Berkshire Hills Bancorp (NYSE: BHLB) and First Bank (NASDAQ:FRBA) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Risk & Volatility

Berkshire Hills Bancorp has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, First Bank has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Profitability

This table compares Berkshire Hills Bancorp and First Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Berkshire Hills Bancorp 15.03% 6.93% 0.85%
First Bank 17.19% N/A N/A

Institutional and Insider Ownership

62.8% of Berkshire Hills Bancorp shares are owned by institutional investors. Comparatively, 29.3% of First Bank shares are owned by institutional investors. 1.7% of Berkshire Hills Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Berkshire Hills Bancorp pays an annual dividend of $0.84 per share and has a dividend yield of 2.4%. First Bank pays an annual dividend of $0.08 per share and has a dividend yield of 0.6%. Berkshire Hills Bancorp pays out 46.2% of its earnings in the form of a dividend. First Bank pays out 12.5% 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 Bank has increased its dividend for 2 consecutive years.

Valuation & Earnings

This table compares Berkshire Hills Bancorp and First Bank’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Berkshire Hills Bancorp $336.88 million 4.08 $72.74 million $1.82 18.87
First Bank $31.35 million 6.06 $9.61 million $0.64 19.77

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Berkshire Hills Bancorp and First Bank, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Berkshire Hills Bancorp 0 3 2 0 2.40
First Bank 0 0 1 0 3.00

Berkshire Hills Bancorp presently has a consensus price target of $35.00, indicating a potential upside of 1.89%. First Bank has a consensus price target of $14.00, indicating a potential upside of 10.67%. Given First Bank’s stronger consensus rating and higher possible upside, analysts clearly believe First Bank is more favorable than Berkshire Hills Bancorp.

Summary

Berkshire Hills Bancorp beats First Bank on 10 of the 17 factors compared between the two stocks.

Berkshire Hills Bancorp Company Profile

Berkshire Hills Bancorp, Inc. (Berkshire) is a holding company for Berkshire Bank (the Bank) and Berkshire Insurance Group. Berkshire offers a range of deposit, lending, insurance and wealth management products to retail, commercial, not-for-profit and municipal customers in its market areas. Berkshire product offerings also include retail and commercial electronic banking, commercial cash management and commercial interest rate swaps. The Bank’s loan portfolio consists of commercial loans, which include residential mortgages, commercial real estate, commercial and industrial loans, and consumer loans. The Bank’s securities available for sale include municipal bonds and obligations, mortgage-backed securities, other bonds and obligations, and marketable equity securities. As of December 5, 2016, the Bank had 99 full service branch offices in Massachusetts, New York, Connecticut, Vermont, New Jersey and Pennsylvania.

First Bank Company Profile

First Bank is a commercial bank. The Company provides a range of lending, deposit and other financial products and services. It operates through Community Banking segment, which is engaged in providing a range of commercial and retail and related banking services. It offers a range of lending products to meet the needs of its customers located within its market areas, including commercial and industrial loans, commercial real estate loans (including owner-occupied, investor, construction and development and multi-family loans), residential real estate loans, and consumer and other loans. It offers a range of deposit instruments, including non-interest bearing demand deposits (such as checking accounts), interest bearing demand accounts, money market accounts, savings accounts and certificates of deposit. It operates over 10 branches located in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Somerset, Randolph and Williamstown, New Jersey, and Trevose, Pennsylvania.

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