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

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

Insider & Institutional Ownership

53.6% of OP Bancorp shares are owned by institutional investors. Comparatively, 79.4% of Independent Bank shares are owned by institutional investors. 21.3% of OP Bancorp shares are owned by company insiders. Comparatively, 5.5% of Independent Bank shares are owned by company 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 OP Bancorp and Independent Bank’s net margins, return on equity and return on assets.

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

Dividends

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

Analyst Ratings

This is a summary of current ratings and recommmendations for OP Bancorp and Independent Bank, as reported by MarketBeat.com.

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

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

Risk & Volatility

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

Earnings & Valuation

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

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

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.

Summary

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

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.

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.