Contrasting Independent Bank (INDB) & FB Financial (FBK)

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Independent Bank (NASDAQ:INDB) and FB Financial (NYSE:FBK) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Earnings & Valuation

This table compares Independent Bank and FB Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Independent Bank $412.21 million 5.76 $121.62 million $4.69 17.99
FB Financial $370.16 million 2.88 $80.24 million $2.61 13.26

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

Insider and Institutional Ownership

81.7% of Independent Bank shares are held by institutional investors. Comparatively, 53.2% of FB Financial shares are held by institutional investors. 1.6% of Independent Bank shares are held by company insiders. Comparatively, 45.1% of FB Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Independent Bank 29.95% 13.67% 1.63%
FB Financial 21.68% 12.81% 1.65%

Analyst Recommendations

This is a summary of recent ratings and price targets for Independent Bank and FB Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independent Bank 0 2 2 0 2.50
FB Financial 0 1 2 0 2.67

Independent Bank presently has a consensus price target of $84.00, indicating a potential downside of 0.43%. FB Financial has a consensus price target of $42.00, indicating a potential upside of 21.35%. Given FB Financial’s stronger consensus rating and higher possible upside, analysts plainly believe FB Financial is more favorable than Independent Bank.

Dividends

Independent Bank pays an annual dividend of $1.76 per share and has a dividend yield of 2.1%. FB Financial pays an annual dividend of $0.32 per share and has a dividend yield of 0.9%. Independent Bank pays out 37.5% of its earnings in the form of a dividend. FB Financial pays out 12.3% 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. Independent Bank has raised its dividend for 8 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Independent Bank has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500. Comparatively, FB Financial has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Summary

Independent Bank beats FB Financial on 11 of the 16 factors compared between the two stocks.

About Independent Bank

Independent Bank Corp. operates as the bank holding company for Rockland Trust Company that provides commercial banking products and services to individuals and small-to-medium sized businesses primarily in Massachusetts. Its products and services include demand deposits and time certificates of deposit, as well as checking, money market, and savings accounts. The company's loan portfolio includes commercial loans, such as commercial and industrial, asset-based, commercial real estate, commercial construction, and small business loans; consumer real estate loans, including residential mortgages, home equity loans, and loans for the construction of residential properties; and other consumer loans, such as personal loans. Its commercial and industrial loans cover loans for working capital, other business-related purposes, and floor plan financing; asset-based loans consist primarily of revolving lines of credit and term loans; commercial real estate loans include commercial mortgages for construction purposes that are secured by nonresidential properties, multifamily properties, or one-to-four family rental properties; and small business loans comprise businesses with commercial credit needs. The company also provides investment management and trust services to individuals, institutions, small businesses, and charitable institutions; Internet and mobile banking services, as well as automated teller machine cards and debit cards; and mutual fund shares, unit investment trust shares, general securities, fixed and variable annuities, and life insurance. It operates through 87 full service and 2 limited service retail branches, 13 commercial banking centers, 8 investment management offices, and 1 mortgage lending center in Eastern Massachusetts; and an investment management group/commercial lending office in Rhode Island. The company was founded in 1907 and is headquartered in Rockland, Massachusetts.

About FB Financial

FB Financial Corporation operates as a holding company for FirstBank that provides a suite of commercial and consumer banking services to businesses, professionals, and individuals. The company operates in two segments, Banking and Mortgage. It provides demand, negotiable order of withdrawal, money market, certificates of deposit, and municipal and savings accounts, as well as time deposits. The company also offers commercial lending products that include working capital lines of credit, equipment loans, owner-occupied and non-owner-occupied real estate construction loans, real estate term loans, and cash flow loans to small and medium sized businesses; and consumer lending products comprising first and second residential mortgage loans, and home equity lines of credit, as well as consumer installment loans to purchase cars, boats, and other recreational vehicles. In addition, it provides residential mortgage banking services through its bank branch network and mortgage banking offices located in the southeastern United States; and an Internet delivery channel, as well as third-party mortgage services to smaller community banks and mortgage companies. Further, the company offers investment services, including equities, mutual funds, bonds, tax-exempt municipals, and annuities; and money management consultation and life insurance products, as well as retirement plan advisory services to business clients. As of January 22, 2018, it operated 58 full-service bank branches across Tennessee, North Alabama, and North Georgia. The company was formerly known as First South Bancorp, Inc. and changed its name to FB Financial Corporation in March 2016. FB Financial Corporation was founded in 1906 and is headquartered in Nashville, Tennessee.

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