Comparing First United (NASDAQ:FUNC) and First Guaranty Bancshares (NASDAQ:FGBI)

First Guaranty Bancshares (NASDAQ:FGBI) and First United (NASDAQ:FUNC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, earnings, valuation and profitability.

Analyst Recommendations

This is a breakdown of current recommendations for First Guaranty Bancshares and First United, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Guaranty Bancshares	1	1	0	0	1.50
First United	0	0	3	0	3.00

First United has a consensus price target of $49.50, suggesting a potential upside of 10.74%. Given First United’s stronger consensus rating and higher probable upside, analysts plainly believe First United is more favorable than First Guaranty Bancshares.

Profitability

This table compares First Guaranty Bancshares and First United’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Guaranty Bancshares	-16.83%	-12.31%	-0.60%
First United	20.05%	13.85%	1.37%

Earnings and Valuation

This table compares First Guaranty Bancshares and First United”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Guaranty Bancshares	$221.76 million	0.72	-$56.02 million	($2.42)	-3.99
First United	$121.42 million	2.37	$24.51 million	$3.86	11.58

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

Dividends

First Guaranty Bancshares pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. First United pays an annual dividend of $1.04 per share and has a dividend yield of 2.3%. First Guaranty Bancshares pays out -1.7% of its earnings in the form of a dividend. First United pays out 26.9% 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. First United has increased its dividend for 6 consecutive years. First United is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

First Guaranty Bancshares has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, First United has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Institutional & Insider Ownership

39.5% of First Guaranty Bancshares shares are held by institutional investors. Comparatively, 33.3% of First United shares are held by institutional investors. 49.4% of First Guaranty Bancshares shares are held by company insiders. Comparatively, 8.1% of First United shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

First United beats First Guaranty Bancshares on 13 of the 17 factors compared between the two stocks.

About First Guaranty Bancshares

First Guaranty Bancshares, Inc. operates as the holding company for First Guaranty Bank that provides commercial banking services in Louisiana and Texas. It offers various deposit products, including personal and business checking, savings, money market, and demand accounts, as well as time deposits to consumers, small businesses, and municipalities. The company provides loans, such as non-farm, non-residential loans secured by real estate, commercial and industrial loans, one- to four-family residential loans, multifamily loans, construction and land development loans, agricultural loans, farmland loans, and consumer and other loans to small to medium-sized businesses and professionals, and individuals. In addition, it offers a range of consumer services, including credit cards, mobile deposit capture, safe deposit boxes, official checks, online and mobile banking, automated teller machines, and online bill pay; provides additional solutions, such as merchant services, remote deposit capture, and lockbox services to business customers; and invests a portion of its assets in securities issued by the United States Government and its agencies, state and municipal obligations, corporate debt securities, mutual funds, and equity securities, as well as invests in mortgage-backed securities primarily issued or guaranteed by United States Government agencies or enterprises. First Guaranty Bancshares, Inc. was founded in 1934 and is headquartered in Hammond, Louisiana.

About First United

First United Corporation operates as the bank holding company for First United Bank & Trust that provides various retail and commercial banking services to businesses and individuals. It offers various deposit products, which includes checking, savings, money market deposit, and regular and individual retirement accounts (IRAs), as well as certificates of deposit. The company loan portfolio includes commercial loans secured by real estate, commercial equipment, vehicles, or other assets of the borrower; commercial real estate loans for residential and commercial development, agricultural purpose properties, and service industry buildings, such as restaurants and motels, retail buildings, and general purpose business space; residential mortgage loans; home equity lines of credit; residential real estate construction loans; and indirect and direct auto loans, student loans, and other secured and unsecured lines of credit and term loans. It also offers access to multi-million-dollar certificates of deposit and the Intrafi cash service, including multi-million-dollar savings and demand deposits to municipalities, businesses, and consumers; and treasury management, cash sweep, and various checking services. In addition, the company provides trust services, which includes personal trust, investment agency accounts, charitable trusts, retirement accounts, including IRA roll-overs, 401(k) accounts and defined benefit plans, estate administration, and estate planning; and insurance products, brokerage services, and safe deposit and night depository facilities. First United Corporation was founded in 1900 and is headquartered in Oakland, Maryland.