Critical Review: Republic Bancorp (NASDAQ:RBCAA) and OptimumBank (NASDAQ:OPHC)

Republic Bancorp (NASDAQ:RBCAA) and OptimumBank (NASDAQ:OPHC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, earnings, analyst recommendations and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Republic Bancorp and OptimumBank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Republic Bancorp	0	2	1	1	2.75
OptimumBank	0	1	3	0	2.75

Republic Bancorp presently has a consensus price target of $98.00, suggesting a potential upside of 7.80%. OptimumBank has a consensus price target of $6.67, suggesting a potential downside of 24.50%. Given Republic Bancorp’s higher probable upside, equities research analysts plainly believe Republic Bancorp is more favorable than OptimumBank.

Profitability

This table compares Republic Bancorp and OptimumBank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Republic Bancorp	25.33%	11.20%	1.78%
OptimumBank	19.62%	14.10%	1.31%

Volatility & Risk

Republic Bancorp has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500. Comparatively, OptimumBank has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500.

Earnings and Valuation

This table compares Republic Bancorp and OptimumBank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Republic Bancorp	$521.34 million	3.42	$131.32 million	$6.62	13.73
OptimumBank	$58.79 million	1.90	$6.28 million	$0.87	10.15

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

Insider and Institutional Ownership

24.4% of Republic Bancorp shares are held by institutional investors. Comparatively, 7.4% of OptimumBank shares are held by institutional investors. 55.9% of Republic Bancorp shares are held by company insiders. Comparatively, 18.7% of OptimumBank shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Republic Bancorp beats OptimumBank on 12 of the 14 factors compared between the two stocks.

About Republic Bancorp

Republic Bancorp, Inc. operates as a bank holding company for Republic Bank & Trust Company that provides various banking products and services in the United States. It operates in six segments: Traditional Banking, Warehouse, Mortgage Banking, Tax Refund Solutions, Republic Payment Solutions, and Republic Credit Solutions. The company offers demand, money market accounts, savings, individual retirement accounts, time, brokered, and other certificates of deposit; and retail and commercial mortgage, construction and land development, consumer, aircraft, and marine loans. It also provides credit cards; title insurance and other financial products and services; and private banking, lockbox processing, remote deposit capture, business online banking, account reconciliation, automated clearing house processing, and internet and mobile banking services. In addition, it offers short-term and revolving credit facilities to mortgage bankers through mortgage warehouse lines of credit; mortgage banking; tax refund solutions, which facilitate the receipt and payment of federal and state tax refund products through third-party tax preparers and tax-preparation software providers; payments-related products and services to consumers through third party service providers; and consumer credit products. The company offers its services through full-services banking centers in Kentucky, Indiana, Florida, Ohio, and Tennessee. Republic Bancorp, Inc. was incorporated in 1974 and is headquartered in Louisville, Kentucky.

About OptimumBank

OptimumBank Holdings, Inc. operates as the bank holding company for OptimumBank that provides various consumer and commercial banking services to individuals and businesses. It accepts demand interest-bearing and noninterest-bearing, savings, money market, and NOW accounts, as well as time deposits, wire transfers, ACH services, and certificates of deposit. The company also offers residential and commercial real estate, multi-family real estate, land and construction loans; commercial loans are generally used for working capital purposes or for acquiring equipment, inventory, and furniture; and consumer loans for various purposes, including purchases of automobiles, recreational vehicles, boats, home improvements, lines of credit, personal, and deposit account collateralized loans. In addition, it provides Visa debit and ATM cards; cash management, notary, and night depository services; and direct deposits, money orders, cashier's checks, domestic collections, and banking by mail, as well as internet banking services. The company was founded in 2000 and is based in Fort Lauderdale, Florida.