Reviewing OFG Bancorp (NYSE:OFG) & Potomac Bancshares (OTCMKTS:PTBS)

OFG Bancorp (NYSE:OFG) and Potomac Bancshares (OTCMKTS:PTBS) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, profitability, institutional ownership, valuation and risk.

Dividends

OFG Bancorp pays an annual dividend of $1.40 per share and has a dividend yield of 2.9%. Potomac Bancshares pays an annual dividend of $0.60 per share and has a dividend yield of 2.6%. OFG Bancorp pays out 28.9% of its earnings in the form of a dividend. Potomac Bancshares pays out 25.4% 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. OFG Bancorp has increased its dividend for 5 consecutive years. OFG Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares OFG Bancorp and Potomac Bancshares”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OFG Bancorp	$688.35 million	2.95	$205.10 million	$4.84	9.92
Potomac Bancshares	$54.90 million	1.92	$10.60 million	$2.36	9.92

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

Insider and Institutional Ownership

92.7% of OFG Bancorp shares are held by institutional investors. Comparatively, 5.3% of Potomac Bancshares shares are held by institutional investors. 1.2% of OFG Bancorp shares are held by company insiders. Comparatively, 4.4% of Potomac Bancshares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

OFG Bancorp has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Potomac Bancshares has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for OFG Bancorp and Potomac Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OFG Bancorp	0	3	2	1	2.67
Potomac Bancshares	0	0	0	0	0.00

OFG Bancorp currently has a consensus target price of $47.20, indicating a potential downside of 1.65%. Given OFG Bancorp’s stronger consensus rating and higher probable upside, research analysts clearly believe OFG Bancorp is more favorable than Potomac Bancshares.

Profitability

This table compares OFG Bancorp and Potomac Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OFG Bancorp	23.45%	15.62%	1.74%
Potomac Bancshares	N/A	N/A	N/A

Summary

OFG Bancorp beats Potomac Bancshares on 15 of the 18 factors compared between the two stocks.

About OFG Bancorp

OFG Bancorp, a financial holding company, provides a range of banking and financial services. It operates through three segments: Banking, Wealth Management, and Treasury. The company offers checking and savings accounts, and individual retirement accounts; certificate of deposits, as well as time deposit products; commercial, consumer, auto leasing, and mortgage lending services; credit cards; cash management; financial planning and insurance services; and corporate and individual trust, and retirement services. In addition, it provides securities brokerage and investment advisory services, including various investment alternatives, such as tax-advantaged fixed income securities, mutual funds, stocks, and bonds to retail and institutional clients; and separately-managed accounts and mutual fund asset allocation programs. Further, the company engages in the insurance agency and reinsurance businesses; administration and servicing of retirement plans; and various treasury-related functions with an investment portfolio consisting of mortgage-backed securities, obligations of U.S. government sponsored agencies, and U.S. Treasury securities and money market instruments. Additionally, it offers money management and investment banking services; and engages in the asset/liability management activities, such as purchases and sales of investment securities, interest rate risk management, derivatives, and borrowings. The company provides investment brokerage, transactional, international trade financing, residential mortgage, and consumer finance services. OFG Bancorp was founded in 1964 and is headquartered in San Juan, Puerto Rico.

About Potomac Bancshares

Potomac Bancshares, Inc. operates as the bank holding company for Bank of Charles Town that provides various banking products and services to individuals and businesses. The company offers checking, savings, and individual retirement accounts; and certificates of deposit (CD). It also provides personal loans, including new and used vehicle, home equity, unsecured home improvement and personal, retail equipment, and lot loans, as well as loans secured by CD, and home equity lines of credit; commercial loans for building or office purchases, commercial real estate and construction, and production and administrative equipment purchases; lines of credit; mortgage, commercial, term, residential and commercial construction, commercial real estate, and agricultural loans; and credit and debit cards. In addition, the company offers Card Pay, cash management, merchant, financial planning, trust and estate, investment management, wealth management, full-service brokerage, retirement and insurance planning and products, asset allocation and management, and college planning services, as well as telephone, mobile, and online banking services. Potomac Bancshares, Inc. was founded in 1871 and is based in Charles Town, West Virginia.