Critical Contrast: Southern Banc (OTCMKTS:SRNN) and OceanFirst Financial (NASDAQ:OCFC)

Southern Banc (OTCMKTS:SRNN) and OceanFirst Financial (NASDAQ:OCFC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Profitability

This table compares Southern Banc and OceanFirst Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern Banc	7.54%	5.79%	0.77%
OceanFirst Financial	12.89%	5.22%	0.66%

Institutional & Insider Ownership

71.0% of OceanFirst Financial shares are owned by institutional investors. 22.0% of Southern Banc shares are owned by company insiders. Comparatively, 5.0% of OceanFirst Financial shares are owned by company 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 Ratings

This is a summary of current ratings and price targets for Southern Banc and OceanFirst Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Banc	0	0	0	0	0.00
OceanFirst Financial	1	4	2	1	2.38

OceanFirst Financial has a consensus target price of $21.00, suggesting a potential upside of 12.30%. Given OceanFirst Financial’s stronger consensus rating and higher probable upside, analysts clearly believe OceanFirst Financial is more favorable than Southern Banc.

Valuation and Earnings

This table compares Southern Banc and OceanFirst Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Banc	$12.13 million	0.68	$920,000.00	$1.19	8.54
OceanFirst Financial	$385.13 million	2.79	$100.07 million	$1.41	13.26

OceanFirst Financial has higher revenue and earnings than Southern Banc. Southern Banc is trading at a lower price-to-earnings ratio than OceanFirst Financial, indicating that it is currently the more affordable of the two stocks.

Summary

OceanFirst Financial beats Southern Banc on 11 of the 14 factors compared between the two stocks.

About Southern Banc

The Southern Banc Company, Inc. operates as the holding company for The Southern Bank company that provides various banking products and services in Alabama. The company’s personal banking products include checking accounts, home mortgage loans, home equity loans, auto loans, and personal loans. Its business banking products comprise business checking accounts, cash flow management, real estate lending, and equipment financing. The Southern Banc Company, Inc. was founded in 1936 and is based in Gadsden, Alabama.

About OceanFirst Financial

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.