Independent Bank Corporation (NASDAQ: IBCP) and First Bancorp (NASDAQ:FBNC) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.

Valuation & Earnings

This table compares Independent Bank Corporation and First Bancorp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Independent Bank Corporation $125.86 million 3.29 $23.90 million $1.12 17.32
First Bancorp $177.16 million 4.25 $35.04 million $1.42 21.47

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

Dividends

Independent Bank Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. First Bancorp pays an annual dividend of $0.32 per share and has a dividend yield of 1.0%. Independent Bank Corporation pays out 35.7% of its earnings in the form of a dividend. First Bancorp pays out 22.5% 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.

Volatility & Risk

Independent Bank Corporation has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500. Comparatively, First Bancorp has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Independent Bank Corporation and First Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independent Bank Corporation 0 3 0 0 2.00
First Bancorp 0 1 3 0 2.75

Independent Bank Corporation presently has a consensus price target of $20.25, indicating a potential upside of 4.38%. First Bancorp has a consensus price target of $31.33, indicating a potential upside of 2.77%. Given Independent Bank Corporation’s higher possible upside, analysts clearly believe Independent Bank Corporation is more favorable than First Bancorp.

Insider & Institutional Ownership

80.9% of Independent Bank Corporation shares are owned by institutional investors. Comparatively, 66.0% of First Bancorp shares are owned by institutional investors. 5.7% of Independent Bank Corporation shares are owned by company insiders. Comparatively, 1.9% of First Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Independent Bank Corporation 17.68% 9.48% 0.93%
First Bancorp 17.52% 7.77% 0.83%

Summary

First Bancorp beats Independent Bank Corporation on 9 of the 16 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 Bancorp Company Profile

First Bancorp is the bank holding company for First Bank (the Bank). The Company’s principal activity is the ownership and operation of First Bank. The Bank engages in a range of banking activities, including the acceptance of deposits and the making of loans. The Bank offers credit cards, debit cards, letters of credit, safe deposit box rentals and electronic funds transfer services, including wire transfers. In addition, the Bank offers Internet banking, mobile banking, cash management and bank-by-phone capabilities to its customers. It also offers a mobile check deposit feature for its mobile banking customers to deposit checks through their smartphone. The Bank offers remote deposit capture for its business customers. The Company provides loans for a range of consumer and commercial purposes, including loans for business, agriculture, real estate, personal uses, home improvement and automobiles.

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