Reviewing Hanover Bancorp (NASDAQ:HNVR) & Isabella Bank (OTCMKTS:ISBA)

Hanover Bancorp (NASDAQ:HNVR) and Isabella Bank (OTCMKTS:ISBA) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Institutional & Insider Ownership

15.0% of Hanover Bancorp shares are owned by institutional investors. 24.8% of Hanover Bancorp shares are owned by company insiders. Comparatively, 9.7% of Isabella Bank 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hanover Bancorp	8.70%	6.33%	0.52%
Isabella Bank	14.98%	7.50%	0.72%

Dividends

Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Isabella Bank pays an annual dividend of $1.12 per share and has a dividend yield of 5.3%. Hanover Bancorp pays out 20.4% of its earnings in the form of a dividend. Isabella Bank pays out 52.8% 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.

Analyst Ratings

This is a breakdown of current ratings and price targets for Hanover Bancorp and Isabella Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanover Bancorp	0	0	1	0	3.00
Isabella Bank	0	1	0	0	2.00

Hanover Bancorp currently has a consensus target price of $20.00, suggesting a potential upside of 5.26%. Isabella Bank has a consensus target price of $22.00, suggesting a potential upside of 4.27%. Given Hanover Bancorp’s stronger consensus rating and higher possible upside, equities analysts clearly believe Hanover Bancorp is more favorable than Isabella Bank.

Valuation & Earnings

This table compares Hanover Bancorp and Isabella Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanover Bancorp	$62.58 million	2.20	$15.16 million	$1.96	9.69
Isabella Bank	$93.46 million	1.69	$18.17 million	$2.12	9.95

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

Volatility and Risk

Hanover Bancorp has a beta of -0.23, suggesting that its share price is 123% less volatile than the S&P 500. Comparatively, Isabella Bank has a beta of -0.03, suggesting that its share price is 103% less volatile than the S&P 500.

Summary

Isabella Bank beats Hanover Bancorp on 9 of the 16 factors compared between the two stocks.

About Hanover Bancorp

Hanover Bancorp, Inc., a bank holding company for Hanover Community Bank, provides personal and business lending and deposit services to businesses, municipalities, and individuals in the New York metro area. The company offers checking, credit cards, debit cards, money market, savings, government and municipal banking, and professional services, as well as time deposits, including certificate of deposit and individual retirement accounts. It also provides business loans, commercial real estate financing, small business administration, lending directory services, and residential mortgage. In addition, the company offers cash management, online and mobile banking, merchant services, and digital solutions. Its banking offices are located in Nassau, Suffolk, Queens, Kings, New York Counties, New York, Monmouth County, Freehold, and New Jersey. The company was founded in 2008 and is headquartered in Mineola, New York.

About Isabella Bank

Isabella Bank Corporation operates as the bank holding company for Isabella Bank that provides various banking products and services to businesses, institutions, and individuals and their families. Its deposit products include checking accounts, savings accounts, certificates of deposit, direct deposits, and money market accounts. The company's loan portfolio comprises commercial, agricultural, and residential real estate loans, as well as consumer loans, including secured and unsecured personal loans. It also offers cash management, mobile and internet banking, electronic bill pay, automated teller machines, trust and investment, estate planning, and safe deposit box rental services; and insurance products. The company operated banking offices in Clare, Gratiot, Isabella, Mecosta, Midland, Montcalm, and Saginaw counties. Isabella Bank Corporation was founded in 1903 and is headquartered in Mount Pleasant, Michigan.