64 million	$2.64	16.59

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

Profitability

This table compares TriCo Bancshares and Sound Financial Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TriCo Bancshares	21.87%	9.27%	1.19%
Sound Financial Bancorp	10.97%	6.48%	0.65%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for TriCo Bancshares and Sound Financial Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TriCo Bancshares	0	4	3	0	2.43
Sound Financial Bancorp	0	1	0	0	2.00

TriCo Bancshares currently has a consensus price target of $48.60, suggesting a potential downside of 0.29%. Given TriCo Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe TriCo Bancshares is more favorable than Sound Financial Bancorp.

Volatility & Risk

TriCo Bancshares has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Sound Financial Bancorp has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500.

Dividends

TriCo Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 3.0%. Sound Financial Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 1.7%. TriCo Bancshares pays out 40.4% of its earnings in the form of a dividend. Sound Financial Bancorp pays out 28.8% 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. TriCo Bancshares has increased its dividend for 12 consecutive years and Sound Financial Bancorp has increased its dividend for 2 consecutive years. TriCo Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

TriCo Bancshares beats Sound Financial Bancorp on 13 of the 17 factors compared between the two stocks.

About TriCo Bancshares

TriCo Bancshares operates as a bank holding company for Tri Counties Bank that provides commercial banking services to individual and corporate customers. The company accepts demand, savings, and time deposits. It also provides small business loans; real estate mortgage loans, such as residential and commercial loans; consumer loans; mortgage, auto, other vehicle, and personal loans; commercial loans, including agricultural loans; and real estate construction loans. In addition, the company offers treasury management services; credit and debit cards; and other customary banking services, including safe deposit boxes; and independent financial and broker-dealer services. Further, it provides checking, saving, and money market accounts, as well as individual retirement accounts; equipment financing; certificate of deposit account registry service; certificated of deposit; and IntraFi cash service. TriCo Bancshares was founded in 1975 and is headquartered in Chico, California.

About Sound Financial Bancorp

Sound Financial Bancorp, Inc. operates as the bank holding company for Sound Community Bank that provides banking and other financial services for consumers and businesses. It accepts various deposits products comprising savings, money market deposit, NOW, and demand accounts, as well as certificates of deposit. The company also offers loans secured by first and second mortgages on one-to four-family residences; home equity loans, including fixed-rate loans and variable-rate lines of credit; commercial and multifamily real estate loans; construction loans secured by single-family residences, and commercial and multifamily real estate; land loans; commercial business loans to finance commercial vehicles and equipment, as well as loans secured by accounts receivable and/or inventory; and secured and unsecured consumer loans, such as new and used manufactured homes, floating homes, automobiles, boats, and recreational vehicle loans, and loans secured by deposit accounts. The company was founded in 1953 and is headquartered in Seattle, Washington.