Critical Survey: Northrim BanCorp (NRIM) versus Live Oak Bancshares (LOB)

Northrim BanCorp (NASDAQ: NRIM) and Live Oak Bancshares (NASDAQ:LOB) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Dividends

Northrim BanCorp pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Northrim BanCorp pays out 37.3% of its earnings in the form of a dividend. Live Oak Bancshares pays out 4.8% 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.

Risk & Volatility

Northrim BanCorp has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Live Oak Bancshares has a beta of -0.03, meaning that its share price is 103% less volatile than the S&P 500.

Profitability

This table compares Northrim BanCorp and Live Oak Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northrim BanCorp 16.18% 8.67% 1.09%
Live Oak Bancshares 36.36% 16.85% 2.13%

Valuation & Earnings

This table compares Northrim BanCorp and Live Oak Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Northrim BanCorp $102.18 million 2.28 $14.41 million $2.36 14.39
Live Oak Bancshares $276.39 million 3.79 $100.50 million $2.51 10.48

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.

Institutional & Insider Ownership

72.2% of Northrim BanCorp shares are owned by institutional investors. Comparatively, 41.0% of Live Oak Bancshares shares are owned by institutional investors. 2.9% of Northrim BanCorp shares are owned by company insiders. Comparatively, 30.1% of Live Oak Bancshares 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.

Analyst Recommendations

This is a summary of current ratings for Northrim BanCorp and Live Oak Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northrim BanCorp 0 0 0 0 N/A
Live Oak Bancshares 0 1 2 0 2.67

Live Oak Bancshares has a consensus target price of $27.67, indicating a potential upside of 5.20%. Given Live Oak Bancshares’ higher possible upside, analysts plainly believe Live Oak Bancshares is more favorable than Northrim BanCorp.

Summary

Live Oak Bancshares beats Northrim BanCorp on 11 of the 15 factors compared between the two stocks.

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.

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.

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