Comparing Touchstone Bankshares (OTCMKTS:TSBA) and Live Oak Bancshares (NASDAQ:LOB)

Live Oak Bancshares (NASDAQ:LOB) and Touchstone Bankshares (OTCMKTS:TSBA) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Risk and Volatility

Live Oak Bancshares has a beta of 1.98, indicating that its stock price is 98% more volatile than the S&P 500. Comparatively, Touchstone Bankshares has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Insider & Institutional Ownership

64.0% of Live Oak Bancshares shares are held by institutional investors. Comparatively, 0.4% of Touchstone Bankshares shares are held by institutional investors. 23.4% of Live Oak Bancshares shares are held by insiders. Comparatively, 10.4% of Touchstone Bankshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for Live Oak Bancshares and Touchstone Bankshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Live Oak Bancshares	0	2	2	0	2.50
Touchstone Bankshares	0	0	0	0	0.00

Live Oak Bancshares currently has a consensus target price of $42.50, suggesting a potential upside of 30.81%. Given Live Oak Bancshares’ stronger consensus rating and higher probable upside, equities analysts clearly believe Live Oak Bancshares is more favorable than Touchstone Bankshares.

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.4%. Touchstone Bankshares pays an annual dividend of $0.32 per share and has a dividend yield of 2.2%. Live Oak Bancshares pays out 8.1% of its earnings in the form of a dividend. Touchstone Bankshares pays out 49.2% 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.

Valuation & Earnings

This table compares Live Oak Bancshares and Touchstone Bankshares”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	$533.05 million	2.79	$77.47 million	$1.49	21.81
Touchstone Bankshares	N/A	N/A	$1.61 million	$0.65	21.92

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Live Oak Bancshares	7.10%	6.88%	0.55%
Touchstone Bankshares	N/A	N/A	N/A

Summary

Live Oak Bancshares beats Touchstone Bankshares on 14 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 Touchstone Bankshares

Touchstone Bankshares, Inc. operates as the bank holding company for Touchstone Bank that provides various community banking products and services in the United States. The company offers personal and business savings and checking accounts. It also provides home mortgage, professional mortgage, home equity, auto, and personal term loans; personal lines of credit; and business loans comprising commercial real estate, operating capital, business term, and construction loans, as well as business lines of credit. In addition, the company offers credit and debit cards; and digital banking, treasury, wealth management, and financial planning services. It has branches in northern North Carolina and south-central Virginia. The company was founded in 1906 and is headquartered in Prince George, Virginia.