Analyzing Prime Meridian (OTCMKTS:PMHG) and OP Bancorp (NASDAQ:OPBK)

Prime Meridian (OTCMKTS:PMHG) 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, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings and price targets for Prime Meridian and OP Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prime Meridian	0	0	0	0	0.00
OP Bancorp	0	1	0	0	2.00

OP Bancorp has a consensus price target of $13.00, suggesting a potential downside of 19.95%. Given OP Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe OP Bancorp is more favorable than Prime Meridian.

Dividends

Prime Meridian pays an annual dividend of $0.25 per share and has a dividend yield of 0.9%. OP Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 3.0%. Prime Meridian pays out 10.2% of its earnings in the form of a dividend. OP Bancorp pays out 34.3% 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.

Risk and Volatility

Prime Meridian has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, OP Bancorp has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500.

Institutional and Insider Ownership

11.8% of Prime Meridian shares are owned by institutional investors. Comparatively, 53.6% of OP Bancorp shares are owned by institutional investors. 25.9% of Prime Meridian shares are owned by company insiders. Comparatively, 21.3% of OP Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Prime Meridian and OP Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prime Meridian	$41.82 million	2.14	$8.71 million	$2.46	11.06
OP Bancorp	$135.85 million	1.78	$23.92 million	$1.40	11.60

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Prime Meridian	16.83%	9.97%	0.94%
OP Bancorp	14.18%	10.94%	0.96%

Summary

OP Bancorp beats Prime Meridian on 10 of the 15 factors compared between the two stocks.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.

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.