Critical Contrast: Mercantile Bank (NASDAQ:MBWM) & First Financial Bancorp. (NASDAQ:FFBC)

Mercantile Bank (NASDAQ:MBWM) and First Financial Bancorp. (NASDAQ:FFBC) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Earnings & Valuation

This table compares Mercantile Bank and First Financial Bancorp.”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercantile Bank	$361.89 million	2.02	$79.59 million	$5.04	8.91
First Financial Bancorp.	$1.62 billion	1.51	$228.83 million	$2.50	10.19

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

Institutional and Insider Ownership

58.6% of Mercantile Bank shares are held by institutional investors. Comparatively, 77.2% of First Financial Bancorp. shares are held by institutional investors. 3.2% of Mercantile Bank shares are held by insiders. Comparatively, 1.1% of First Financial Bancorp. shares are held by 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.

Analyst Recommendations

This is a breakdown of current recommendations for Mercantile Bank and First Financial Bancorp., as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercantile Bank	0	2	3	0	2.60
First Financial Bancorp.	0	3	2	0	2.40

Mercantile Bank currently has a consensus target price of $55.25, suggesting a potential upside of 23.00%. First Financial Bancorp. has a consensus target price of $29.40, suggesting a potential upside of 15.43%. Given Mercantile Bank’s stronger consensus rating and higher probable upside, research analysts clearly believe Mercantile Bank is more favorable than First Financial Bancorp..

Risk & Volatility

Mercantile Bank has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500. Comparatively, First Financial Bancorp. has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Mercantile Bank	22.11%	13.52%	1.34%
First Financial Bancorp.	19.41%	10.57%	1.42%

Dividends

Mercantile Bank pays an annual dividend of $1.52 per share and has a dividend yield of 3.4%. First Financial Bancorp. pays an annual dividend of $1.00 per share and has a dividend yield of 3.9%. Mercantile Bank pays out 30.2% of its earnings in the form of a dividend. First Financial Bancorp. pays out 40.0% 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. Mercantile Bank has raised its dividend for 14 consecutive years and First Financial Bancorp. has raised its dividend for 1 consecutive years.

Summary

Mercantile Bank beats First Financial Bancorp. on 10 of the 17 factors compared between the two stocks.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.

About First Financial Bancorp.

First Financial Bancorp. operates as the bank holding company for First Financial Bank that provides commercial banking and related services to individuals and businesses in Ohio, Indiana, Kentucky, and Illinois. The company offers checking, savings, and money-market accounts; and accepts various deposit products, such as interest-bearing and non-interest-bearing accounts, time deposits, and cash management services for commercial customers. It also provides real estate loans secured by residential property, such as one to four family residential housing units or commercial property comprising owner-occupied and/or investor income producing real estate consisting of apartments, shopping centers, and office buildings; commercial and industrial loans for various purposes, including inventory, receivables, and equipment, as well as equipment and leasehold improvement financing for franchisees; consumer loans comprising new and used vehicle loans, second mortgages on residential real estate, and unsecured loans; and home equity lines of credit. In addition, the company offers commercial financing to the insurance industry, registered investment advisors, certified public accountants, indirect auto finance companies, and restaurant franchisees. Further, it provides a range of trust and wealth management services; lease and equipment financing services; and currency payments, foreign exchange hedging, and other advisory products. First Financial Bancorp. was founded in 1863 and is headquartered in Cincinnati, Ohio.