Contrasting Live Oak Bancshares (NYSE:LOB) & Community West Bancshares (NASDAQ:CWBC)

Live Oak Bancshares (NYSE:LOB) and Community West Bancshares (NASDAQ:CWBC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, earnings, dividends and risk.

Insider & Institutional Ownership

64.0% of Live Oak Bancshares shares are owned by institutional investors. Comparatively, 33.8% of Community West Bancshares shares are owned by institutional investors. 22.4% of Live Oak Bancshares shares are owned by insiders. Comparatively, 9.0% of Community West Bancshares shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Live Oak Bancshares and Community West Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Live Oak Bancshares	0	4	2	0	2.33
Community West Bancshares	0	2	3	0	2.60

Live Oak Bancshares currently has a consensus price target of $46.40, suggesting a potential upside of 21.29%. Community West Bancshares has a consensus price target of $28.17, suggesting a potential upside of 8.13%. Given Live Oak Bancshares’ higher probable upside, equities research analysts clearly believe Live Oak Bancshares is more favorable than Community West Bancshares.

Profitability

This table compares Live Oak Bancshares and Community West Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Live Oak Bancshares	12.68%	11.77%	0.90%
Community West Bancshares	16.86%	10.12%	1.16%

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Community West Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 1.8%. Live Oak Bancshares pays out 4.2% of its earnings in the form of a dividend. Community West Bancshares pays out 25.9% 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.

Earnings & Valuation

This table compares Live Oak Bancshares and Community West Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Live Oak Bancshares	$1.04 billion	1.70	$105.87 million	$2.84	13.47
Community West Bancshares	$196.20 million	3.60	$38.17 million	$1.85	14.08

Live Oak Bancshares has higher revenue and earnings than Community West Bancshares. Live Oak Bancshares is trading at a lower price-to-earnings ratio than Community West Bancshares, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Live Oak Bancshares has a beta of 1.86, suggesting that its share price is 86% more volatile than the S&P 500. Comparatively, Community West Bancshares has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Summary

Live Oak Bancshares beats Community West Bancshares on 9 of the 16 factors compared between the two stocks.

About Live Oak Bancshares

Live Oak Bancshares, Inc. operates as the bank holding company for Live Oak Banking Company that provides various commercial banking products and services to individuals, small businesses, and professionals in North Carolina, the United States. The company accepts various deposit products, including noninterest-bearing demand, as well as interest-bearing checking, money market, savings, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. In addition, the company provides settlement, accounting, and securitization services for government guaranteed loans; wealth and investment management services to high-net-worth individuals and families; investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies; and an on-site restaurant location to company employees and business visitors. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.

About Community West Bancshares

Community West Bancshares operates as the bank holding company for Community West Bank, N.A. that provides various financial products and services in California. The company offers deposit products, such as checking accounts, savings accounts, money market accounts, and fixed rate and fixed maturity certificates of deposits; and cash management products. It also provides commercial, commercial real estate, consumer, manufactured housing, and small business administration loans, as well as agricultural loans for real estate and operating lines; home equity lines of credit collateralized by residential real estate; single family real estate loans; and installment loans consisting of automobile and general-purpose loans. The company serves small to medium-sized businesses and their owners, professionals, high-net worth individuals, and non-profit organizations. Community West Bancshares was founded in 1989 and is headquartered in Goleta, California.