Contrasting Community Heritage Financial (OTCMKTS:CMHF) & Northpointe Bancshares (NYSE:NPB)

Community Heritage Financial (OTCMKTS:CMHF) and Northpointe Bancshares (NYSE:NPB) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Community Heritage Financial and Northpointe Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community Heritage Financial	0	0	0	0	0.00
Northpointe Bancshares	0	0	2	0	3.00

Northpointe Bancshares has a consensus target price of $17.25, indicating a potential upside of 35.51%. Given Northpointe Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe Northpointe Bancshares is more favorable than Community Heritage Financial.

Profitability

This table compares Community Heritage Financial and Northpointe Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community Heritage Financial	N/A	N/A	N/A
Northpointe Bancshares	N/A	N/A	N/A

Earnings and Valuation

This table compares Community Heritage Financial and Northpointe Bancshares”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community Heritage Financial	$57.30 million	1.25	$6.60 million	$2.26	10.82
Northpointe Bancshares	$187.14 million	2.33	N/A	N/A	N/A

Community Heritage Financial has higher earnings, but lower revenue than Northpointe Bancshares.

Dividends

Community Heritage Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.3%. Northpointe Bancshares pays an annual dividend of $0.10 per share and has a dividend yield of 0.8%. Community Heritage Financial pays out 14.2% of its earnings in the form of a dividend.

Insider & Institutional Ownership

12.2% of Community Heritage Financial shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Northpointe Bancshares beats Community Heritage Financial on 6 of the 8 factors compared between the two stocks.

About Community Heritage Financial

Community Heritage Financial, Inc. operates as the bank holding company for Middletown Valley Bank that provides retail and commercial banking services to individuals and businesses in Frederick and Washington counties in Maryland and Franklin County, Pennsylvania. Its primary deposit products include demand, savings, and time deposits, as well as lending products comprise real estate mortgages, commercial business loans, and instalment loans. The company also offers mortgage financing, new home purchases, refinancing, and construction lending in Middletown, Crofton, and Oakland, Maryland. The company was founded in 1908 and is based in Middletown, Maryland.

About Northpointe Bancshares

We are a bank holding company headquartered in Grand Rapids, Michigan and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). We operate our business primarily through our wholly-owned banking subsidiary, Northpointe Bank. We emphasize to our employees and clients that our specialized business lines differentiate us as a business that has the added benefit of being a bank. Our Bank was founded in 1999 as a focused mortgage portfolio lender primarily operating in the midwestern states of Michigan, Ohio and Indiana. Since then, we have evolved, and our business now offers a nationwide mortgage purchase program, residential mortgage loans, digital deposit banking to our retail customers and custodial deposit services to our loan servicing clients, which we believe is unique for a bank. We believe we are recognized in the market for the methods we utilize to acquire new borrowers and for our ability to provide simple, fast, and trusted digital solutions to borrowers in the mortgage banking marketplace. Our delivery systems are primarily digital and are available to clients nationwide; and we provide our staff with loan production offices across 23 cities in 15 states and support them through our centralized operating center in Grand Rapids, Michigan. Our nationwide presence has enabled us to have clients in all 50 states and the District of Columbia. As of September 30, 2024, we had $5.4 billion in assets, $4.8 billion in gross loans, including held for investment (“HFI”) and held for sale (“HFS”), $3.5 billion of deposits and $454.8 million of stockholders’ equity. We have originated more than $190 billion in home loan financings over the last 10 years. In the large and fragmented mortgage marketplace, we believe we are well-positioned as a specialty bank that uses a widely accepted and growing digitally-enabled platform to serve the borrowing and payment needs of increasingly sophisticated mortgage warehouse MPP clients and the rapidly evolving demands of professional mortgage originators and retail borrowers. Our strategy is to primarily operate four major business channels that offer products which we believe requires differentiated expertise in order to originate, hold and service those products. We believe our specialized credit, technology and payment processing expertise allows us to successfully compete and achieve the desired profitability in the channels in which we operate. We have expertise in the below businesses, which are reflected in our two primary business channels: 1) Mortgage Warehouse, or Mortgage Purchase Program (“MPP”) — our mortgage warehouse revolving purchase facility, which we refer to as MPP, utilizes proprietary software and payment technology which is integrated with our credit underwriting process to manage the high velocity of credit extension draws and repayments that result from extensive use by our MPP clients of their revolving purchase facilities. We process approximately $2.2 billion in funding draws/repayments per month; and have experienced no charge-offs in our 15-year history of MPP lending. 2) Retail Banking, including Residential Lending and our All-in-One (“AIO”) Loan — are a rapidly growing category of specialized first mortgage revolving (HELOC-styled) loans, linked by one account to a demand deposit bank account of the borrower. An AIO account requires us to accurately process a high frequency of payments, including changes in payment amounts associated with variable rate structures, revolving loan features and constantly changing balances of contractually linked demand deposit accounts. a. Specialized Mortgage Loan & Deposit Account Servicing — requires highly developed operating skills and a customized platform capable of: (a) being approved and rated by major agencies to handle subservicing AIO-style loans, (b) being a well-capitalized FDIC-insured depository institution able to accept deposits, and (c) documenting significant compliance requirements. We believe very few financial institutions have been able to offer and successfully conduct the servicing of the variable rate, varying balance and higher velocity of payments related to such linked loan and deposit accounts. We further believe we are the largest of the limited number of entities that originate, hold and service these types of loans for their own balance sheet, as well as being rated and approved for servicing such products for other issuers. b. Digital Deposit Banking — requires delivery of easy to use, real-time branchless banking to retail deposit customers nationwide with a technologically competitive delivery framework. While many financial institutions offer digital banking, our digital-only focus has allowed us to remain contemporary without being “a bleeding edge” provider. We provide our digital banking services along with attractive rates to a focused digital banking customer subset that fit our specific balance sheet strategy. Our principal executive office is located at 3333 Deposit Drive Northeast, Grand Rapids, Michigan.