Meridian Bank (NASDAQ:MRBK – Get Free Report) and Hanover Bancorp (NASDAQ:HNVR – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
Dividends
Meridian Bank pays an annual dividend of $0.56 per share and has a dividend yield of 3.1%. Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Meridian Bank pays out 27.1% of its earnings in the form of a dividend. Hanover Bancorp pays out 38.1% 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. Meridian Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
58.6% of Meridian Bank shares are held by institutional investors. Comparatively, 15.0% of Hanover Bancorp shares are held by institutional investors. 14.1% of Meridian Bank shares are held by insiders. Comparatively, 23.9% of Hanover Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Meridian Bank | 1 | 0 | 3 | 0 | 2.50 |
| Hanover Bancorp | 1 | 3 | 1 | 0 | 2.00 |
Meridian Bank presently has a consensus price target of $22.50, indicating a potential upside of 25.35%. Hanover Bancorp has a consensus price target of $24.33, indicating a potential upside of 4.66%. Given Meridian Bank’s stronger consensus rating and higher probable upside, analysts clearly believe Meridian Bank is more favorable than Hanover Bancorp.
Risk & Volatility
Meridian Bank has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, Hanover Bancorp has a beta of 0.12, suggesting that its stock price is 88% less volatile than the S&P 500.
Profitability
This table compares Meridian Bank and Hanover Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Meridian Bank | 11.68% | 12.81% | 0.95% |
| Hanover Bancorp | 5.53% | 5.10% | 0.43% |
Valuation and Earnings
This table compares Meridian Bank and Hanover Bancorp”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Meridian Bank | $130.00 million | 1.64 | $21.84 million | $2.07 | 8.67 |
| Hanover Bancorp | $143.32 million | 1.16 | $7.49 million | $1.05 | 22.14 |
Meridian Bank has higher earnings, but lower revenue than Hanover Bancorp. Meridian Bank is trading at a lower price-to-earnings ratio than Hanover Bancorp, indicating that it is currently the more affordable of the two stocks.
Summary
Meridian Bank beats Hanover Bancorp on 13 of the 16 factors compared between the two stocks.
About Meridian Bank
Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.
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.
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