Head-To-Head Analysis: First Bank (NASDAQ:FRBA) vs. Webster Financial (NYSE:WBS)

First Bank (NASDAQ:FRBA) and Webster Financial (NYSE:WBS) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, dividends and valuation.

Dividends

First Bank pays an annual dividend of $0.36 per share and has a dividend yield of 2.2%. Webster Financial pays an annual dividend of $1.60 per share and has a dividend yield of 2.2%. First Bank pays out 21.6% of its earnings in the form of a dividend. Webster Financial pays out 26.2% 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 Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

First Bank has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, Webster Financial has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Valuation and Earnings

This table compares First Bank and Webster Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$245.83 million	1.69	$43.66 million	$1.67	9.91
Webster Financial	$4.42 billion	2.71	$1.00 billion	$6.11	12.09

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for First Bank and Webster Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	1	1	2	0	2.25
Webster Financial	1	11	4	0	2.19

First Bank currently has a consensus price target of $17.50, suggesting a potential upside of 5.74%. Webster Financial has a consensus price target of $73.96, suggesting a potential upside of 0.16%. Given First Bank’s stronger consensus rating and higher probable upside, equities analysts clearly believe First Bank is more favorable than Webster Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bank	17.02%	9.69%	1.05%
Webster Financial	22.95%	11.31%	1.24%

Insider and Institutional Ownership

64.9% of First Bank shares are owned by institutional investors. Comparatively, 85.6% of Webster Financial shares are owned by institutional investors. 13.1% of First Bank shares are owned by company insiders. Comparatively, 0.5% of Webster Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Webster Financial beats First Bank 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 Webster Financial

Webster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of financial products and services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Consumer Banking. The Commercial Banking segment offers commercial real estate and equipment financing, business banking, asset-based lending, and commercial services; public sector finance; mortgage warehouse financing; sponsor and specialty financing services; credit, deposit, and cash flow management services; and wealth management solutions to business owners and operators, including trust, asset management, financial planning, insurance, retirement, and investment products, as well as treasury management services comprising derivative, treasury, accounts payable, accounts receivable, and trade products and services. This segment also provides commercial services, such as accounts receivable factoring and trade financing, payroll funding, and business process outsourcing. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter benefit services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, benefit consultants, and financial advisors. The Consumer Banking segment provides consumer deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers; and small business banking products, such as credit, deposit, and cash flow management products to businesses and professional service firms. The company offers online and mobile banking services. Webster Financial Corporation was founded in 1935 and is headquartered in Stamford, Connecticut.