Live Oak Bancshares (NASDAQ: LOB) and Northrim BanCorp (NASDAQ:NRIM) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, profitability, institutional ownership, earnings, risk and analyst recommendations.
Volatility and Risk
Live Oak Bancshares has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500. Comparatively, Northrim BanCorp has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.
Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Northrim BanCorp pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. Live Oak Bancshares pays out 4.8% of its earnings in the form of a dividend. Northrim BanCorp pays out 46.8% 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.
Institutional and Insider Ownership
41.3% of Live Oak Bancshares shares are owned by institutional investors. Comparatively, 71.9% of Northrim BanCorp shares are owned by institutional investors. 30.1% of Live Oak Bancshares shares are owned by company insiders. Comparatively, 2.9% of Northrim BanCorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares Live Oak Bancshares and Northrim BanCorp’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|Live Oak Bancshares
This is a summary of recent recommendations and price targets for Live Oak Bancshares and Northrim BanCorp, as provided by MarketBeat.com.
||Strong Buy Ratings
|Live Oak Bancshares
Live Oak Bancshares currently has a consensus target price of $27.67, suggesting a potential upside of 5.80%. Given Live Oak Bancshares’ higher possible upside, equities research analysts clearly believe Live Oak Bancshares is more favorable than Northrim BanCorp.
Valuation & Earnings
This table compares Live Oak Bancshares and Northrim BanCorp’s gross revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|Live Oak Bancshares
Live Oak Bancshares has higher revenue and earnings than Northrim BanCorp. Live Oak Bancshares is trading at a lower price-to-earnings ratio than Northrim BanCorp, indicating that it is currently the more affordable of the two stocks.
Live Oak Bancshares beats Northrim BanCorp on 12 of the 15 factors compared between the two stocks.
Live Oak Bancshares Company Profile
Live Oak Bancshares, Inc. is a bank holding company. The Company conducts business operations primarily through its commercial bank subsidiary, Live Oak Banking Company (the Bank). The Bank specializes in providing lending services to small businesses nationwide in targeted industries. The loans originated by the Bank are guaranteed by the small business administration (SBA). The Company’s loan portfolio includes commercial and industrial loans; construction and development loans; commercial real estate, and commercial land. The Company’s investment securities include the United States Government agencies, residential mortgage-backed securities and mutual fund. The Company’s deposits include non-interest-bearing deposits and interest-bearing deposits, such as interest-bearing checking, money market and time deposits.
Northrim BanCorp Company Profile
Northrim BanCorp, Inc. is a bank holding company. The Company operates in two segments: Community Banking and Home Mortgage Lending. The Community Banking segment’s principal business focus is the offering of loan and deposit products to business and consumer customers in its primary market areas. The Community Banking segment operates approximately 10 branches throughout Alaska. The Home Mortgage Lending segment’s principal business focus is the origination and sale of mortgage loans for one- to four-family residential properties. Its loan products include short and medium-term commercial loans, commercial credit lines, construction and real estate loans, and consumer loans. Its commercial loan portfolio includes both secured and unsecured loans for working capital and expansion. It provides construction lending for commercial real estate projects. It offers personal loans for automobiles, recreational vehicles, boats, and other larger consumer purchases.
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