Comparing First Bank (NASDAQ:FRBA) and Arrow Financial (NASDAQ:AROW)

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

Risk & Volatility

First Bank has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Arrow Financial has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Earnings and Valuation

This table compares First Bank and Arrow Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$229.43 million	N/A	$42.24 million	$1.51	10.56
Arrow Financial	$223.07 million	2.08	$29.71 million	$1.83	15.39

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

Analyst Recommendations

This is a breakdown of recent recommendations for First Bank and Arrow Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	0	0	3	0	3.00
Arrow Financial	0	2	0	0	2.00

First Bank currently has a consensus target price of $17.8333, indicating a potential upside of 11.81%. Arrow Financial has a consensus target price of $28.25, indicating a potential upside of 0.32%. Given First Bank’s stronger consensus rating and higher possible upside, equities analysts plainly believe First Bank is more favorable than Arrow Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bank	16.13%	9.51%	1.02%
Arrow Financial	13.28%	8.64%	0.79%

Dividends

First Bank pays an annual dividend of $0.24 per share and has a dividend yield of 1.5%. Arrow Financial pays an annual dividend of $1.16 per share and has a dividend yield of 4.1%. First Bank pays out 15.9% of its earnings in the form of a dividend. Arrow Financial pays out 63.4% 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. Arrow Financial has increased its dividend for 7 consecutive years. Arrow Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

64.9% of First Bank shares are held by institutional investors. Comparatively, 46.7% of Arrow Financial shares are held by institutional investors. 13.1% of First Bank shares are held by company insiders. Comparatively, 3.3% of Arrow Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

First Bank beats Arrow Financial on 11 of the 16 factors compared between the two stocks.

About First Bank

First Bank provides various banking products and services to small to mid-sized businesses and individuals. The company accepts various deposits, including non-interest-bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit, as well as commercial checking accounts. It also offers various loan products comprising commercial and industrial loans, which include line of credit, inventory, equipment, and short-term working capital financing; commercial real estate loans, such as owner-occupied, investor, construction and development, and multi-family loans; residential real estate loans comprising residential mortgages, first and second lien home equity loans, and revolving lines of credit; and consumer and other loans consists of auto, personal, traditional installment, and other loans. The company also provides electronic banking services, including Internet and mobile banking, electronic bill payment, and banking by phone; ATM and debit cards, and wire and ACH transfer services; remote deposit capture; and cash management services, as well as engages in the capital markets activities. It operates full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset, and Williamstown, New Jersey; Doylestown, Trevose, Warminster, and West Chester, Paoli, Malvern, Coventry, Devon, Lionville, and Glen Mills Pennsylvania; and Palm Beach, Florida. First Bank was incorporated in 2007 and is headquartered in Hamilton, New Jersey.

About Arrow Financial

Arrow Financial Corporation, a bank holding company, provides commercial and consumer banking, and financial products and services. The company’s deposit products include demand deposits, interest-bearing checking accounts, savings deposits, time deposits, and other time deposits. Its lending activities comprise commercial loans, such as term loans, time notes, and lines of credit; and commercial real estate loans to finance real estate purchases, refinancing, expansions, and enhancement to commercial properties, as well as commercial construction and land development loans to finance projects. The company’s lending activities also include consumer installment loans to finance personal expenditures, personal lines of credit, overdraft protection, and automobile loans; and residential real estate loans, fixed home equity loans, and home equity lines of credit for consumers to finance home improvements, debt consolidation, education, and other uses. In addition, it maintains an indirect lending program. Further, the company provides retirement planning, trust, and estate administration services for individuals, as well as pension, profit-sharing, and employee benefit plan administration services for corporations. Additionally, it offers insurance agency services comprising group health care policies and life insurance, and property and casualty insurance products; and investment advisory services to its proprietary mutual funds, as well as holds a real estate investment trust. It operates in the northeastern region of New York State in Warren, Washington, Saratoga, Essex, Clinton, Rensselaer, Albany, and Schenectady counties. Arrow Financial Corporation was founded in 1851 and is headquartered in Glens Falls, New York.