Hanmi Financial (NASDAQ:HAFC) & Oak Valley Bancorp (NASDAQ:OVLY) Critical Comparison

Oak Valley Bancorp (NASDAQ:OVLY) and Hanmi Financial (NASDAQ:HAFC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Dividends

Oak Valley Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 2.0%. Hanmi Financial pays an annual dividend of $1.08 per share and has a dividend yield of 3.9%. Oak Valley Bancorp pays out 21.1% of its earnings in the form of a dividend. Hanmi Financial pays out 45.2% 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. Oak Valley Bancorp has increased its dividend for 11 consecutive years and Hanmi Financial has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and price targets for Oak Valley Bancorp and Hanmi Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oak Valley Bancorp	0	0	1	0	3.00
Hanmi Financial	0	3	2	0	2.40

Hanmi Financial has a consensus price target of $28.50, indicating a potential upside of 1.71%. Given Hanmi Financial’s higher possible upside, analysts clearly believe Hanmi Financial is more favorable than Oak Valley Bancorp.

Institutional and Insider Ownership

30.9% of Oak Valley Bancorp shares are owned by institutional investors. Comparatively, 88.7% of Hanmi Financial shares are owned by institutional investors. 18.1% of Oak Valley Bancorp shares are owned by insiders. Comparatively, 1.6% of Hanmi Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Oak Valley Bancorp and Hanmi Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oak Valley Bancorp	$89.45 million	2.84	$24.95 million	$2.85	10.64
Hanmi Financial	$430.37 million	1.95	$62.20 million	$2.39	11.72

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

Risk & Volatility

Oak Valley Bancorp has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500. Comparatively, Hanmi Financial has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Profitability

This table compares Oak Valley Bancorp and Hanmi Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oak Valley Bancorp	25.28%	12.56%	1.22%
Hanmi Financial	16.53%	9.59%	0.93%

Summary

Oak Valley Bancorp beats Hanmi Financial on 9 of the 17 factors compared between the two stocks.

About Oak Valley Bancorp

Oak Valley Bancorp operates as the bank holding company for Oak Valley Community Bank that provides a range of commercial banking services to individuals and small to medium-sized businesses in the Central Valley and the Eastern Sierras. The company's deposits products include checking and savings, money market, health savings, and individual retirement accounts, as well as certificates of deposit. It also offers commercial real estate loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including automobile loans, home mortgages, credit lines, and other personal loans. In addition, the company provides online and mobile banking, remote deposit capture, merchant, night depository, extended hours, wire transfer of funds, note collection services, and automated teller machines. The company was incorporated in 1990 and is headquartered in Oakdale, California.

About Hanmi Financial

Hanmi Financial Corporation operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. It offers various deposit products, including noninterest-bearing checking accounts, savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit. The company also provides real estate loans, such as commercial property, construction, and residential property loans; and commercial and industrial loans, such as commercial term loans and commercial lines of credit; and international finance and trade services and products, such as letters of credit, and import and export financing. In addition, it offers small business administration loans for business purposes, which comprise owner-occupied commercial real estate, business acquisitions, start-ups, franchise financing, working capital, improvements and renovations, inventory and equipment, and debt-refinancing, as well as equipment lease financing. The company was founded in 1982 and is headquartered in Los Angeles, California.