Critical Survey: OP Bancorp (NASDAQ:OPBK) and TowneBank (NASDAQ:TOWN)

TowneBank (NASDAQ:TOWN) and OP Bancorp (NASDAQ:OPBK) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, risk, institutional ownership, valuation, dividends and earnings.

Dividends

TowneBank pays an annual dividend of $1.00 per share and has a dividend yield of 3.0%. OP Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 4.0%. TowneBank pays out 42.4% of its earnings in the form of a dividend. OP Bancorp pays out 34.5% 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. TowneBank has increased its dividend for 13 consecutive years. OP Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent recommendations for TowneBank and OP Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TowneBank	0	1	2	0	2.67
OP Bancorp	0	1	0	0	2.00

TowneBank presently has a consensus price target of $39.67, indicating a potential upside of 20.17%. OP Bancorp has a consensus price target of $18.00, indicating a potential upside of 50.50%. Given OP Bancorp’s higher probable upside, analysts plainly believe OP Bancorp is more favorable than TowneBank.

Volatility & Risk

TowneBank has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500. Comparatively, OP Bancorp has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.

Valuation & Earnings

This table compares TowneBank and OP Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TowneBank	$692.51 million	3.58	$161.76 million	$2.36	13.99
OP Bancorp	$82.04 million	2.17	$21.07 million	$1.39	8.60

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

Insider & Institutional Ownership

56.0% of TowneBank shares are owned by institutional investors. Comparatively, 53.6% of OP Bancorp shares are owned by institutional investors. 8.1% of TowneBank shares are owned by insiders. Comparatively, 21.3% of OP 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.

Profitability

This table compares TowneBank and OP Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TowneBank	15.77%	7.77%	0.96%
OP Bancorp	13.68%	10.64%	0.91%

Summary

TowneBank beats OP Bancorp on 12 of the 17 factors compared between the two stocks.

About TowneBank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.

About OP Bancorp

OP Bancorp operates as the bank holding company for Open Bank that provides banking products and services in California. It offers demand, checking, savings, money market, and time deposit accounts, as well as certificates of deposit. The company also provides commercial real estate, small business administration, commercial and industrial business, single-family residential, term, consumer, and home mortgage loans; trade financing products; and letters of credit, and SWIFT and export advice. In addition, it offers debit and credit card, online transfer and bill payment, electronic delivery of customer statements, and mobile banking solutions for iPhone and Android phones, including remote check deposit with mobile bill pay; direct deposits, cashier's checks, person to person payments, wire transfers, and automated clearing house (ACH) services; and cash management services, including balance reporting, transfers between accounts, wire transfer initiation, ACH origination, and stop payment services, as well as remote deposit capture, positive pay, zero balance accounts, and sweep accounts. The company operates full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena Park, and Santa Clara in California; and Carrollton, Texas; and operates loan production offices in Pleasanton, California; Atlanta, Georgia; Aurora, Colorado; and Lynnwood in Washington. The company was founded in 2005 and is headquartered in Los Angeles, California.