Critical Review: Horizon Bancorp (HBNC) versus Origin Bancorp (OBNK)

Horizon Bancorp (NASDAQ:HBNC) and Origin Bancorp (NASDAQ:OBNK) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Horizon Bancorp and Origin Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Horizon Bancorp 0 0 2 0 3.00
Origin Bancorp 0 1 1 1 3.00

Horizon Bancorp presently has a consensus target price of $20.00, suggesting a potential upside of 18.27%. Origin Bancorp has a consensus target price of $43.00, suggesting a potential upside of 26.03%. Given Origin Bancorp’s higher possible upside, analysts clearly believe Origin Bancorp is more favorable than Horizon Bancorp.

Valuation & Earnings

This table compares Horizon Bancorp and Origin Bancorp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Horizon Bancorp $200.58 million 3.23 $53.12 million $1.27 13.31
Origin Bancorp $229.34 million 3.51 $51.60 million $2.20 15.51

Horizon Bancorp has higher earnings, but lower revenue than Origin Bancorp. Horizon Bancorp is trading at a lower price-to-earnings ratio than Origin Bancorp, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

53.3% of Horizon Bancorp shares are held by institutional investors. Comparatively, 45.1% of Origin Bancorp shares are held by institutional investors. 4.6% of Horizon Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Horizon Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. Origin Bancorp pays an annual dividend of $0.13 per share and has a dividend yield of 0.4%. Horizon Bancorp pays out 31.5% of its earnings in the form of a dividend. Origin Bancorp pays out 5.9% 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. Horizon Bancorp has increased its dividend for 5 consecutive years. Horizon Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Horizon Bancorp and Origin Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Horizon Bancorp 26.48% 10.72% 1.24%
Origin Bancorp 22.50% 10.95% 1.17%

Horizon Bancorp Company Profile

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that provides commercial and retail banking services. The company offers non-interest bearing and interest-bearing demand deposits, savings accounts, money market deposits, and time deposits. Its loan portfolio comprises commercial, financial, agricultural, and commercial tax-exempt loans; and real estate, mortgage warehouse, and consumer loans. The company also provides corporate and individual trust and agency, investment management, and real estate investment trust services; and sells various insurance products. It operates through a network of 62 full service offices in Northern and Central Indiana, as well as Southern, Central, and Great Lakes bay regions of Michigan. The company was founded in 1873 and is headquartered in Michigan City, Indiana.

Origin Bancorp Company Profile

Origin Bancorp, Inc. operates as the holding company for Origin Bank that provides banking and financial services to small and medium-sized businesses, municipalities, high net worth individuals, and retail clients in Louisiana, Texas, and Mississippi. It offers accepts noninterest and interest-bearing checking accounts, savings deposits, money market accounts, and time deposits; and grants single and multi-family real estate, residential construction, and commercial building loans, as well as loans to small and medium-sized businesses, and consumers. The company also offers personal and commercial property, and casualty insurance products; products and services, including Internet banking and voice response information, mobile applications, cash management, overdraft protection, direct deposit, safe deposit boxes, U.S. savings, bonds and automatic account transfers; and mortgage origination and servicing. As of April 10, 2018, it operated approximately 40 banking centers. The company was founded in 1912 and is headquartered in Ruston, Louisiana.

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