Financial Analysis: First BanCorp. (NYSE:FBP) vs. United Community Banks (NYSE:UCB)

United Community Banks (NYSE:UCB) and First BanCorp. (NYSE:FBP) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their risk, dividends, valuation, institutional ownership, profitability, earnings and analyst recommendations.

Valuation and Earnings

This table compares United Community Banks and First BanCorp.”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$1.50 billion	2.54	$252.40 million	$2.52	12.45
First BanCorp.	$1.23 billion	2.61	$298.72 million	$2.06	9.82

First BanCorp. has lower revenue, but higher earnings than United Community Banks. First BanCorp. is trading at a lower price-to-earnings ratio than United Community Banks, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

82.3% of United Community Banks shares are held by institutional investors. Comparatively, 97.9% of First BanCorp. shares are held by institutional investors. 0.5% of United Community Banks shares are held by insiders. Comparatively, 2.3% of First BanCorp. 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.

Dividends

United Community Banks pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. First BanCorp. pays an annual dividend of $0.72 per share and has a dividend yield of 3.6%. United Community Banks pays out 39.7% of its earnings in the form of a dividend. First BanCorp. pays out 35.0% 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. First BanCorp. has raised its dividend for 6 consecutive years. First BanCorp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for United Community Banks and First BanCorp., as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	4	3	0	2.43
First BanCorp.	0	1	3	0	2.75

United Community Banks currently has a consensus target price of $35.33, indicating a potential upside of 12.64%. First BanCorp. has a consensus target price of $24.00, indicating a potential upside of 18.67%. Given First BanCorp.’s stronger consensus rating and higher possible upside, analysts plainly believe First BanCorp. is more favorable than United Community Banks.

Profitability

This table compares United Community Banks and First BanCorp.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	20.67%	9.42%	1.17%
First BanCorp.	26.73%	17.45%	1.64%

Risk & Volatility

United Community Banks has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, First BanCorp. has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Summary

First BanCorp. beats United Community Banks on 13 of the 16 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.

About First BanCorp.

First BanCorp. operates as a bank holding company for FirstBank Puerto Rico that provides a range of financial products and services to consumers and commercial customers. The company operates through six segments: Commercial and Corporate Banking, Mortgage Banking, Consumer (Retail) Banking, Treasury and Investments, United States Operations, and Virgin Islands Operations. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, as well as other products, such as cash management and business management services. The Mortgage Banking segment engages in the origination, sale, and servicing of various residential mortgage loans; hedging activities; and purchase of mortgage loans from branch and mortgage bankers. The Consumer (Retail) Banking segment provides auto loans, finance leases, boat and personal loans, credit card loans, and lines of credit; and interest-bearing and non-interest-bearing checking and savings accounts, and individual retirement accounts and retail certificates of deposit (CDs), as well as insurance agency services. The Treasury and Investments segment offers funding and liquidity management services. The United States Operations segment provides checking, savings, and money market accounts, as well as retail CDs; traditional commercial and industrial, and commercial real estate loans, residential mortgages, term and construction loan, home equity loans, lines of credit, FHLB advances, and brokered CDs; and internet banking, cash management, remote deposit capture, and automated clearing house transactions services. The Virgin Islands Operations segment is involved in consumer, commercial lending, and deposit-taking activities. First BanCorp. was founded in 1948 and is headquartered in San Juan, Puerto Rico.