Contrasting First Bancorp (NASDAQ:FBNC) & Hilltop (NYSE:HTH)

First Bancorp (NASDAQ:FBNC) and Hilltop (NYSE:HTH) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, analyst recommendations, valuation, institutional ownership, profitability and earnings.

Risk & Volatility

First Bancorp has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Bancorp	20.59%	10.86%	1.38%
Hilltop	10.13%	7.32%	1.03%

Dividends

First Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 1.7%. Hilltop pays an annual dividend of $0.80 per share and has a dividend yield of 2.2%. First Bancorp pays out 32.8% of its earnings in the form of a dividend. Hilltop pays out 30.3% 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. Hilltop has increased its dividend for 8 consecutive years. Hilltop 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 ratings for First Bancorp and Hilltop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Bancorp	0	2	3	1	2.83
Hilltop	0	2	1	1	2.75

First Bancorp presently has a consensus price target of $62.25, suggesting a potential upside of 8.51%. Hilltop has a consensus price target of $37.50, suggesting a potential upside of 3.36%. Given First Bancorp’s stronger consensus rating and higher probable upside, research analysts clearly believe First Bancorp is more favorable than Hilltop.

Institutional and Insider Ownership

68.4% of First Bancorp shares are held by institutional investors. Comparatively, 57.1% of Hilltop shares are held by institutional investors. 2.0% of First Bancorp shares are held by insiders. Comparatively, 29.9% of Hilltop shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Bancorp	$549.30 million	4.32	$111.05 million	$2.93	19.58
Hilltop	$1.63 billion	1.31	$165.59 million	$2.64	13.74

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

Summary

First Bancorp beats Hilltop on 9 of the 17 factors compared between the two stocks.

About First Bancorp

First Bancorp operates as the bank holding company for First Bank that provides banking products and services for individuals and small to medium-sized businesses. The company accepts deposit products, such as checking, savings, and money market accounts, as well as time deposits, including certificate of deposits and individual retirement accounts. It also offers loans for a range of consumer and commercial purposes comprising loans for business, real estate, personal, home improvement, and automobiles, as well as residential mortgages and small business administration loans; and accounts receivable financing and factoring, inventory financing, and purchase order financing services. In addition, the company provides credit and debit cards, letter of credits, and safe deposit box rental services, as well as electronic funds transfer services consisting of wire transfers; and internet and mobile banking, cash management, bank-by-phone services, and remote deposit capture services. Further, it offers investment and insurance products, such as mutual funds, annuities, long-term care insurance, life insurance, and company retirement plans, as well as property and casualty insurance products; and financial planning services. The company was founded in 1934 and is headquartered in Southern Pines, North Carolina.

About Hilltop

Hilltop Holdings Inc. provides business and consumer banking services. It operates through three segments: Banking, Broker-Dealer, and Mortgage Origination. The Banking segment offers savings, checking, interest-bearing checking, and money market accounts; certificates of deposit; lines and letters of credit, home improvement and equity loans, loans for purchasing and carrying securities, term, agricultural and commercial real estate, equipment loans, and other lending products; and mortgage, commercial and industrial loans, and term and construction finance. It also provides treasury management, asset management, check cards, safe deposit boxes, online banking, bill pay, and overdraft privilege services; and estate planning, management and administration, investment portfolio management, employee benefit accounts, and individual retirement accounts services, as well as automated teller machines. The Broker-Dealer segment offers public finance services that assist public entities in originating, syndicating, and distributing securities of municipalities and political subdivisions; specialized advisory and investment banking services; advice and guidance to arbitrage rebate compliance, portfolio management, and local government investment pool administration; advisory services and products for derivatives and commodities; agricultural insurance; and sells, trades in, and underwrites U.S. government and government agency bonds, corporate bonds, and municipal bonds; mortgage-backed, asset-backed, and commercial mortgage-backed securities and structured products; and provides asset and liability management advisory, clearing, retail, and securities lending services. The Mortgage Origination segment offers fixed and adjustable rate mortgages, jumbo, new construction, Federal Housing Administration, Veterans Affairs, and United States Department of Agriculture loans. Hilltop Holdings Inc. was incorporated in 1998 and is based in Dallas, Texas.