Comparing OP Bancorp (NASDAQ:OPBK) and Farmers & Merchants Bancorp (OTCMKTS:FMCB)

Farmers & Merchants Bancorp (OTCMKTS:FMCB) and OP Bancorp (NASDAQ:OPBK) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Institutional and Insider Ownership

5.6% of Farmers & Merchants Bancorp shares are held by institutional investors. Comparatively, 53.6% of OP Bancorp shares are held by institutional investors. 8.0% of Farmers & Merchants Bancorp shares are held by insiders. Comparatively, 20.4% of OP Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Farmers & Merchants Bancorp and OP Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	30.89%	15.03%	1.65%
OP Bancorp	14.42%	11.09%	0.94%

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $20.20 per share and has a dividend yield of 1.9%. OP Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 3.5%. Farmers & Merchants Bancorp pays out 15.4% of its earnings in the form of a dividend. OP Bancorp pays out 30.6% 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 Farmers & Merchants Bancorp and OP Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bancorp	$292.68 million	2.68	$88.46 million	$130.83	8.33
OP Bancorp	$154.05 million	1.33	$21.07 million	$1.57	8.76

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

Volatility and Risk

Farmers & Merchants Bancorp has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, OP Bancorp has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Farmers & Merchants Bancorp and OP Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	0	0	0	0.00
OP Bancorp	0	2	1	1	2.75

OP Bancorp has a consensus target price of $16.50, suggesting a potential upside of 20.00%. Given OP Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe OP Bancorp is more favorable than Farmers & Merchants Bancorp.

Summary

OP Bancorp beats Farmers & Merchants Bancorp on 9 of the 17 factors compared between the two stocks.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals. The company accepts various deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also offers range of lending products comprising commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides various specialized services consisting of credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. The company was founded in 1916 and is headquartered in Lodi, 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.