Surrey Bancorp (OTCMKTS:SRYB) versus First Financial Northwest (NASDAQ:FFNW) Critical Analysis

First Financial Northwest (NASDAQ:FFNW) and Surrey Bancorp (OTCMKTS:SRYB) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Dividends

First Financial Northwest pays an annual dividend of $0.13 per share and has a dividend yield of 0.6%. Surrey Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.9%. First Financial Northwest pays out 118.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Surrey Bancorp pays out 31.6% of its earnings in the form of a dividend. Surrey Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares First Financial Northwest and Surrey Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Financial Northwest	1.34%	0.67%	0.07%
Surrey Bancorp	37.97%	N/A	N/A

Analyst Recommendations

This is a breakdown of current ratings and target prices for First Financial Northwest and Surrey Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Northwest	0	2	0	0	2.00
Surrey Bancorp	0	0	0	0	0.00

First Financial Northwest currently has a consensus target price of $22.75, indicating a potential upside of 0.84%. Given First Financial Northwest’s stronger consensus rating and higher possible upside, equities analysts plainly believe First Financial Northwest is more favorable than Surrey Bancorp.

Volatility and Risk

First Financial Northwest has a beta of 0.25, indicating that its share price is 75% less volatile than the S&P 500. Comparatively, Surrey Bancorp has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500.

Insider & Institutional Ownership

55.0% of First Financial Northwest shares are owned by institutional investors. Comparatively, 3.7% of Surrey Bancorp shares are owned by institutional investors. 7.2% of First Financial Northwest shares are owned by insiders. Comparatively, 33.7% of Surrey Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares First Financial Northwest and Surrey Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Northwest	$37.56 million	5.54	$1.07 million	$0.11	205.09
Surrey Bancorp	$16.20 million	4.23	$5.10 million	$1.52	10.99

Surrey Bancorp has lower revenue, but higher earnings than First Financial Northwest. Surrey Bancorp is trading at a lower price-to-earnings ratio than First Financial Northwest, indicating that it is currently the more affordable of the two stocks.

Summary

First Financial Northwest beats Surrey Bancorp on 8 of the 15 factors compared between the two stocks.

About First Financial Northwest

First Financial Northwest, Inc. operates as the bank holding company for First Financial Northwest Bank that provides commercial banking services in Washington. The company offers a range of deposit products, including noninterest-bearing accounts, interest-bearing demand accounts, money market accounts, savings accounts, and certificates of deposit. Its loan products comprise one-to-four family residential loans; multifamily and commercial real estate loans; construction/land loans; business loans; and consumer loans, such as home equity loans, lines of credit, second mortgage term loans, auto loans, and savings account loans. The company also provides wealth management services; and online banking services, as well as debit cards and ATMs. The company was founded in 1923 and is headquartered in Renton, Washington.

About Surrey Bancorp

Surrey BanCorp engages in the provision of banking solutions through its subsidiaries, Surrey Bank & Trust . It offers checking accounts, savings, deposit services, mortgages, real estate loans, commercial credit products, business checking, and electronic banking. The company was founded on May 1, 2003 and is headquartered in Mount Airy, NC.