Critical Analysis: Bank of N.T. Butterfield & Son (NYSE:NTB) and First Community Bancshares (NASDAQ:FCBC)

First Community Bancshares (NASDAQ:FCBC) and Bank of N.T. Butterfield & Son (NYSE:NTB) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.

Profitability

This table compares First Community Bancshares and Bank of N.T. Butterfield & Son’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Community Bancshares	28.84%	10.67%	1.61%
Bank of N.T. Butterfield & Son	29.34%	22.43%	1.79%

Insider and Institutional Ownership

35.0% of First Community Bancshares shares are owned by institutional investors. Comparatively, 62.7% of Bank of N.T. Butterfield & Son shares are owned by institutional investors. 3.7% of First Community Bancshares shares are owned by company insiders. Comparatively, 1.2% of Bank of N.T. Butterfield & Son 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.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for First Community Bancshares and Bank of N.T. Butterfield & Son, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Community Bancshares	0	2	1	0	2.33
Bank of N.T. Butterfield & Son	0	3	0	1	2.50

Bank of N.T. Butterfield & Son has a consensus target price of $63.50, suggesting a potential upside of 5.37%. Given Bank of N.T. Butterfield & Son’s stronger consensus rating and higher probable upside, analysts clearly believe Bank of N.T. Butterfield & Son is more favorable than First Community Bancshares.

Volatility and Risk

First Community Bancshares has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Bank of N.T. Butterfield & Son has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.

Valuation & Earnings

This table compares First Community Bancshares and Bank of N.T. Butterfield & Son”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Community Bancshares	$185.42 million	5.01	$48.79 million	$3.17	15.50
Bank of N.T. Butterfield & Son	$800.02 million	3.16	$231.94 million	$5.69	10.59

Bank of N.T. Butterfield & Son has higher revenue and earnings than First Community Bancshares. Bank of N.T. Butterfield & Son is trading at a lower price-to-earnings ratio than First Community Bancshares, indicating that it is currently the more affordable of the two stocks.

Dividends

First Community Bancshares pays an annual dividend of $1.32 per share and has a dividend yield of 2.7%. Bank of N.T. Butterfield & Son pays an annual dividend of $2.00 per share and has a dividend yield of 3.3%. First Community Bancshares pays out 41.6% of its earnings in the form of a dividend. Bank of N.T. Butterfield & Son pays out 35.1% 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 Community Bancshares has increased its dividend for 13 consecutive years. Bank of N.T. Butterfield & Son is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Bank of N.T. Butterfield & Son beats First Community Bancshares on 13 of the 18 factors compared between the two stocks.

About First Community Bancshares

First Community Bankshares, Inc. operates as the financial holding company for First Community Bank that provides various banking products and services. It offers demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement plans; and commercial, consumer real estate, and consumer and other loans. The company also provides trust management, estate administration, and investment advisory services; and investment management services. It serves individuals and businesses across various industries, such as education, government, and health services; coal mining and gas extraction; retail trade; construction; manufacturing; tourism; and transportation. The company operates through branches in West Virginia, Virginia, North Carolina, and Tennessee. Community Bankshares, Inc. was founded in 1874 and is headquartered in Bluefield, Virginia.

About Bank of N.T. Butterfield & Son

The Bank of N.T. Butterfield & Son Ltd. provides community banking and wealth management business. The firm operates through the following geographical segments: Bermuda, the Cayman Islands, Channel Islands and the UK, and Other. The Bermuda and Cayman segments offer retail banking and wealth management. The Channel Islands and the UK segment refers to the retail and corporate banking and wealth management. The Other segment includes operations in the jurisdictions of The Bahamas, Canada, Mauritius, Singapore and Switzerland. The company was founded in 1858 and is headquartered in Hamilton, Bermuda.