Critical Contrast: Hanover Bancorp (NASDAQ:HNVR) versus First Bank (NASDAQ:FRBA)

First Bank (NASDAQ:FRBA) and Hanover Bancorp (NASDAQ:HNVR) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, valuation, dividends and profitability.

Dividends

First Bank pays an annual dividend of $0.36 per share and has a dividend yield of 2.3%. Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. First Bank pays out 20.7% of its earnings in the form of a dividend. Hanover Bancorp pays out 40.0% 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. First Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bank	17.76%	10.32%	1.10%
Hanover Bancorp	5.22%	5.18%	0.43%

Analyst Ratings

This is a summary of current ratings and price targets for First Bank and Hanover Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	0	2	2	0	2.50
Hanover Bancorp	1	3	1	0	2.00

First Bank presently has a consensus target price of $17.75, suggesting a potential upside of 10.94%. Hanover Bancorp has a consensus target price of $24.33, suggesting a potential upside of 12.71%. Given Hanover Bancorp’s higher possible upside, analysts clearly believe Hanover Bancorp is more favorable than First Bank.

Insider and Institutional Ownership

64.9% of First Bank shares are owned by institutional investors. Comparatively, 15.0% of Hanover Bancorp shares are owned by institutional investors. 23.9% of Hanover Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$245.83 million	1.63	$43.66 million	$1.74	9.20
Hanover Bancorp	$73.32 million	2.11	$7.49 million	$1.00	21.59

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

Volatility & Risk

First Bank has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, Hanover Bancorp has a beta of 0.07, meaning that its stock price is 93% less volatile than the S&P 500.

Summary

First Bank beats Hanover Bancorp on 12 of the 16 factors compared between the two stocks.

About First Bank

First Bank provides various banking products and services to small to mid-sized businesses and individuals. The company accepts various deposits, including non-interest-bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit, as well as commercial checking accounts. It also offers various loan products comprising commercial and industrial loans, which include line of credit, inventory, equipment, and short-term working capital financing; commercial real estate loans, such as owner-occupied, investor, construction and development, and multi-family loans; residential real estate loans comprising residential mortgages, first and second lien home equity loans, and revolving lines of credit; and consumer and other loans consists of auto, personal, traditional installment, and other loans. The company also provides electronic banking services, including Internet and mobile banking, electronic bill payment, and banking by phone; ATM and debit cards, and wire and ACH transfer services; remote deposit capture; and cash management services, as well as engages in the capital markets activities. It operates full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset, and Williamstown, New Jersey; Doylestown, Trevose, Warminster, and West Chester, Paoli, Malvern, Coventry, Devon, Lionville, and Glen Mills Pennsylvania; and Palm Beach, Florida. First Bank was incorporated in 2007 and is headquartered in Hamilton, New Jersey.

About Hanover Bancorp

Hanover Bancorp, Inc., a bank holding company for Hanover Community Bank, provides personal and business lending and deposit services to businesses, municipalities, and individuals in the New York metro area. The company offers checking, credit cards, debit cards, money market, savings, government and municipal banking, and professional services, as well as time deposits, including certificate of deposit and individual retirement accounts. It also provides business loans, commercial real estate financing, small business administration, lending directory services, and residential mortgage. In addition, the company offers cash management, online and mobile banking, merchant services, and digital solutions. Its banking offices are located in Nassau, Suffolk, Queens, Kings, New York Counties, New York, Monmouth County, Freehold, and New Jersey. The company was founded in 2008 and is headquartered in Mineola, New York.