Comparing First Bancorp (NASDAQ:FBNC) and 1st Source (NASDAQ:SRCE)

First Bancorp (NASDAQ:FBNC) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares First Bancorp and 1st Source’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Bancorp	20.17%	8.39%	0.94%
1st Source	23.01%	11.68%	1.48%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for First Bancorp and 1st Source, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bancorp	0	0	1	0	3.00
1st Source	0	2	0	0	2.00

First Bancorp presently has a consensus target price of $45.00, indicating a potential upside of 6.71%. 1st Source has a consensus target price of $64.75, indicating a potential upside of 6.92%. Given 1st Source’s higher possible upside, analysts clearly believe 1st Source is more favorable than First Bancorp.

Institutional and Insider Ownership

68.4% of First Bancorp shares are held by institutional investors. Comparatively, 74.4% of 1st Source shares are held by institutional investors. 3.7% of First Bancorp shares are held by insiders. Comparatively, 19.3% of 1st Source shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares First Bancorp and 1st Source”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bancorp	$381.68 million	4.55	$104.13 million	$2.77	15.22
1st Source	$380.68 million	3.90	$124.93 million	$4.97	12.19

1st Source has lower revenue, but higher earnings than First Bancorp. 1st Source 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

First Bancorp pays an annual dividend of $0.88 per share and has a dividend yield of 2.1%. 1st Source pays an annual dividend of $1.44 per share and has a dividend yield of 2.4%. First Bancorp pays out 31.8% of its earnings in the form of a dividend. 1st Source pays out 29.0% 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. 1st Source has increased its dividend for 37 consecutive years. 1st Source is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

First Bancorp has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500.

Summary

1st Source beats First Bancorp on 11 of the 17 factors compared between the two stocks.

About First Bancorp

First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses. The company accepts deposit products, such as checking, savings, and money market accounts, as well as time deposits, including certificate of deposits and individual retirement accounts. It also offers loans for a range of consumer and commercial purposes comprising loans for business, real estate, personal, home improvement, and automobiles, as well as residential mortgages and small business administration loans; and accounts receivable financing and factoring, inventory financing, and purchase order financing services. In addition, the company provides credit and debit cards, letter of credits, and safe deposit box rental services, as well as electronic funds transfer services consisting of wire transfers; and internet and mobile banking, cash management, bank-by-phone services, and remote deposit capture services. Further, it offers investment and insurance products, such as mutual funds, annuities, long-term care insurance, life insurance, and company retirement plans, as well as property and casualty insurance products; and financial planning services. The company was founded in 1934 and is headquartered in Southern Pines, North Carolina.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.