Critical Analysis: United Community Banks (NYSE:UCB) & Nicolet Bankshares (NYSE:NIC)

United Community Banks (NYSE:UCB) and Nicolet Bankshares (NYSE:NIC) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Earnings and Valuation

This table compares United Community Banks and Nicolet Bankshares”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$1.54 billion	2.65	$328.10 million	$3.04	11.11
Nicolet Bankshares	$556.52 million	6.16	$150.69 million	$8.81	18.57

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

Insider and Institutional Ownership

82.3% of United Community Banks shares are held by institutional investors. Comparatively, 43.1% of Nicolet Bankshares shares are held by institutional investors. 0.5% of United Community Banks shares are held by company insiders. Comparatively, 7.2% of Nicolet Bankshares shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

United Community Banks has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Nicolet Bankshares has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Profitability

This table compares United Community Banks and Nicolet Bankshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	24.43%	9.61%	1.24%
Nicolet Bankshares	21.77%	11.36%	1.62%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for United Community Banks and Nicolet Bankshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	3	4	1	2.75
Nicolet Bankshares	0	2	4	1	2.86

United Community Banks presently has a consensus price target of $39.60, suggesting a potential upside of 17.28%. Nicolet Bankshares has a consensus price target of $183.00, suggesting a potential upside of 11.88%. Given United Community Banks’ higher possible upside, equities research analysts clearly believe United Community Banks is more favorable than Nicolet Bankshares.

Dividends

United Community Banks pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. Nicolet Bankshares pays an annual dividend of $1.44 per share and has a dividend yield of 0.9%. United Community Banks pays out 34.2% of its earnings in the form of a dividend. Nicolet Bankshares pays out 16.3% 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. Nicolet Bankshares has increased its dividend for 2 consecutive years.

Summary

Nicolet Bankshares beats United Community Banks on 9 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 Nicolet Bankshares

Nicolet Bankshares, Inc. operates as the bank holding company for Nicolet National Bank that provides banking products and services for businesses and individuals in Wisconsin and Michigan. The company accepts checking, savings, and money market accounts; various certificates of deposit; and individual retirement accounts. It also offers commercial loans, including commercial, industrial, and business loans and lines of credit; commercial real estate loans; agricultural (AG) production and AG real estate loans; commercial real estate investment real estate loans; construction and land development loans; residential real estate loans, such as residential first lien and junior lien mortgages, home equity loans, lines of credit, and residential construction loans; and consumer loans. In addition, the company provides cash management, international banking, personal brokerage, safe deposit boxes, and trust and fiduciary services, as well as wealth management and retirement plan services. Further, it offers mortgage refinancing; online services, such as commercial, retail, and trust online banking; automated bill payment, mobile banking deposits and account access, and remote deposit capture services; and other services consisting of wire transfers, debit cards, credit cards, pre-paid gift cards, direct deposits, and official bank checks, as well as facilitates crop insurance products. The company was formerly known as Green Bay Financial Corporation and changed its name to Nicolet Bankshares, Inc. in March 2002. The company was incorporated in 2000 and is headquartered in Green Bay, Wisconsin.