First Bank (NASDAQ:FRBA) vs. Independent Bank Group (NASDAQ:IBTX) Critical Comparison

First Bank (NASDAQ:FRBA) and Independent Bank Group (NASDAQ:IBTX) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for First Bank and Independent Bank Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	0	0	1	0	3.00
Independent Bank Group	0	1	4	0	2.80

First Bank currently has a consensus target price of $14.00, indicating a potential upside of 15.51%. Independent Bank Group has a consensus target price of $54.20, indicating a potential upside of 35.09%. Given Independent Bank Group’s higher probable upside, analysts clearly believe Independent Bank Group is more favorable than First Bank.

Dividends

First Bank pays an annual dividend of $0.24 per share and has a dividend yield of 2.0%. Independent Bank Group pays an annual dividend of $1.52 per share and has a dividend yield of 3.8%. First Bank pays out 24.2% of its earnings in the form of a dividend. Independent Bank Group pays out 146.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bank	12.06%	11.21%	1.15%
Independent Bank Group	4.68%	5.76%	0.72%

Volatility & Risk

First Bank has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Independent Bank Group has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.

Institutional and Insider Ownership

64.9% of First Bank shares are held by institutional investors. Comparatively, 77.9% of Independent Bank Group shares are held by institutional investors. 13.1% of First Bank shares are held by company insiders. Comparatively, 3.4% of Independent Bank Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares First Bank and Independent Bank Group’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$173.30 million	1.37	$20.90 million	$0.99	12.24
Independent Bank Group	$922.84 million	1.79	$43.20 million	$1.04	38.58

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

Summary

Independent Bank Group beats First Bank on 10 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 Independent Bank Group

Independent Bank Group, Inc., through its subsidiary, Independent Bank provides various commercial banking products and services to businesses, professionals, and individuals in the United States. It accepts various deposit products, including checking and savings accounts, demand deposits, money market accounts, and certificates of deposit. The company also provides commercial real estate loans; commercial construction, land, and land development loans; residential real estate loans; single-family interim construction loans; commercial loans, such as SBA guaranteed loans, business term loans, lines of credit, and energy related loans; agricultural loans for farmers and ranchers; consumer installment loans comprising loans to purchase cars, boats, and other recreational vehicles; and residential mortgages, as well as mortgage warehouse purchase loans. In addition, it offers debit and credit cards, online and mobile banking, estatement, bank-by-mail, and direct deposit services; wealth management services; and business accounts and management services consisting of analyzed business checking, business savings, and treasury management services. The company was incorporated in 2002 and is headquartered in McKinney, Texas.