Critical Analysis: Northeast Indiana Bancorp (OTCMKTS:NIDB) and Banner (NASDAQ:BANR)

Banner (NASDAQ:BANR) and Northeast Indiana Bancorp (OTCMKTS:NIDB) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitability, analyst recommendations and dividends.

Dividends

Banner pays an annual dividend of $2.00 per share and has a dividend yield of 3.2%. Northeast Indiana Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 3.8%. Banner pays out 36.4% of its earnings in the form of a dividend. Northeast Indiana Bancorp pays out 33.0% 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. Northeast Indiana Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Banner has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Northeast Indiana Bancorp has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Banner and Northeast Indiana Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banner	0	3	3	0	2.50
Northeast Indiana Bancorp	0	0	0	0	0.00

Banner currently has a consensus target price of $71.40, suggesting a potential upside of 15.11%. Given Banner’s stronger consensus rating and higher probable upside, equities analysts clearly believe Banner is more favorable than Northeast Indiana Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Banner	21.80%	10.32%	1.17%
Northeast Indiana Bancorp	16.57%	N/A	N/A

Institutional & Insider Ownership

87.3% of Banner shares are held by institutional investors. 1.6% of Banner shares are held by insiders. Comparatively, 19.8% of Northeast Indiana Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Banner and Northeast Indiana Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banner	$647.40 million	3.27	$168.90 million	$5.49	11.30
Northeast Indiana Bancorp	$31.80 million	1.49	$4.31 million	$2.30	8.70

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

Summary

Banner beats Northeast Indiana Bancorp on 13 of the 16 factors compared between the two stocks.

About Banner

Banner Corporation operates as the bank holding company for Banner Bank that engages in the provision of commercial banking and financial products and services to individuals, businesses, and public sector entities in the United States. It accepts various deposit instruments, 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; one- to four-family residential real estate lending; commercial business loans; agricultural loans; consumer and other loans, such as home equity lines of credit, automobile, and boat and recreational vehicle loans, as well as loans secured by deposit accounts; and small business administration loans. In addition, it provides electronic and digital banking services comprising debit cards and ATMs, internet banking, remote deposit, and mobile banking services. The company was founded in 1890 and is based in Walla Walla, Washington.

About Northeast Indiana Bancorp

Northeast Indiana Bancorp, Inc. operates as the bank holding company for First Federal Savings Bank that provides various banking and financial advisory services. The company offers checking accounts, savings accounts, retirement accounts, health savings accounts, and direct deposits, as well as certificates of deposit. It also provides mortgage, refinance, new construction, and home equity loans; auto, recreational vehicle, and unsecured loans; and revolving lines of credit, term loans, real estate loans, letter of credit, and small business administration loans, as well as debit and credit cards. In addition, the company offers merchant, online banking, and cash management services. It operates through full-service locations in Huntington, Warsaw, and Fort Wayne, Indiana. The company was founded in 1912 and is headquartered in Huntington, Indiana.