Comparing Independent Bank (NASDAQ:IBCP) & OP Bancorp (NASDAQ:OPBK)

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

Dividends

Independent Bank pays an annual dividend of $0.96 per share and has a dividend yield of 2.9%. OP Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 4.0%. Independent Bank pays out 32.7% of its earnings in the form of a dividend. OP Bancorp pays out 34.3% 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.

Risk and Volatility

Independent Bank has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, OP Bancorp has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Independent Bank and OP Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	4	0	0	2.00
OP Bancorp	0	1	0	0	2.00

Independent Bank presently has a consensus target price of $32.17, indicating a potential downside of 1.90%. OP Bancorp has a consensus target price of $13.00, indicating a potential upside of 9.52%. Given OP Bancorp’s higher probable upside, analysts plainly believe OP Bancorp is more favorable than Independent Bank.

Earnings & Valuation

This table compares Independent Bank and OP Bancorp’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$290.35 million	2.36	$59.07 million	$2.94	11.15
OP Bancorp	$135.85 million	1.30	$23.92 million	$1.40	8.48

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

Institutional and Insider Ownership

79.4% of Independent Bank shares are held by institutional investors. Comparatively, 53.6% of OP Bancorp shares are held by institutional investors. 5.5% of Independent Bank shares are held by insiders. Comparatively, 21.3% of OP Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Independent Bank	21.11%	17.24%	1.31%
OP Bancorp	14.52%	11.00%	0.96%

Summary

Independent Bank beats OP Bancorp on 11 of the 14 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

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.