Critical Analysis: Banc of California (NYSE:BANC) versus OP Bancorp (NASDAQ:OPBK)

Banc of California (NYSE:BANC) and OP Bancorp (NASDAQ:OPBK) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Profitability

This table compares Banc of California and OP Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banc of California	12.59%	8.66%	0.76%
OP Bancorp	15.39%	11.75%	0.99%

Insider and Institutional Ownership

86.9% of Banc of California shares are owned by institutional investors. Comparatively, 53.6% of OP Bancorp shares are owned by institutional investors. 2.7% of Banc of California shares are owned by insiders. Comparatively, 20.4% of OP Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Banc of California has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500. Comparatively, OP Bancorp has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Banc of California and OP Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banc of California	0	2	9	1	2.92
OP Bancorp	1	2	1	0	2.00

Banc of California currently has a consensus target price of $20.86, indicating a potential upside of 21.19%. OP Bancorp has a consensus target price of $16.50, indicating a potential upside of 27.71%. Given OP Bancorp’s higher possible upside, analysts plainly believe OP Bancorp is more favorable than Banc of California.

Earnings and Valuation

This table compares Banc of California and OP Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banc of California	$1.82 billion	1.42	$228.97 million	$1.18	14.59
OP Bancorp	$94.68 million	2.03	$25.64 million	$1.71	7.56

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

Dividends

Banc of California pays an annual dividend of $0.48 per share and has a dividend yield of 2.8%. OP Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 3.7%. Banc of California pays out 40.7% of its earnings in the form of a dividend. OP Bancorp pays out 28.1% 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. OP Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

OP Bancorp beats Banc of California on 9 of the 17 factors compared between the two stocks.

About Banc of California

Banc of California, Inc. operates as the bank holding company for Banc of California that provides various banking products and services in California. The company offers deposit products, such as checking, savings, money market, demand, and time deposits; certificates of deposit; retirement accounts; and safe deposit boxes. It also provides real estate loans to professional developers and real estate investors for the acquisition, construction, refinancing, renovation, and on-going operation of commercial real estate properties; commercial real estate mortgage, residential real estate mortgage, and real estate construction and land loans; commercial loans and leases, such as equipment finance, other asset-based, venture capital, secured business, warehouse, and other lending services; small business administration loans; and consumer loans comprising personal, auto, and other loans, as well as home equity and revolving lines of credit. In addition, the company offers international banking, multi-state deposit, and asset and investment management services, as well as cash and treasury management services; and online, mobile, remote deposit, and telephone banking services. It serves small and middle-market businesses, venture capital firms, non-profit organizations, business owners, entrepreneurs, professionals, and high-net worth individuals. Banc of California, Inc. was founded in 1941 and is headquartered in Los Angeles, California.

About OP Bancorp

OP Bancorp operates as the bank holding company for Open Bank that provides banking products and services in California. It offers demand, checking, savings, money market, and time deposit accounts, as well as certificates of deposit. The company also provides commercial real estate, small business administration, commercial and industrial business, single-family residential, term, consumer, and home mortgage loans; trade financing products; and letters of credit, and SWIFT and export advice. In addition, it offers debit and credit card, online transfer and bill payment, electronic delivery of customer statements, and mobile banking solutions for iPhone and Android phones, including remote check deposit with mobile bill pay; direct deposits, cashier's checks, person to person payments, wire transfers, and automated clearing house (ACH) services; and cash management services, including balance reporting, transfers between accounts, wire transfer initiation, ACH origination, and stop payment services, as well as remote deposit capture, positive pay, zero balance accounts, and sweep accounts. The company operates full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena Park, and Santa Clara in California; and Carrollton, Texas; and operates loan production offices in Pleasanton, California; Atlanta, Georgia; Aurora, Colorado; and Lynnwood in Washington. The company was founded in 2005 and is headquartered in Los Angeles, California.