OFG Bancorp (NYSE:OFG) and ServisFirst Bancshares (NYSE:SFBS) Critical Contrast

ServisFirst Bancshares (NYSE:SFBS) and OFG Bancorp (NYSE:OFG) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Valuation & Earnings

This table compares ServisFirst Bancshares and OFG Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ServisFirst Bancshares	$843.66 million	6.12	$206.85 million	$3.74	25.29
OFG Bancorp	$662.15 million	3.03	$181.87 million	$4.11	10.65

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

Risk & Volatility

ServisFirst Bancshares has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, OFG Bancorp has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for ServisFirst Bancshares and OFG Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ServisFirst Bancshares	0	2	0	0	2.00
OFG Bancorp	0	0	3	0	3.00

ServisFirst Bancshares currently has a consensus target price of $85.00, indicating a potential downside of 10.13%. OFG Bancorp has a consensus target price of $48.67, indicating a potential upside of 11.16%. Given OFG Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe OFG Bancorp is more favorable than ServisFirst Bancshares.

Institutional & Insider Ownership

67.3% of ServisFirst Bancshares shares are held by institutional investors. Comparatively, 92.7% of OFG Bancorp shares are held by institutional investors. 7.4% of ServisFirst Bancshares shares are held by insiders. Comparatively, 3.1% of OFG 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 ServisFirst Bancshares and OFG Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ServisFirst Bancshares	21.16%	14.23%	1.33%
OFG Bancorp	22.68%	15.69%	1.72%

Dividends

ServisFirst Bancshares pays an annual dividend of $1.20 per share and has a dividend yield of 1.3%. OFG Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. ServisFirst Bancshares pays out 32.1% of its earnings in the form of a dividend. OFG Bancorp pays out 24.3% 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. OFG Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

OFG Bancorp beats ServisFirst Bancshares on 11 of the 16 factors compared between the two stocks.

About ServisFirst Bancshares

ServisFirst Bancshares, Inc. operates as the bank holding company for ServisFirst Bank that provides various banking services to individual and corporate customers. It accepts demand, time, savings, and other deposits; checking, money market, and IRA accounts; and certificates of deposit. The company's loan products include commercial lending products, including seasonal, bridge, and term loans for working capital, expansion of the business, acquisition of property, and plant and equipment, as well as commercial lines of credit; commercial real estate loans, construction and development loans, and residential real estate loans; and consumer loans, such as home equity loans, vehicle financing, loans secured by deposits, and secured and unsecured personal loans. It also offers other banking products and services comprising telephone and mobile banking, Internet banking, direct deposit, traveler's checks, safe deposit boxes, attorney trust accounts, automatic account transfers, automated teller machines, and debit and credit card systems; treasury and cash management services; wire transfer, night depository, banking-by-mail, and remote capture services; and correspondent banking services to other financial institutions. In addition, the company holds and manages participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank in Alabama, Florida, Georgia, and Tennessee. The company was founded in 2005 and is headquartered in Birmingham, Alabama.

About OFG Bancorp

OFG Bancorp, a financial holding company, provides a range of banking and financial services. It operates through three segments: Banking, Wealth Management, and Treasury. The company offers checking and savings accounts, and individual retirement accounts; certificate of deposits, as well as time deposit products; commercial, consumer, auto leasing, and mortgage lending services; credit cards; cash management; financial planning and insurance services; and corporate and individual trust, and retirement services. In addition, it provides securities brokerage and investment advisory services, including various investment alternatives, such as tax-advantaged fixed income securities, mutual funds, stocks, and bonds to retail and institutional clients; and separately-managed accounts and mutual fund asset allocation programs. Further, the company engages in the insurance agency and reinsurance businesses; administration and servicing of retirement plans; and various treasury-related functions with an investment portfolio consisting of mortgage-backed securities, obligations of U.S. government sponsored agencies, and U.S. Treasury securities and money market instruments. Additionally, it offers money management and investment banking services; and engages in the asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. The company provides investment brokerage, transactional, international trade financing, residential mortgage, and consumer finance services. OFG Bancorp was founded in 1964 and is headquartered in San Juan, Puerto Rico.