Reviewing Hanover Bancorp (NASDAQ:HNVR) & Meridian Bank (NASDAQ:MRBK)

Hanover Bancorp (NASDAQ:HNVR) and Meridian Bank (NASDAQ:MRBK) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, valuation, earnings, analyst recommendations, institutional ownership and profitability.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Hanover Bancorp and Meridian Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanover Bancorp	1	3	1	0	2.00
Meridian Bank	0	0	3	0	3.00

Hanover Bancorp presently has a consensus target price of $24.33, indicating a potential upside of 8.73%. Meridian Bank has a consensus target price of $22.00, indicating a potential upside of 14.52%. Given Meridian Bank’s stronger consensus rating and higher probable upside, analysts plainly believe Meridian Bank is more favorable than Hanover Bancorp.

Institutional and Insider Ownership

15.0% of Hanover Bancorp shares are held by institutional investors. Comparatively, 58.6% of Meridian Bank shares are held by institutional investors. 23.9% of Hanover Bancorp shares are held by company insiders. Comparatively, 14.1% of Meridian Bank shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Hanover Bancorp and Meridian Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanover Bancorp	$143.32 million	1.12	$7.49 million	$1.00	22.38
Meridian Bank	$205.49 million	1.11	$21.84 million	$2.07	9.28

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

Profitability

This table compares Hanover Bancorp and Meridian Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanover Bancorp	5.22%	5.18%	0.43%
Meridian Bank	11.68%	12.81%	0.95%

Dividends

Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Meridian Bank pays an annual dividend of $0.56 per share and has a dividend yield of 2.9%. Hanover Bancorp pays out 40.0% of its earnings in the form of a dividend. Meridian Bank pays out 27.1% 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. Meridian Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Hanover Bancorp has a beta of 0.04, suggesting that its share price is 96% less volatile than the S&P 500. Comparatively, Meridian Bank has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500.

Summary

Meridian Bank beats Hanover Bancorp on 13 of the 16 factors compared between the two stocks.

About Hanover Bancorp

Hanover Bancorp, Inc., a bank holding company for Hanover Community Bank, provides personal and business lending and deposit services to businesses, municipalities, and individuals in the New York metro area. The company offers checking, credit cards, debit cards, money market, savings, government and municipal banking, and professional services, as well as time deposits, including certificate of deposit and individual retirement accounts. It also provides business loans, commercial real estate financing, small business administration, lending directory services, and residential mortgage. In addition, the company offers cash management, online and mobile banking, merchant services, and digital solutions. Its banking offices are located in Nassau, Suffolk, Queens, Kings, New York Counties, New York, Monmouth County, Freehold, and New Jersey. The company was founded in 2008 and is headquartered in Mineola, New York.

About Meridian Bank

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.