Analyzing First Merchants (FRME) and Porter Bancorp (PBIB)

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First Merchants (NASDAQ: PBIB) and Porter Bancorp (NASDAQ:PBIB) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.

Dividends

First Merchants pays an annual dividend of $0.88 per share and has a dividend yield of 1.9%. Porter Bancorp does not pay a dividend. First Merchants pays out 36.5% of its earnings in the form of a dividend. First Merchants has increased its dividend for 6 consecutive years.

Analyst Recommendations

This is a summary of current ratings and recommmendations for First Merchants and Porter Bancorp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Merchants 0 2 1 0 2.33
Porter Bancorp 0 0 0 0 N/A

First Merchants currently has a consensus target price of $50.00, suggesting a potential upside of 6.25%. Given First Merchants’ higher possible upside, research analysts plainly believe First Merchants is more favorable than Porter Bancorp.

Insider & Institutional Ownership

70.3% of First Merchants shares are owned by institutional investors. Comparatively, 23.0% of Porter Bancorp shares are owned by institutional investors. 1.4% of First Merchants shares are owned by company insiders. Comparatively, 17.0% of Porter Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

First Merchants has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, Porter Bancorp has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500.

Profitability

This table compares First Merchants and Porter Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Merchants 28.09% 10.44% 1.45%
Porter Bancorp 89.19% 11.85% 0.70%

Valuation & Earnings

This table compares First Merchants and Porter Bancorp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Merchants $385.90 million 6.04 $96.07 million $2.41 19.53
Porter Bancorp $42.38 million 2.11 $38.45 million N/A N/A

First Merchants has higher revenue and earnings than Porter Bancorp.

Summary

First Merchants beats Porter Bancorp on 10 of the 15 factors compared between the two stocks.

First Merchants Company Profile

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. It accepts time, savings, and demand deposits; and provides consumer, commercial, agri-business, and real estate mortgage loans, as well as rents safe deposit facilities. The company also provides personal and corporate trust, full-service brokerage, corporate, letters of credit, and repurchase agreements services. It operates 119 banking locations in 31 Indiana, 2 Illinois, and 2 Ohio counties. The company's delivery channels include ATMs, check cards, remote deposit capture, interactive voice response systems, and Internet technology. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.

Porter Bancorp Company Profile

Porter Bancorp, Inc. operates as the bank holding company for Limestone Bank, Inc. that provides a range of commercial and personal banking products and services. The company offers deposit products, including checking, savings, and term certificate accounts, as well as money market accounts and fixed rate certificates. It also provides commercial loans for equipment purchases, working capital, and other financing needs of business enterprises; and commercial real estate loans that include loans on properties occupied by borrowers and tenants, as well as construction and development loans secured by land under development, or homes and commercial buildings under construction. In addition, the company offers residential real estate loans; consumer loans; agriculture loans secured by livestock, crops, and equipment; and other loans, including loans to municipalities, loans secured by stock, and overdrafts. Further, it provides drive-through banking facilities, automatic teller machines, personalized checks, credit and debit cards, electronic funds transfers through ACH services, domestic and foreign wire transfers, and loan and deposit sweep accounts; and night depository, Internet and mobile banking, treasury management, remote deposit, cash management, and vault services. The company primarily serves small to medium-sized businesses, and business owners and employees, as well as other executives and professionals. It operates 15 banking offices in 12 counties in Kentucky. Porter Bancorp, Inc. was founded in 1902 and is headquartered in Louisville, Kentucky.

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