Isabella Bank (NASDAQ:ISBA – Get Free Report) and Live Oak Bancshares (NYSE:LOB – Get Free Report) are both small-cap financial services companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.
Analyst Recommendations
This is a summary of current recommendations for Isabella Bank and Live Oak Bancshares, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Isabella Bank | 0 | 1 | 0 | 0 | 2.00 |
| Live Oak Bancshares | 0 | 1 | 0 | 1 | 3.00 |
Isabella Bank presently has a consensus price target of $34.00, indicating a potential downside of 3.27%. Given Isabella Bank’s higher probable upside, analysts clearly believe Isabella Bank is more favorable than Live Oak Bancshares.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Isabella Bank | 15.18% | 7.83% | 0.80% |
| Live Oak Bancshares | 5.71% | 5.46% | 0.42% |
Insider and Institutional Ownership
64.0% of Live Oak Bancshares shares are held by institutional investors. 9.7% of Isabella Bank shares are held by insiders. Comparatively, 23.4% of Live Oak Bancshares shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Dividends
Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.2%. Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Isabella Bank pays out 51.1% of its earnings in the form of a dividend. Live Oak Bancshares pays out 9.8% 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.
Earnings and Valuation
This table compares Isabella Bank and Live Oak Bancshares”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Isabella Bank | $104.55 million | 2.47 | $13.89 million | $2.19 | 16.05 |
| Live Oak Bancshares | $936.15 million | 1.76 | $77.47 million | $1.22 | 29.61 |
Live Oak Bancshares has higher revenue and earnings than Isabella Bank. Isabella Bank is trading at a lower price-to-earnings ratio than Live Oak Bancshares, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Isabella Bank has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, Live Oak Bancshares has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500.
Summary
Live Oak Bancshares beats Isabella Bank on 9 of the 16 factors compared between the two stocks.
About Isabella Bank
Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company’s loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and group life, health, accident, disability, and other insurance products, as well as other employee benefit programs. As of December 31, 2021, the company operated 30 banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.
About Live Oak Bancshares
Live Oak Bancshares, Inc. operates as the bank holding company for Live Oak Banking Company that provides various commercial banking products and services to individuals, small businesses, and professionals in North Carolina, the United States. The company accepts various deposit products, including noninterest-bearing demand, as well as interest-bearing checking, money market, savings, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. In addition, the company provides settlement, accounting, and securitization services for government guaranteed loans; wealth and investment management services to high-net-worth individuals and families; investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies; and an on-site restaurant location to company employees and business visitors. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.
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