Critical Comparison: OFG Bancorp (NYSE:OFG) versus Hanover Bancorp (NASDAQ:HNVR)

OFG Bancorp (NYSE:OFG) and Hanover Bancorp (NASDAQ:HNVR) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, institutional ownership, valuation, dividends and analyst recommendations.

Insider and Institutional Ownership

92.7% of OFG Bancorp shares are held by institutional investors. Comparatively, 15.0% of Hanover Bancorp shares are held by institutional investors. 1.2% of OFG Bancorp shares are held by company insiders. Comparatively, 24.8% of Hanover Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares OFG Bancorp and Hanover Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OFG Bancorp	$688.35 million	2.78	$205.10 million	$4.84	9.36
Hanover Bancorp	$143.32 million	1.16	$7.49 million	$1.05	22.06

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

Risk & Volatility

OFG Bancorp has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Hanover Bancorp has a beta of 0.12, meaning that its stock price is 88% less volatile than the S&P 500.

Dividends

OFG Bancorp pays an annual dividend of $1.40 per share and has a dividend yield of 3.1%. Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. OFG Bancorp pays out 28.9% of its earnings in the form of a dividend. Hanover Bancorp pays out 38.1% 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. OFG Bancorp has raised its dividend for 5 consecutive years. OFG Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
OFG Bancorp	23.45%	15.62%	1.74%
Hanover Bancorp	5.53%	5.09%	0.42%

Analyst Ratings

This is a breakdown of recent ratings for OFG Bancorp and Hanover Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OFG Bancorp	0	3	2	1	2.67
Hanover Bancorp	1	3	1	0	2.00

OFG Bancorp presently has a consensus price target of $47.20, suggesting a potential upside of 4.19%. Hanover Bancorp has a consensus price target of $24.33, suggesting a potential upside of 5.07%. Given Hanover Bancorp’s higher probable upside, analysts plainly believe Hanover Bancorp is more favorable than OFG Bancorp.

Summary

OFG Bancorp beats Hanover Bancorp on 15 of the 18 factors compared between the two stocks.

About OFG Bancorp

OFG Bancorp, a financial holding company, provides a range of banking and financial services. It operates through three segments: Banking, Wealth Management, and Treasury. The company offers checking and savings accounts, and individual retirement accounts; certificate of deposits, as well as time deposit products; commercial, consumer, auto leasing, and mortgage lending services; credit cards; cash management; financial planning and insurance services; and corporate and individual trust, and retirement services. In addition, it provides securities brokerage and investment advisory services, including various investment alternatives, such as tax-advantaged fixed income securities, mutual funds, stocks, and bonds to retail and institutional clients; and separately-managed accounts and mutual fund asset allocation programs. Further, the company engages in the insurance agency and reinsurance businesses; administration and servicing of retirement plans; and various treasury-related functions with an investment portfolio consisting of mortgage-backed securities, obligations of U.S. government sponsored agencies, and U.S. Treasury securities and money market instruments. Additionally, it offers money management and investment banking services; and engages in the asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. The company provides investment brokerage, transactional, international trade financing, residential mortgage, and consumer finance services. OFG Bancorp was founded in 1964 and is headquartered in San Juan, Puerto Rico.

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.