Financial Review: Fifth Third Bancorp (NASDAQ:FITB) & Banner (NASDAQ:BANR)

Fifth Third Bancorp (NASDAQ:FITB) and Banner (NASDAQ:BANR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.

Valuation & Earnings

This table compares Fifth Third Bancorp and Banner’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fifth Third Bancorp $7.97 billion 2.46 $2.19 billion $2.54 10.57
Banner $544.70 million 3.39 $136.51 million $4.09 13.07

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

Dividends

Fifth Third Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 3.6%. Banner pays an annual dividend of $1.64 per share and has a dividend yield of 3.1%. Fifth Third Bancorp pays out 37.8% of its earnings in the form of a dividend. Banner pays out 40.1% 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. Fifth Third Bancorp has increased its dividend for 2 consecutive years and Banner has increased its dividend for 6 consecutive years. Fifth Third Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Fifth Third Bancorp has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500. Comparatively, Banner has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500.

Insider and Institutional Ownership

78.0% of Fifth Third Bancorp shares are held by institutional investors. Comparatively, 83.7% of Banner shares are held by institutional investors. 0.4% of Fifth Third Bancorp shares are held by company insiders. Comparatively, 2.5% of Banner shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Fifth Third Bancorp and Banner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fifth Third Bancorp 24.39% 11.51% 1.24%
Banner 25.14% 10.43% 1.31%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Fifth Third Bancorp and Banner, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fifth Third Bancorp 0 9 8 0 2.47
Banner 0 2 3 0 2.60

Fifth Third Bancorp currently has a consensus target price of $31.32, indicating a potential upside of 16.65%. Banner has a consensus target price of $60.00, indicating a potential upside of 12.21%. Given Fifth Third Bancorp’s higher possible upside, analysts plainly believe Fifth Third Bancorp is more favorable than Banner.

Summary

Banner beats Fifth Third Bancorp on 9 of the 17 factors compared between the two stocks.

Fifth Third Bancorp Company Profile

Fifth Third Bancorp operates as a diversified financial services company in the United States. The company's Commercial Banking segment offers credit intermediation, cash management, and financial services; lending and depository products; and cash management, foreign exchange and international trade finance, derivatives and capital markets services, asset-based lending, real estate finance, public finance, commercial leasing, and syndicated finance for business, government, and professional customers. Its Branch Banking segment provides a range of deposit and loan products to individuals and small businesses. This segment offers checking and savings accounts, home equity loans and lines of credit, credit cards, and loans for automobiles and personal financing needs, as well as cash management services for small businesses. The company's Consumer Lending segment engages in direct lending activities that include origination, retention, and servicing of residential mortgage and home equity loans or lines of credit; and indirect lending activities, including loans to consumers through correspondent lenders and automobile dealers. Fifth Third Bancorp's Wealth & Asset Management segment provides various investment alternatives for individuals, companies, and not-for-profit organizations. It offers retail brokerage services to individual clients; and broker dealer services to the institutional marketplace. This segment also provides asset management services; holistic strategies to affluent clients in wealth planning, investing, insurance, and wealth protection; and advisory services for institutional clients comprising states and municipalities. As of December 31, 2018, the company operated 1,121 full-service banking centers and 2,419 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, and North Carolina. Fifth Third Bancorp was founded in 1858 and is headquartered in Cincinnati, Ohio.

Banner Company Profile

Banner Corporation operates as the bank holding company for Banner Bank and Islanders Bank that provides commercial banking and financial products and services to individuals, businesses, and public sector entities primarily in the United States. It offers deposit products, including interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, regular savings accounts, and certificates of deposit, as well as treasury management services and retirement savings plans. The company also provides commercial real estate loans, including owner-occupied, investment properties, and multifamily residential real estate loans; construction, land, and land development loans; residential mortgage loans; commercial business loans; agricultural loans; and consumer loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts. In addition, it engages in the mortgage banking operations through the origination and sale of one- to four-family and multi-family residential loans. Further, the company provides electronic and digital banking services. As of December 31, 2018, it operated 182 branch offices, including 179 Banner Bank branches and 3 Islanders Bank branches located in Washington, Oregon, California, and Idaho. It also operates 17 Banner Bank loan production offices located in Washington, Oregon, California, Idaho, and Utah. Banner Corporation was founded in 1890 and is based in Walla Walla, Washington.

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