1st Source (NASDAQ:SRCE) versus Hanover Bancorp (NASDAQ:HNVR) Head-To-Head Review

Hanover Bancorp (NASDAQ:HNVR) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, risk, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Analyst Ratings

This is a summary of current ratings and price targets for Hanover Bancorp and 1st Source, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanover Bancorp	0	1	1	0	2.50
1st Source	0	1	1	0	2.50

Hanover Bancorp presently has a consensus target price of $22.00, suggesting a potential upside of 2.42%. 1st Source has a consensus target price of $70.75, suggesting a potential upside of 12.78%. Given 1st Source’s higher possible upside, analysts clearly believe 1st Source is more favorable than Hanover Bancorp.

Profitability

This table compares Hanover Bancorp and 1st Source’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanover Bancorp	8.32%	6.71%	0.54%
1st Source	23.10%	11.92%	1.54%

Dividends

Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. 1st Source pays an annual dividend of $1.44 per share and has a dividend yield of 2.3%. Hanover Bancorp pays out 24.1% of its earnings in the form of a dividend. 1st Source pays out 26.9% 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. 1st Source has raised its dividend for 37 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Hanover Bancorp has a beta of 0.02, indicating that its share price is 98% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Earnings & Valuation

This table compares Hanover Bancorp and 1st Source”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanover Bancorp	$68.43 million	2.25	$12.35 million	$1.66	12.94
1st Source	$387.12 million	3.98	$132.62 million	$5.36	11.70

1st Source has higher revenue and earnings than Hanover Bancorp. 1st Source is trading at a lower price-to-earnings ratio than Hanover Bancorp, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

15.0% of Hanover Bancorp shares are held by institutional investors. Comparatively, 74.4% of 1st Source shares are held by institutional investors. 24.8% of Hanover Bancorp shares are held by company insiders. Comparatively, 19.3% of 1st Source shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

1st Source beats Hanover Bancorp on 12 of the 15 factors compared between the two stocks.

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.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.