Contrasting Live Oak Bancshares (NASDAQ:LOB) and M&T Bank (NYSE:MTB)

Live Oak Bancshares (NASDAQ:LOB) and M&T Bank (NYSE:MTB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

64.0% of Live Oak Bancshares shares are owned by institutional investors. Comparatively, 84.7% of M&T Bank shares are owned by institutional investors. 23.9% of Live Oak Bancshares shares are owned by insiders. Comparatively, 0.8% of M&T Bank shares are owned by 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.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Live Oak Bancshares and M&T Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Live Oak Bancshares	0	2	2	0	2.50
M&T Bank	1	6	9	0	2.50

Live Oak Bancshares currently has a consensus price target of $48.75, indicating a potential downside of 1.20%. M&T Bank has a consensus price target of $196.18, indicating a potential downside of 0.70%. Given M&T Bank’s higher possible upside, analysts plainly believe M&T Bank is more favorable than Live Oak Bancshares.

Valuation & Earnings

This table compares Live Oak Bancshares and M&T Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Live Oak Bancshares	$467.62 million	4.74	$73.90 million	$1.99	24.79
M&T Bank	$9.17 billion	3.59	$2.74 billion	$14.79	13.36

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

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. M&T Bank pays an annual dividend of $5.40 per share and has a dividend yield of 2.7%. Live Oak Bancshares pays out 6.0% of its earnings in the form of a dividend. M&T Bank pays out 36.5% 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 & Volatility

Live Oak Bancshares has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, M&T Bank has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Profitability

This table compares Live Oak Bancshares and M&T Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Live Oak Bancshares	11.22%	10.93%	0.87%
M&T Bank	17.84%	9.62%	1.14%

Summary

M&T Bank beats Live Oak Bancshares on 9 of the 15 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 banking products and services in the United States. It operates through two segments, Banking and Fintech. 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; financing for renewable energy application industry; wealth and investment management services to high-net-worth individuals and families; and investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.

About M&T Bank

M&T Bank Corporation operates as a bank holding company for Manufacturers and Traders Trust Company and Wilmington Trust, National Association that engages in the provision of retail and commercial banking products and services in the United States. The company operates through three segments: Commercial Bank, Retail Bank, and Institutional Services and Wealth Management. It offers a range of credit products and banking services, such as commercial lending and leasing, letters of credits, commercial real estate loans, and credit facilities secured by various commercial real estate to middle-market and large commercial customers. The company also provides customers deposit products, including demand, savings and time accounts, and other services; automobile and recreational finance loans, home equity loans and lines of credit, credit cards, and other loan products, as well as residential mortgage and real estate loans; business loans, cash management, payroll, and direct deposit services to consumers and small businesses through branch network, telephone banking, internet banking, and automated teller machines. In addition, it offers trustee, agency, investment management, security brokerage, and administrative services; personal trust, planning, fiduciary, asset management, family office, and other services; and investment products, including mutual funds and annuities, and other services for corporations and institutions, investment bankers, corporate tax, finance and legal executives, and other institutional clients. The company was founded in 1856 and is headquartered in Buffalo, New York.