Banner (NASDAQ:BANR) vs. OceanFirst Financial (NASDAQ:OCFC) Critical Analysis

Banner (NASDAQ:BANR) and OceanFirst Financial (NASDAQ:OCFC) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Institutional and Insider Ownership

87.3% of Banner shares are owned by institutional investors. Comparatively, 71.0% of OceanFirst Financial shares are owned by institutional investors. 1.7% of Banner shares are owned by insiders. Comparatively, 5.1% of OceanFirst Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Banner and OceanFirst Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banner	22.26%	10.46%	1.21%
OceanFirst Financial	10.33%	5.14%	0.62%

Analyst Recommendations

This is a summary of recent ratings for Banner and OceanFirst Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banner	0	3	4	0	2.57
OceanFirst Financial	0	4	1	0	2.20

Banner presently has a consensus price target of $70.00, indicating a potential upside of 13.64%. OceanFirst Financial has a consensus price target of $21.33, indicating a potential upside of 16.96%. Given OceanFirst Financial’s higher probable upside, analysts clearly believe OceanFirst Financial is more favorable than Banner.

Risk & Volatility

Banner has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, OceanFirst Financial has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Dividends

Banner pays an annual dividend of $2.00 per share and has a dividend yield of 3.2%. OceanFirst Financial pays an annual dividend of $0.80 per share and has a dividend yield of 4.4%. Banner pays out 35.5% of its earnings in the form of a dividend. OceanFirst Financial pays out 69.0% 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.

Valuation & Earnings

This table compares Banner and OceanFirst Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banner	$877.77 million	2.39	$195.38 million	$5.64	10.92
OceanFirst Financial	$400.34 million	2.62	$70.98 million	$1.16	15.72

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

Summary

Banner beats OceanFirst Financial on 10 of the 16 factors compared between the two stocks.

About Banner

Banner Corporation operates as the bank holding company for Banner Bank that engages in the provision of commercial banking and financial products and services to individuals, businesses, and public sector entities in the United States. It accepts various deposit instruments, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, regular savings accounts, and certificates of deposit, as well as treasury management services and retirement savings plans. The company also provides commercial real estate loans, including owner-occupied, investment properties, and multifamily residential real estate loans; construction, land, and land development loans; one- to four-family residential real estate lending; commercial business loans; agricultural loans; consumer and other loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts; and small business administration loans. In addition, it provides electronic and digital banking services comprising debit cards and ATMs, internet banking, remote deposit, and mobile banking services. The company was founded in 1890 and is based in Walla Walla, Washington.

About OceanFirst Financial

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.