Comparing Orrstown Financial Services (NASDAQ:ORRF) and Community West Bancshares (NASDAQ:CWBC)

Community West Bancshares (NASDAQ:CWBC) and Orrstown Financial Services (NASDAQ:ORRF) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, valuation, dividends and earnings.

Volatility & Risk

Community West Bancshares has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, Orrstown Financial Services has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Profitability

This table compares Community West Bancshares and Orrstown Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Community West Bancshares	4.59%	7.90%	0.78%
Orrstown Financial Services	7.70%	15.77%	1.42%

Analyst Ratings

This is a breakdown of recent ratings for Community West Bancshares and Orrstown Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Community West Bancshares	0	1	2	0	2.67
Orrstown Financial Services	0	1	3	0	2.75

Community West Bancshares presently has a consensus price target of $23.33, indicating a potential upside of 26.09%. Orrstown Financial Services has a consensus price target of $39.75, indicating a potential upside of 32.79%. Given Orrstown Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe Orrstown Financial Services is more favorable than Community West Bancshares.

Earnings & Valuation

This table compares Community West Bancshares and Orrstown Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Community West Bancshares	$46.27 million	7.62	$7.67 million	$0.52	35.59
Orrstown Financial Services	$192.69 million	3.01	$22.05 million	$1.84	16.27

Orrstown Financial Services has higher revenue and earnings than Community West Bancshares. Orrstown Financial Services is trading at a lower price-to-earnings ratio than Community West Bancshares, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

33.8% of Community West Bancshares shares are owned by institutional investors. Comparatively, 44.3% of Orrstown Financial Services shares are owned by institutional investors. 11.2% of Community West Bancshares shares are owned by insiders. Comparatively, 5.3% of Orrstown Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Community West Bancshares pays an annual dividend of $0.48 per share and has a dividend yield of 2.6%. Orrstown Financial Services pays an annual dividend of $1.04 per share and has a dividend yield of 3.5%. Community West Bancshares pays out 92.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Orrstown Financial Services pays out 56.5% of its earnings in the form of a dividend. Orrstown Financial Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Orrstown Financial Services beats Community West Bancshares on 12 of the 16 factors compared between the two stocks.

About Community West Bancshares

Community West Bancshares operates as the bank holding company for Community West Bank, N.A. that provides various financial products and services in California. The company offers deposit products, such as checking accounts, savings accounts, money market accounts, and fixed rate and fixed maturity certificates of deposits; and cash management products. It also provides commercial, commercial real estate, consumer, manufactured housing, and small business administration loans, as well as agricultural loans for real estate and operating lines; home equity lines of credit collateralized by residential real estate; single family real estate loans; and installment loans consisting of automobile and general-purpose loans. The company serves small to medium-sized businesses and their owners, professionals, high-net worth individuals, and non-profit organizations. Community West Bancshares was founded in 1989 and is headquartered in Goleta, California.

About Orrstown Financial Services

Orrstown Financial Services, Inc. operates as the financial holding company for Orrstown Bank that provides commercial banking and financial advisory services to retail, commercial, non-profit, and government clients in the United States. It accepts various deposits, including checking, savings, time, demand, and money market deposits, as well as certificates of deposit. The company also offers commercial loans, such as commercial real estate, equipment, construction, working capital, and other commercial purpose loans, as well as industrial loans; consumer loans, such as home equity and other consumer loans, as well as home equity lines of credit; residential mortgage loans; acquisition and development loans; municipal loans; and installment and other loans. In addition, it provides renders services as trustee, executor, administrator, guardian, managing agent, custodian, and investment advisor, as well as other fiduciary services under the Orrstown Financial Advisors name; and retail brokerage services through a third-party broker/dealer arrangement. Further, the company offers fiduciary, investment advisory, insurance, and brokerage services. Orrstown Financial Services, Inc. was founded in 1919 and is headquartered in Shippensburg, Pennsylvania.