Comparing Towne Bank (NASDAQ:TOWN) and Oak Ridge Financial Services (OTCMKTS:BKOR)

Towne Bank (NASDAQ:TOWN) and Oak Ridge Financial Services (OTCMKTS:BKOR) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, profitability, earnings, institutional ownership and valuation.

Analyst Recommendations

This is a summary of recent ratings and target prices for Towne Bank and Oak Ridge Financial Services, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	1	1	2	0	2.25
Oak Ridge Financial Services	0	0	0	0	0.00

Towne Bank currently has a consensus price target of $39.50, indicating a potential upside of 12.57%. Given Towne Bank’s stronger consensus rating and higher possible upside, research analysts clearly believe Towne Bank is more favorable than Oak Ridge Financial Services.

Profitability

This table compares Towne Bank and Oak Ridge Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Towne Bank	13.51%	9.91%	1.24%
Oak Ridge Financial Services	18.00%	N/A	N/A

Risk and Volatility

Towne Bank has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Oak Ridge Financial Services has a beta of 0.14, indicating that its share price is 86% less volatile than the S&P 500.

Earnings and Valuation

This table compares Towne Bank and Oak Ridge Financial Services”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$1.12 billion	2.48	$169.53 million	$1.98	17.72
Oak Ridge Financial Services	$44.28 million	1.94	$8.01 million	$2.88	10.76

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

Dividends

Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.1%. Oak Ridge Financial Services pays an annual dividend of $0.64 per share and has a dividend yield of 2.1%. Towne Bank pays out 54.5% of its earnings in the form of a dividend. Oak Ridge Financial Services pays out 22.2% 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. Towne Bank has raised its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

56.0% of Towne Bank shares are owned by institutional investors. Comparatively, 4.2% of Oak Ridge Financial Services shares are owned by institutional investors. 8.1% of Towne Bank shares are owned by insiders. Comparatively, 25.6% of Oak Ridge Financial Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Towne Bank beats Oak Ridge Financial Services on 13 of the 17 factors compared between the two stocks.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.

About Oak Ridge Financial Services

Oak Ridge Financial Services, Inc. operates as a bank holding company for Bank of Oak Ridge that provides various banking products and services for individuals and businesses. It offers checking, savings, and money market accounts; overdrafts; auto, home equity, mortgage, business term, and business SBA loans; business lines of credit; credit cards; and online and mobile banking products and services. The company also provides health savings accounts, identity theft protection, wealth management, cash management, and remote deposit capture services; and auto, home, small business, renters, life, boat and watercraft, classic car, motorcycle, flood, pet, and umbrella insurance products. It operates through a network of branches in Oak Ridge, Greensboro, and Summerfield, North Carolina. The company was founded in 2000 and is based in Oak Ridge, North Carolina.