Yadkin Financial Corp (NYSE: YDKN) and Sun Bancorp (NASDAQ:SNBC) are both small-cap commercial banks companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Risk & Volatility

Yadkin Financial Corp has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500. Comparatively, Sun Bancorp has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500.

Dividends

Yadkin Financial Corp pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Sun Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.2%. Yadkin Financial Corp pays out 35.7% of its earnings in the form of a dividend. Sun Bancorp pays out 1.2% 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.

Insider and Institutional Ownership

69.7% of Yadkin Financial Corp shares are held by institutional investors. Comparatively, 70.0% of Sun Bancorp shares are held by institutional investors. 3.0% of Yadkin Financial Corp shares are held by insiders. Comparatively, 12.5% of Sun Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Yadkin Financial Corp and Sun Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Yadkin Financial Corp 18.40% 5.41% 0.75%
Sun Bancorp 72.60% 19.02% 2.77%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Yadkin Financial Corp and Sun Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Yadkin Financial Corp 0 0 0 0 N/A
Sun Bancorp 0 0 2 0 3.00

Sun Bancorp has a consensus target price of $27.25, indicating a potential upside of 10.32%. Given Sun Bancorp’s higher possible upside, analysts clearly believe Sun Bancorp is more favorable than Yadkin Financial Corp.

Earnings & Valuation

This table compares Yadkin Financial Corp and Sun Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Yadkin Financial Corp N/A N/A N/A $1.12 30.79
Sun Bancorp $83.00 million 5.68 $61.41 million $3.23 7.65

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

Summary

Sun Bancorp beats Yadkin Financial Corp on 10 of the 12 factors compared between the two stocks.

About Yadkin Financial Corp

Yadkin Financial Corporation is a bank holding company. The Company conducts its business operations through its subsidiary, Yadkin Bank, which is a chartered community bank that provides services in approximately 110 branches across North Carolina and South Carolina. Yadkin Bank provides banking, mortgage, investment and insurance services to businesses and consumers across the Carolinas. It operates through a segment, which is providing general commercial banking and financial services to individuals and businesses located in North Carolina and South Carolina, and to customers in various states through its Small Business Administration (SBA) lending program. It offers various loans, such as commercial and industrial (C&I) loans and government-guaranteed loans. The Company’s investment securities portfolio includes the United States Government-sponsored enterprise (GSE) obligations and securities guaranteed by the United States SBA. The Company’s primary source of funds is deposits.

About Sun Bancorp

Sun Bancorp, Inc. is a bank holding company. The Company’s principal subsidiary is Sun National Bank (the Bank). Through the Bank, the Company provides an array of community banking services to consumers, small businesses and mid-size companies. The Company’s lending services to businesses include term loans, lines of credit and commercial mortgages. The Company’s commercial deposit services include business checking and money market accounts, and cash management solutions, such as online banking, electronic bill payment and wire transfer services, lockbox services, remote deposit and controlled disbursement services. The Company’s lending services to consumers consist primarily of lines of credit of overdraft sweeps. The Company’s consumer deposit services include checking accounts, savings accounts, money market accounts, certificates of deposit and individual retirement accounts.

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