Analyzing OP Bancorp (NASDAQ:OPBK) and Pinnacle Bank (OTCMKTS:PBNK)

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

Valuation and Earnings

This table compares Pinnacle Bank and OP Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle Bank	$53.91 million	2.18	$8.85 million	$1.00	19.80
OP Bancorp	$154.05 million	1.29	$21.07 million	$1.57	8.50

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Pinnacle Bank	14.83%	7.72%	0.88%
OP Bancorp	14.42%	11.24%	0.95%

Insider & Institutional Ownership

8.4% of Pinnacle Bank shares are held by institutional investors. Comparatively, 53.6% of OP Bancorp shares are held by institutional investors. 20.4% of OP Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Pinnacle Bank and OP Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle Bank	0	0	0	0	0.00
OP Bancorp	0	1	2	1	3.00

OP Bancorp has a consensus price target of $16.50, indicating a potential upside of 23.60%. Given OP Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe OP Bancorp is more favorable than Pinnacle Bank.

Volatility & Risk

Pinnacle Bank has a beta of 0.33, suggesting that its stock price is 67% less volatile than the S&P 500. Comparatively, OP Bancorp has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.

Summary

OP Bancorp beats Pinnacle Bank on 12 of the 15 factors compared between the two stocks.

About Pinnacle Bank

Pinnacle Bank, a commercial bank, provides various depository and credit services in Santa Clara, San Benito, and Monterey counties. The company offers checking, savings, money market, sweep, and individual retirement accounts, as well as certificates of deposit and certificates of deposit account registry services. It also provides home equity lines of credit and single family home construction loans; and loans and lines of credit, letters of credit, commercial real estate, and government assisted loans, as well as credit cards. In addition, the company offers automated teller machine cards/debit cards, debit card protection products, and safe deposit boxes; cash management products, such as online and mobile banking, online bill payment, mobile check deposit, automated clearing house (ACH) origination, remote deposit capture, night depository box, positive pay, ACH fraud filter, merchant card processing, wire transfer, and foreign currency services; and asset based lending covering accounts receivable financing, factoring, and purchase order financing services. It serves individual and business customers, as well as nonprofit organizations in Morgan Hill, Gilroy, Salinas, and Campbell. Pinnacle Bank was founded in 2006 and is headquartered in Gilroy, 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.