First Bank (NASDAQ: SRCE) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, dividends, valuation, earnings, analyst recommendations and profitability.

Dividends

First Bank pays an annual dividend of $0.12 per share and has a dividend yield of 0.9%. 1st Source pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. First Bank pays out 16.7% of its earnings in the form of a dividend. 1st Source pays out 40.0% 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. 1st Source has raised its dividend for 32 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares First Bank and 1st Source’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Bank $53.31 million 4.56 $6.99 million $0.72 19.38
1st Source $311.09 million 4.67 $68.05 million $2.50 22.37

1st Source has higher revenue and earnings than First Bank. First Bank is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares First Bank and 1st Source’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Bank 16.95% N/A N/A
1st Source 22.84% 10.18% 1.22%

Institutional and Insider Ownership

42.8% of First Bank shares are held by institutional investors. Comparatively, 70.9% of 1st Source shares are held by institutional investors. 19.9% of 1st Source shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

First Bank has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for First Bank and 1st Source, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Bank 0 0 1 0 3.00
1st Source 0 2 1 0 2.33

First Bank presently has a consensus target price of $15.00, suggesting a potential upside of 7.53%. 1st Source has a consensus target price of $55.00, suggesting a potential downside of 1.66%. Given First Bank’s stronger consensus rating and higher probable upside, equities analysts clearly believe First Bank is more favorable than 1st Source.

Summary

1st Source beats First Bank on 13 of the 16 factors compared between the two stocks.

First Bank Company Profile

First Bank provides various banking products and services to individuals, businesses, and governmental entities. The company accepts various deposits, including non-interest bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit, as well as commercial checking accounts. Its loan products include commercial and industrial loans; commercial real estate loans, such as owner-occupied, investor, construction and development, and multi-family loans; residential real estate loans comprising residential mortgages, first and second lien home equity loans, and revolving lines of credit; and consumer loans, which consist of auto, personal, and traditional installment loans, as well as other loans. The company also provides electronic banking services, including Internet and mobile banking, electronic bill payment, and banking by phone, as well as ATM and debit cards, and wire and ACH transfer services; and cash management services. As of December 31, 2017, it operated 14 full-service branches in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Randolph, Somerset, and Williamstown, New Jersey; and Doylestown, Bensalem, Warminster, Levittown, and Trevose, Pennsylvania. First Bank was founded in 2007 and is headquartered in Hamilton, New Jersey.

1st Source Company Profile

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and investment management services, and insurance to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate loans, and lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides a range of trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for new and used aircraft, auto and light trucks, construction equipment, and medium and heavy duty trucks; and leases construction equipment, various types of trucks, vans, automobiles, motor coaches, shuttle buses, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services; and investment advisory services to trust and investment clients. As of December 31, 2017, the company operated through 79 banking centers in 17 counties in Indiana and Michigan, and Sarasota County in Florida. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.

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