First Republic Bank (NYSE: FRC) and BNC Bancorp (NASDAQ:BNCN) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Dividends

First Republic Bank pays an annual dividend of $0.68 per share and has a dividend yield of 0.7%. BNC Bancorp pays an annual dividend of $0.05 per share and has a dividend yield of 0.1%. First Republic Bank pays out 16.6% of its earnings in the form of a dividend. BNC Bancorp pays out 3.8% 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. BNC Bancorp has increased its dividend for 4 consecutive years.

Earnings and Valuation

This table compares First Republic Bank and BNC Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
First Republic Bank $2.34 billion 7.05 $646.80 million $4.10 25.49
BNC Bancorp N/A N/A N/A $1.32 26.63

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

Risk & Volatility

First Republic Bank has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, BNC Bancorp has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Recommendations

This is a summary of current ratings for First Republic Bank and BNC Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Republic Bank 0 8 5 0 2.38
BNC Bancorp 0 3 1 0 2.25

First Republic Bank presently has a consensus target price of $105.42, suggesting a potential upside of 0.87%. BNC Bancorp has a consensus target price of $33.88, suggesting a potential downside of 3.63%. Given First Republic Bank’s stronger consensus rating and higher possible upside, research analysts plainly believe First Republic Bank is more favorable than BNC Bancorp.

Profitability

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

Net Margins Return on Equity Return on Assets
First Republic Bank 27.37% 12.16% 0.96%
BNC Bancorp 19.39% 6.37% 0.77%

Insider & Institutional Ownership

97.7% of First Republic Bank shares are held by institutional investors. Comparatively, 62.6% of BNC Bancorp shares are held by institutional investors. 6.2% of BNC Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

First Republic Bank beats BNC Bancorp on 11 of the 14 factors compared between the two stocks.

About First Republic Bank

First Republic Bank is a commercial bank and trust company. The Bank specializes in providing services, including private banking, private business banking, real estate lending and wealth management services, including trust and custody services, to clients in selected metropolitan areas in the United States. It operates through two segments: Commercial Banking and Wealth Management. The Commercial Banking segment is engaged in attracting funds from the public; originating loans, primarily real estate secured mortgage loans, and investing in investment securities. The Wealth Management segment consists of First Republic Investment Management, Inc.; its money market mutual fund activities through third-party providers and the brokerage activities of First Republic Securities Company, LLC; First Republic Trust Company and First Republic Trust Company of Delaware LLC (the Trust Company), and its foreign exchange activities. It offers a range of internally managed investment services.

About BNC Bancorp

BNC Bancorp is a one-bank holding company for Bank of North Carolina (the Bank). The Bank is a full service commercial bank, which provides a range of banking services tailored to the particular banking needs of the communities it serves. It is engaged in the business of attracting deposits from the general public and using those deposits, together with other funding from its lines of credit, to make commercial and consumer loans. It provides banking services to individuals and small to medium-sized local businesses. It also offers a range of banking services, including traditional products, such as checking and savings accounts. Its other banking services include Mortgage Lending, Small Business Administration Lending, Wealth Management Services and Insurance Services. It offers an array of residential mortgage products, including long-term fixed rate and variable rate loans. Its Wealth Management Services include financial planning, wealth management, and trust and estate planning.

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