Independent Bank Corporation (NASDAQ: IBCP) and First Mid-Illinois Bancshares (NASDAQ:FMBH) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitabiliy.

Dividends

Independent Bank Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.9%. First Mid-Illinois Bancshares pays an annual dividend of $0.64 per share and has a dividend yield of 1.7%. Independent Bank Corporation pays out 34.8% of its earnings in the form of a dividend.

Profitability

This table compares Independent Bank Corporation and First Mid-Illinois Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Independent Bank Corporation 18.47% 9.83% 0.97%
First Mid-Illinois Bancshares 21.08% 8.66% 0.88%

Analyst Ratings

This is a summary of recent recommendations for Independent Bank Corporation and First Mid-Illinois Bancshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independent Bank Corporation 0 1 0 0 2.00
First Mid-Illinois Bancshares 0 2 0 0 2.00

Independent Bank Corporation presently has a consensus price target of $17.50, suggesting a potential downside of 18.22%. First Mid-Illinois Bancshares has a consensus price target of $37.00, suggesting a potential upside of 0.46%. Given First Mid-Illinois Bancshares’ higher probable upside, analysts plainly believe First Mid-Illinois Bancshares is more favorable than Independent Bank Corporation.

Valuation and Earnings

This table compares Independent Bank Corporation and First Mid-Illinois Bancshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Independent Bank Corporation $124.89 million 3.66 $24.53 million $1.15 18.61
First Mid-Illinois Bancshares $101.22 million 4.54 N/A N/A N/A

Independent Bank Corporation has higher revenue and earnings than First Mid-Illinois Bancshares.

Insider & Institutional Ownership

81.4% of Independent Bank Corporation shares are owned by institutional investors. Comparatively, 19.0% of First Mid-Illinois Bancshares shares are owned by institutional investors. 5.7% of Independent Bank Corporation shares are owned by company insiders. Comparatively, 20.3% of First Mid-Illinois Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Independent Bank Corporation has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500. Comparatively, First Mid-Illinois Bancshares has a beta of -0.09, indicating that its stock price is 109% less volatile than the S&P 500.

Summary

Independent Bank Corporation beats First Mid-Illinois Bancshares on 6 of the 11 factors compared between the two stocks.

Independent Bank Corporation Company Profile

Independent Bank Corporation is a bank holding company. The Company owns all of the outstanding stock of Independent Bank (the Bank). The Bank focuses on commercial banking industry. The Bank offers a range of banking services to individuals and businesses, including checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending and safe deposit box services. The Company’s principal markets are the rural and suburban communities across lower Michigan. As of December 31, 2016, the Company’s markets were served by the Bank’s main office in Grand Rapids, Michigan, and a total of 62 branches, a drive-in facility and 12 loan production offices. The Bank’s branches provide lobby and drive-in services, as well as automatic teller machines (ATMs). Its Bank also offers title insurance services through a subsidiary, and investment and insurance services through a third party agreement with Cetera Investment Services LLC.

First Mid-Illinois Bancshares Company Profile

First Mid-Illinois Bancshares, Inc. is a financial holding company. The Company is engaged in the business of banking through its subsidiaries, First Mid-Illinois Bank & Trust, N.A. (First Mid Bank) and First Clover Leaf Bank, N.A. (First Clover Leaf Bank). The Company provides data processing services to affiliates through another subsidiary, Mid-Illinois Data Services, Inc. (MIDS). The Company offers insurance products and services to customers through its subsidiary, The Checkley Agency, Inc., doing business as First Mid Insurance Group (First Mid Insurance). The Company also owns three statutory business trusts, First Mid-Illinois Statutory Trust I (First Mid Trust I), and First Mid-Illinois Statutory Trust II (First Mid Trust II), and Clover Leaf Statutory Trust I (CLST Trust). As of December 31, 2016, the Company operated in three primary lines of business: community banking, wealth management, and insurance brokerage.

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