Critical Survey: First Interstate BancSystem (NASDAQ:FIBK) & Associated Banc (NYSE:ASB)

Associated Banc (NYSE:ASB) and First Interstate BancSystem (NASDAQ:FIBK) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Valuation & Earnings

This table compares Associated Banc and First Interstate BancSystem”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Associated Banc	$2.39 billion	1.78	$123.14 million	$0.77	33.42
First Interstate BancSystem	$1.01 billion	3.29	$226.00 million	$2.22	14.27

First Interstate BancSystem has lower revenue, but higher earnings than Associated Banc. First Interstate BancSystem is trading at a lower price-to-earnings ratio than Associated Banc, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Associated Banc and First Interstate BancSystem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Associated Banc	5.79%	8.86%	0.91%
First Interstate BancSystem	16.04%	6.82%	0.80%

Volatility & Risk

Associated Banc has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, First Interstate BancSystem has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Dividends

Associated Banc pays an annual dividend of $0.92 per share and has a dividend yield of 3.6%. First Interstate BancSystem pays an annual dividend of $1.88 per share and has a dividend yield of 5.9%. Associated Banc pays out 119.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First Interstate BancSystem pays out 84.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Associated Banc has increased its dividend for 13 consecutive years. First Interstate BancSystem is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Associated Banc and First Interstate BancSystem, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Associated Banc	0	7	2	0	2.22
First Interstate BancSystem	1	2	3	0	2.33

Associated Banc presently has a consensus price target of $27.78, suggesting a potential upside of 7.94%. First Interstate BancSystem has a consensus price target of $35.14, suggesting a potential upside of 10.90%. Given First Interstate BancSystem’s stronger consensus rating and higher possible upside, analysts clearly believe First Interstate BancSystem is more favorable than Associated Banc.

Institutional and Insider Ownership

83.0% of Associated Banc shares are owned by institutional investors. Comparatively, 88.7% of First Interstate BancSystem shares are owned by institutional investors. 1.5% of Associated Banc shares are owned by insiders. Comparatively, 8.2% of First Interstate BancSystem shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

First Interstate BancSystem beats Associated Banc on 11 of the 17 factors compared between the two stocks.

About Associated Banc

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses in Wisconsin, Illinois, and Minnesota. The company offers lending solutions, including commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending and equipment finance, loan syndications products, residential mortgages, home equity loans and lines of credit, personal and installment loans, auto finance and business loans, and business lines of credit. It also provides deposit and cash management solutions, such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services; specialized financial services, such as interest rate risk management and foreign exchange solutions; fiduciary services, such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management services; and investable funds solutions, including savings, money market deposit accounts, IRA accounts, CDs, fixed and variable annuities, full-service, discount, and online investment brokerage; investment advisory services; and trust and investment management accounts. In addition, the company offers deposit and transactional solutions, including checking, credit, debit and pre-paid cards, online banking and bill pay; and money transfer services. Associated Banc-Corp was founded in 1861 and is headquartered in Green Bay, Wisconsin.

About First Interstate BancSystem

First Interstate BancSystem, Inc. operates as the bank holding company for First Interstate Bank that provides range of banking products and services in the United States. It offers various traditional depository products, including checking, savings, and time deposits; and repurchase agreements primarily for commercial and municipal depositors. The company also offers real estate loans comprising commercial real estate, construction, residential, agricultural, and other real estate loans; consumer loans comprising direct personal loans, credit card loans and lines of credit, and indirect loans; variable and fixed rate commercial loans for small and medium-sized manufacturing, wholesale, retail, and service businesses for working capital needs and business expansions; and agricultural loans. In addition, it provides a range of trust, employee benefit, investment management, insurance, agency, and custodial services to individuals, businesses, and nonprofit organizations. Further, the company offers marketing, credit review, loan servicing, credit cards issuance and servicing, mortgage loan sales and servicing, indirect consumer loan purchasing and processing, loan collection services, other operational, and specialized staff support services, as well as online and mobile banking services. The company serves individuals, businesses, municipalities, and other entities in various industries, including agriculture, construction, education, governmental services, healthcare, hospitality, housing, professional services, real estate development, retail, technology, tourism, and wholesale trade. First Interstate BancSystem, Inc. was incorporated in 1971 and is headquartered in Billings, Montana.