Analyzing Oak Ridge Financial Services (OTCMKTS:BKOR) and Towne Bank (NASDAQ:TOWN)

Oak Ridge Financial Services (OTCMKTS:BKOR) and Towne Bank (NASDAQ:TOWN) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitability.

Profitability

This table compares Oak Ridge Financial Services and Towne Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oak Ridge Financial Services	18.00%	N/A	N/A
Towne Bank	13.51%	9.91%	1.24%

Earnings & Valuation

This table compares Oak Ridge Financial Services and Towne Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oak Ridge Financial Services	$44.28 million	1.94	$8.01 million	$2.88	10.76
Towne Bank	$1.12 billion	2.45	$169.53 million	$1.98	17.53

Towne Bank has higher revenue and earnings than Oak Ridge Financial Services. Oak Ridge Financial Services is trading at a lower price-to-earnings ratio than Towne Bank, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

4.2% of Oak Ridge Financial Services shares are held by institutional investors. Comparatively, 56.0% of Towne Bank shares are held by institutional investors. 25.6% of Oak Ridge Financial Services shares are held by insiders. Comparatively, 8.1% of Towne Bank shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Oak Ridge Financial Services has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500. Comparatively, Towne Bank has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Dividends

Oak Ridge Financial Services pays an annual dividend of $0.64 per share and has a dividend yield of 2.1%. Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.1%. Oak Ridge Financial Services pays out 22.2% of its earnings in the form of a dividend. Towne Bank pays out 54.5% 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. Towne Bank has increased its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations for Oak Ridge Financial Services and Towne Bank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oak Ridge Financial Services	0	0	0	0	0.00
Towne Bank	1	1	2	0	2.25

Towne Bank has a consensus target price of $39.50, indicating a potential upside of 13.80%. Given Towne Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Towne Bank is more favorable than Oak Ridge Financial Services.

Summary

Towne Bank beats Oak Ridge Financial Services on 13 of the 17 factors compared between the two stocks.

About Oak Ridge Financial Services

Oak Ridge Financial Services, Inc. operates as a bank holding company for Bank of Oak Ridge that provides various banking products and services for individuals and businesses. It offers checking, savings, and money market accounts; overdrafts; auto, home equity, mortgage, business term, and business SBA loans; business lines of credit; credit cards; and online and mobile banking products and services. The company also provides health savings accounts, identity theft protection, wealth management, cash management, and remote deposit capture services; and auto, home, small business, renters, life, boat and watercraft, classic car, motorcycle, flood, pet, and umbrella insurance products. It operates through a network of branches in Oak Ridge, Greensboro, and Summerfield, North Carolina. The company was founded in 2000 and is based in Oak Ridge, North Carolina.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.