Critical Comparison: Orrstown Financial Services (NASDAQ:ORRF) and Jeffersonville Bancorp (OTCMKTS:JFBC)

Jeffersonville Bancorp (OTCMKTS:JFBC) and Orrstown Financial Services (NASDAQ:ORRF) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Valuation & Earnings

This table compares Jeffersonville Bancorp and Orrstown Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Jeffersonville Bancorp	$34.24 million	3.41	$12.55 million	$3.10	8.91
Orrstown Financial Services	$356.05 million	2.35	$80.86 million	$4.45	9.56

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

Institutional & Insider Ownership

44.3% of Orrstown Financial Services shares are owned by institutional investors. 8.4% of Jeffersonville Bancorp shares are owned by insiders. Comparatively, 4.3% of Orrstown Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Jeffersonville Bancorp and Orrstown Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Jeffersonville Bancorp	0	0	0	0	0.00
Orrstown Financial Services	0	3	3	0	2.50

Orrstown Financial Services has a consensus target price of $43.00, suggesting a potential upside of 1.03%. Given Orrstown Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Orrstown Financial Services is more favorable than Jeffersonville Bancorp.

Dividends

Jeffersonville Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.9%. Orrstown Financial Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.8%. Jeffersonville Bancorp pays out 25.8% of its earnings in the form of a dividend. Orrstown Financial Services pays out 27.0% 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. Orrstown Financial Services has increased its dividend for 10 consecutive years. Jeffersonville Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

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

Profitability

This table compares Jeffersonville Bancorp and Orrstown Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Jeffersonville Bancorp	37.76%	12.84%	1.95%
Orrstown Financial Services	24.00%	14.66%	1.56%

Summary

Orrstown Financial Services beats Jeffersonville Bancorp on 11 of the 17 factors compared between the two stocks.

About Jeffersonville Bancorp

Jeffersonville Bancorp operates as the bank holding company for Jeff Bank that provides community banking services to individuals, small businesses, and local municipal governments primarily in Sullivan County, New York. The company offers various deposit products, such as checking, money market, savings, and NOW, as well as demand and time deposits. It also offers commercial mortgage, farmland, construction, real estate, agricultural, residential mortgage, home equity, consumer, installment, and other consumer loans. The company was founded in 1913 and is based in Jeffersonville, New York.

About Orrstown Financial Services

Orrstown Financial Services, Inc. operates as the financial holding company for Orrstown Bank that provides commercial banking and financial advisory services to retail, commercial, non-profit, and government clients in the United States. It accepts various deposits, including checking, savings, time, demand, and money market deposits, as well as certificates of deposit. The company also offers commercial loans, such as commercial real estate, equipment, construction, working capital, and other commercial purpose loans, as well as industrial loans; consumer loans, such as home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; acquisition and development loans; municipal loans; and installment and other loans. In addition, it provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as other fiduciary services under the Orrstown Financial Advisors name; and retail brokerage services through a third-party broker/dealer arrangement. Further, the company offers fiduciary, investment advisory, insurance, and brokerage services. Orrstown Financial Services, Inc. was founded in 1919 and is headquartered in Shippensburg, Pennsylvania.