Critical Review: Hanover Bancorp (NASDAQ:HNVR) and Bank of South Carolina (NASDAQ:BKSC)

Bank of South Carolina (NASDAQ:BKSC) and Hanover Bancorp (NASDAQ:HNVR) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.

Volatility & Risk

Bank of South Carolina has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, Hanover Bancorp has a beta of -0.23, suggesting that its stock price is 123% less volatile than the S&P 500.

Profitability

This table compares Bank of South Carolina and Hanover Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of South Carolina	20.76%	12.48%	0.94%
Hanover Bancorp	8.70%	6.33%	0.52%

Insider & Institutional Ownership

0.2% of Bank of South Carolina shares are held by institutional investors. Comparatively, 15.0% of Hanover Bancorp shares are held by institutional investors. 29.8% of Bank of South Carolina shares are held by company insiders. Comparatively, 24.8% of Hanover Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Bank of South Carolina 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
Bank of South Carolina	$21.16 million	3.19	$5.49 million	$1.04	11.89
Hanover Bancorp	$113.89 million	1.18	$15.16 million	$1.65	11.45

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

Analyst Recommendations

This is a summary of current recommendations for Bank of South Carolina and Hanover Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of South Carolina	0	0	0	0	N/A
Hanover Bancorp	0	0	1	0	3.00

Hanover Bancorp has a consensus price target of $22.00, indicating a potential upside of 16.46%. Given Hanover Bancorp’s higher possible upside, analysts clearly believe Hanover Bancorp is more favorable than Bank of South Carolina.

Dividends

Bank of South Carolina pays an annual dividend of $0.76 per share and has a dividend yield of 6.1%. Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Bank of South Carolina pays out 73.1% of its earnings in the form of a dividend. Hanover Bancorp pays out 24.2% 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.

Summary

Bank of South Carolina beats Hanover Bancorp on 8 of the 15 factors compared between the two stocks.

About Bank of South Carolina

Bank of South Carolina Corporation operates as a bank holding company for The Bank of South Carolina that provides a range of financial products and services primarily in Charleston, Berkeley, and Dorchester counties of South Carolina. Its deposits include non-interest-bearing demand accounts, NOW accounts, money market accounts, time deposits, and savings accounts, as well as certificates of deposit. The company offers secured and unsecured commercial loans, commercial real estate construction loans, consumer construction loans, home equity lines of credit, and mortgage originations, as well as paycheck protection program loans. It operates five banking house locations. The company was founded in 1986 and is headquartered in Charleston, South Carolina.

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.