Contrasting Oak Valley Bancorp (NASDAQ:OVLY) and Northrim BanCorp (NASDAQ:NRIM)

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

Dividends

Northrim BanCorp pays an annual dividend of $0.64 per share and has a dividend yield of 2.7%. Oak Valley Bancorp pays an annual dividend of $0.75 per share and has a dividend yield of 2.3%. Northrim BanCorp pays out 22.3% of its earnings in the form of a dividend. Oak Valley Bancorp pays out 26.0% 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. Northrim BanCorp has increased its dividend for 16 consecutive years and Oak Valley Bancorp has increased its dividend for 11 consecutive years. Northrim BanCorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

66.0% of Northrim BanCorp shares are held by institutional investors. Comparatively, 30.9% of Oak Valley Bancorp shares are held by institutional investors. 3.9% of Northrim BanCorp shares are held by insiders. Comparatively, 18.1% of Oak Valley Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Northrim BanCorp and Oak Valley Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northrim BanCorp	25.17%	18.13%	1.66%
Oak Valley Bancorp	25.28%	12.64%	1.23%

Earnings & Valuation

This table compares Northrim BanCorp and Oak Valley Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northrim BanCorp	$255.58 million	2.03	$64.61 million	$2.87	8.18
Oak Valley Bancorp	$89.45 million	3.00	$23.91 million	$2.88	11.11

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Northrim BanCorp and Oak Valley Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northrim BanCorp	0	1	2	0	2.67
Oak Valley Bancorp	0	0	1	0	3.00

Northrim BanCorp presently has a consensus target price of $33.00, suggesting a potential upside of 40.49%. Given Northrim BanCorp’s higher probable upside, analysts clearly believe Northrim BanCorp is more favorable than Oak Valley Bancorp.

Volatility and Risk

Northrim BanCorp has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Oak Valley Bancorp has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500.

Summary

Northrim BanCorp beats Oak Valley Bancorp on 11 of the 17 factors compared between the two stocks.

About Northrim BanCorp

Northrim BanCorp, Inc. operates as the bank holding company for Northrim Bank that provides commercial banking products and services to businesses and professional individuals. It operates through two segments, Community Banking and Home Mortgage Lending. The company offers noninterest-bearing checking accounts and interest-bearing time deposits, checking and savings accounts, individual retirement and money market deposit accounts, certificates of deposit, and business sweep accounts. It also provides short and medium-term commercial loans, commercial credit lines, construction and real estate loans, and consumer loans, as well as short-term working capital. In addition, the company offers other services comprising consumer and business online banking, mobile app, and mobile deposits; and debit and credit cards. Further, it provides mobile web and app banking, consumer online account opening, personal finance, online documents, consumer debit cards, business debit cards, my rewards for consumer debit cards, retail lockbox, card control, corporate purchase cards, integrated payables, home equity advantage access cards, telebanking, and automated teller services. Additionally, the company offers personalized checks at account opening, overdraft protection from a savings account, commercial drive-up banking, automatic transfer and payment, People Pay, external transfer, Bill Pay, wire transfer, direct payroll deposit, electronic tax payment, Automated Clearing House origination and receipt, remote deposit capture, account reconciliation and positive pay, merchant, cash management, annuity, and long-term investment portfolio products and services. It also provides investment advisory, trust, wealth management, factoring, and mortgage services. The company was founded in 1990 and is headquartered in Anchorage, Alaska.

About Oak Valley Bancorp

Oak Valley Bancorp operates as the bank holding company for Oak Valley Community Bank that provides a range of commercial banking services to individuals and small to medium-sized businesses in the Central Valley and the Eastern Sierras. The company's deposits products include checking and savings, money market, health savings, and individual retirement accounts, as well as certificates of deposit. It also offers commercial real estate loans, commercial business lending and trade finance, and small business administration lending, as well as consumer loans, including automobile loans, home mortgages, credit lines, and other personal loans. In addition, the company provides online and mobile banking, remote deposit capture, merchant, night depository, extended hours, wire transfer of funds, note collection services, and automated teller machines. The company was incorporated in 1990 and is headquartered in Oakdale, California.