Critical Comparison: Ottawa Bancorp (OTCMKTS:OTTW) and First Commonwealth Financial (NYSE:FCF)

Ottawa Bancorp (OTCMKTS:OTTW) and First Commonwealth Financial (NYSE:FCF) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Risk and Volatility

Ottawa Bancorp has a beta of 0.32, suggesting that its share price is 68% less volatile than the S&P 500. Comparatively, First Commonwealth Financial has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.

Institutional & Insider Ownership

72.6% of First Commonwealth Financial shares are owned by institutional investors. 7.8% of Ottawa Bancorp shares are owned by company insiders. Comparatively, 2.2% of First Commonwealth Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Ottawa Bancorp and First Commonwealth Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ottawa Bancorp	9.05%	4.04%	0.46%
First Commonwealth Financial	18.94%	9.71%	1.18%

Dividends

Ottawa Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 2.8%. First Commonwealth Financial pays an annual dividend of $0.54 per share and has a dividend yield of 3.0%. Ottawa Bancorp pays out 63.8% of its earnings in the form of a dividend. First Commonwealth Financial pays out 41.5% 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. First Commonwealth Financial has raised its dividend for 9 consecutive years. First Commonwealth Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Ottawa Bancorp and First Commonwealth Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ottawa Bancorp	0	0	0	0	0.00
First Commonwealth Financial	0	2	3	0	2.60

First Commonwealth Financial has a consensus price target of $18.90, indicating a potential upside of 5.68%. Given First Commonwealth Financial’s stronger consensus rating and higher probable upside, analysts plainly believe First Commonwealth Financial is more favorable than Ottawa Bancorp.

Valuation and Earnings

This table compares Ottawa Bancorp and First Commonwealth Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ottawa Bancorp	$17.43 million	2.11	$780,000.00	$0.69	23.19
First Commonwealth Financial	$490.58 million	3.81	$142.57 million	$1.30	13.76

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

Summary

First Commonwealth Financial beats Ottawa Bancorp on 15 of the 17 factors compared between the two stocks.

About Ottawa Bancorp

Ottawa Bancorp, Inc. operates as the bank holding company for OSB Community Bank, a savings bank that provides various financial services to individual and corporate customers in Illinois. The company's deposit products include saving, checking, money market, and interest-bearing accounts, as well as certificate of deposit. Its loan portfolio comprises commercial, non-residential real estate, one-to-four family residential, multi-family residential, consumer direct, and purchased auto loans; business and construction loans; motor vehicle, home improvement, share, and personal unsecured loans, as well as home equity and small personal credit lines; mortgage loans; and student loans. The company also provides cash management solutions, such as remote deposit capture, automated clearing house/payroll direct deposit, and merchant services, as well as commercial leasing services. In addition, it offers notary, lamination, night depository, document faxing, money gift envelopes, safe deposit boxes, and coin counting, as well as debit and credit cards, and digital banking services. The company was formerly known as Ottawa Savings Bancorp, Inc. and changed its name to Ottawa Bancorp, Inc. in October 2016. Ottawa Bancorp, Inc. was founded in 1871 and is based in Ottawa, Illinois.

About First Commonwealth Financial

First Commonwealth Financial Corporation, a financial holding company, provides various consumer and commercial banking services in the United States. Its consumer services include personal checking accounts, interest-earning checking accounts, savings and health savings accounts, insured money market accounts, debit cards, investment certificates, fixed and variable rate certificates of deposit, mortgage loans, secured and unsecured installment loans, construction and real estate loans, safe deposit facilities, credit cards, credit lines with overdraft checking protection, IRA accounts, and automated teller machine (atm) services, as well as internet, mobile, and telephone banking services. The company's commercial banking services comprise commercial lending, business checking accounts, online account management services, payroll direct deposits, commercial cash management services, and repurchase agreements, as well as ACH origination services. In addition, it offers various trust and asset management services; auto, home, and business insurance, as well as term life insurance; and annuities, mutual funds, and stock and bond brokerage services through a broker-dealer and insurance brokers. The company was founded in 1934 and is headquartered in Indiana, Pennsylvania.