Critical Analysis: First Bank (NASDAQ:FRBA) vs. Citizens Financial Group (NYSE:CFG)

First Bank (NASDAQ:FRBA) and Citizens Financial Group (NYSE:CFG) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Volatility and Risk

First Bank has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Citizens Financial Group has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bank	14.48%	12.55%	1.30%
Citizens Financial Group	10.74%	6.21%	0.61%

Dividends

First Bank pays an annual dividend of $0.24 per share and has a dividend yield of 1.6%. Citizens Financial Group pays an annual dividend of $1.68 per share and has a dividend yield of 4.1%. First Bank pays out 21.2% of its earnings in the form of a dividend. Citizens Financial Group pays out 60.9% 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.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for First Bank and Citizens Financial Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bank	0	0	1	0	3.00
Citizens Financial Group	0	9	8	0	2.47

First Bank presently has a consensus target price of $18.00, suggesting a potential upside of 22.03%. Citizens Financial Group has a consensus target price of $42.20, suggesting a potential upside of 2.35%. Given First Bank’s stronger consensus rating and higher probable upside, equities research analysts clearly believe First Bank is more favorable than Citizens Financial Group.

Earnings and Valuation

This table compares First Bank and Citizens Financial Group’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bank	$120.30 million	2.40	$20.90 million	$1.13	13.05
Citizens Financial Group	$7.92 billion	2.37	$1.61 billion	$2.76	14.94

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

Institutional and Insider Ownership

64.9% of First Bank shares are owned by institutional investors. Comparatively, 94.9% of Citizens Financial Group shares are owned by institutional investors. 13.1% of First Bank shares are owned by company insiders. Comparatively, 0.6% of Citizens Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

About First Bank

First Bank provides various banking products and services to small to mid-sized businesses and individuals. The company accepts various deposits, including non-interest-bearing demand deposits, interest bearing demand accounts, money market accounts, savings accounts, and certificates of deposit, as well as commercial checking accounts. It also offers various loan products comprising commercial and industrial loans, which include line of credit, inventory, equipment, and short-term working capital financing; commercial real estate loans, such as owner-occupied, investor, construction and development, and multi-family loans; residential real estate loans comprising residential mortgages, first and second lien home equity loans, and revolving lines of credit; and consumer and other loans consists of auto, personal, traditional installment, and other loans. The company also provides electronic banking services, including Internet and mobile banking, electronic bill payment, and banking by phone; ATM and debit cards, and wire and ACH transfer services; remote deposit capture; and cash management services, as well as engages in the capital markets activities. It operates full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset, and Williamstown, New Jersey; Doylestown, Trevose, Warminster, and West Chester, Paoli, Malvern, Coventry, Devon, Lionville, and Glen Mills Pennsylvania; and Palm Beach, Florida. First Bank was incorporated in 2007 and is headquartered in Hamilton, New Jersey.

About Citizens Financial Group

Citizens Financial Group, Inc. operates as the bank holding company that provides retail and commercial banking products and services to individuals, small businesses, middle-market companies, corporations, and institutions in the United States. The company operates in two segments, Consumer Banking and Commercial Banking. The Consumer Banking segment offers deposit products, mortgage and home equity lending products, credit cards, business loans, wealth management, and investment services; and auto, education, and point-of-sale finance loans, as well as digital deposit products. This segment serves its customers through telephone service centers, as well as through its online and mobile platforms. The Commercial Banking segment provides various financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, and interest rate and commodity risk management solutions, as well as syndicated loans, corporate finance, mergers and acquisitions, and debt and equity capital markets services. This segment serves corporate banking, healthcare, technology, asset finance, franchise finance, leasing, asset-based lending, commercial real estate, mid-corporate, and private equity sponsor industries. The company was formerly known as RBS Citizens Financial Group, Inc. and changed its name to Citizens Financial Group, Inc. in April 2014. Citizens Financial Group, Inc. was founded in 1828 and is headquartered in Providence, Rhode Island.