Financial Analysis: Independent Bank (NASDAQ:IBCP) and First Financial Bancorp. (NASDAQ:FFBC)

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

Analyst Ratings

This is a summary of current ratings and price targets for Independent Bank and First Financial Bancorp., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	2	1	0	2.33
First Financial Bancorp.	0	4	4	0	2.50

Independent Bank presently has a consensus target price of $37.00, suggesting a potential upside of 13.08%. First Financial Bancorp. has a consensus target price of $33.00, suggesting a potential upside of 11.26%. Given Independent Bank’s higher possible upside, equities research analysts clearly believe Independent Bank is more favorable than First Financial Bancorp..

Earnings and Valuation

This table compares Independent Bank and First Financial Bancorp.”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$315.38 million	2.14	$68.54 million	$3.35	9.77
First Financial Bancorp.	$1.26 billion	2.47	$255.60 million	$2.83	10.48

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Independent Bank	22.02%	14.15%	1.27%
First Financial Bancorp.	20.92%	11.09%	1.49%

Volatility & Risk

Independent Bank has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, First Financial Bancorp. has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Insider and Institutional Ownership

79.4% of Independent Bank shares are owned by institutional investors. Comparatively, 77.2% of First Financial Bancorp. shares are owned by institutional investors. 5.9% of Independent Bank shares are owned by company insiders. Comparatively, 1.1% of First Financial Bancorp. 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.

Dividends

Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.4%. First Financial Bancorp. pays an annual dividend of $1.00 per share and has a dividend yield of 3.4%. Independent Bank pays out 33.4% of its earnings in the form of a dividend. First Financial Bancorp. pays out 35.3% 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. Independent Bank has increased its dividend for 11 consecutive years and First Financial Bancorp. has increased its dividend for 1 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Independent Bank beats First Financial Bancorp. on 9 of the 17 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

About First Financial Bancorp.

First Financial Bancorp. operates as the bank holding company for First Financial Bank that provides commercial banking and related services to individuals and businesses in Ohio, Indiana, Kentucky, and Illinois. The company offers checking, savings, and money-market accounts; and accepts various deposit products, such as interest-bearing and non-interest-bearing accounts, time deposits, and cash management services for commercial customers. It also provides real estate loans secured by residential property, such as one to four family residential housing units or commercial property comprising owner-occupied and/or investor income producing real estate consisting of apartments, shopping centers, and office buildings; commercial and industrial loans for various purposes, including inventory, receivables, and equipment, as well as equipment and leasehold improvement financing for franchisees; consumer loans comprising new and used vehicle loans, second mortgages on residential real estate, and unsecured loans; and home equity lines of credit. In addition, the company offers commercial financing to the insurance industry, registered investment advisors, certified public accountants, indirect auto finance companies, and restaurant franchisees. Further, it provides a range of trust and wealth management services; lease and equipment financing services; and currency payments, foreign exchange hedging, and other advisory products. First Financial Bancorp. was founded in 1863 and is headquartered in Cincinnati, Ohio.