Critical Analysis: First Financial Bancorp. (NASDAQ:FFBC) & Alerus Financial (NASDAQ:ALRS)

Alerus Financial (NASDAQ:ALRS) and First Financial Bancorp. (NASDAQ:FFBC) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitability and analyst recommendations.

Earnings and Valuation

This table compares Alerus Financial and First Financial Bancorp.”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alerus Financial	$269.76 million	2.08	$11.70 million	$0.16	138.07
First Financial Bancorp.	$1.12 billion	2.49	$255.86 million	$2.32	12.54

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alerus Financial	1.01%	6.02%	0.54%
First Financial Bancorp.	18.55%	10.32%	1.35%

Volatility and Risk

Alerus Financial has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, First Financial Bancorp. has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Dividends

Alerus Financial pays an annual dividend of $0.80 per share and has a dividend yield of 3.6%. First Financial Bancorp. pays an annual dividend of $0.96 per share and has a dividend yield of 3.3%. Alerus Financial pays out 500.0% 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 Financial Bancorp. pays out 41.4% of its earnings in the form of a dividend. Alerus Financial has increased its dividend for 21 consecutive years. Alerus Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Alerus Financial and First Financial Bancorp., as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alerus Financial	0	3	2	0	2.40
First Financial Bancorp.	0	2	1	0	2.33

Alerus Financial presently has a consensus price target of $23.20, indicating a potential upside of 5.02%. First Financial Bancorp. has a consensus price target of $27.33, indicating a potential downside of 6.07%. Given Alerus Financial’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Alerus Financial is more favorable than First Financial Bancorp..

Institutional and Insider Ownership

51.3% of Alerus Financial shares are owned by institutional investors. Comparatively, 77.2% of First Financial Bancorp. shares are owned by institutional investors. 5.6% of Alerus Financial shares are owned by company insiders. Comparatively, 2.0% of First Financial Bancorp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

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

About Alerus Financial

Alerus Financial Corporation operates as the bank holding company for Alerus Financial, National Association that engages in the provision of various financial services to businesses and consumers. The company operates in four segments: Banking, Mortgage, Retirement and Benefit Services, and Wealth Management. It offers various deposit products, including demand deposits, interest-bearing transaction accounts, money market accounts, time and savings deposits, checking accounts, and certificates of deposit; and treasury management products, including electronic receivables management, remote deposit capture, cash vault services, merchant services, and other cash management services. The company also provides commercial loans, business term loans, lines of credit, and commercial real estate loans, as well as construction and land development loans; consumer lending products, including residential first mortgage loans; installment loans and lines of credit; and second mortgage loans. In addition, it offers retirement plan administration and investment advisory services, employee stock ownership plan, fiduciary services, payroll, health savings accounts, and other benefit services, as well as individual retirement accounts; and financial planning, investment management, personal and corporate trust, estate administration, and custody services. Further, the company provides debit and credit cards, online banking, mobile banking/wallet, payment, private banking, payroll accounts, flex spending accounts, administration, and government health insurance program services. It offers banking services in North Dakota, Minnesota, and Arizona; and retirement and benefit plans through offices located in Michigan, Minnesota, and Colorado. The company was formerly known as First National Bank North Dakota and changed its name to Alerus Financial Corporation in 2000. Alerus Financial Corporation was founded in 1879 and is headquartered in Grand Forks, North Dakota.

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.