Critical Comparison: First BanCorp. (NYSE:FBP) and Security Federal (OTCMKTS:SFDL)

First BanCorp. (NYSE:FBP) and Security Federal (OTCMKTS:SFDL) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.

Dividends

First BanCorp. pays an annual dividend of $0.80 per share and has a dividend yield of 3.4%. Security Federal pays an annual dividend of $0.64 per share and has a dividend yield of 1.7%. First BanCorp. pays out 35.6% of its earnings in the form of a dividend. Security Federal pays out 16.0% 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. First BanCorp. has increased its dividend for 6 consecutive years. First BanCorp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

First BanCorp. has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Security Federal has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for First BanCorp. and Security Federal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First BanCorp.	0	2	4	1	2.86
Security Federal	0	0	0	0	0.00

First BanCorp. currently has a consensus target price of $25.86, indicating a potential upside of 11.19%. Given First BanCorp.’s stronger consensus rating and higher probable upside, equities research analysts clearly believe First BanCorp. is more favorable than Security Federal.

Profitability

This table compares First BanCorp. and Security Federal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First BanCorp.	28.31%	17.51%	1.76%
Security Federal	15.72%	12.60%	0.88%

Insider & Institutional Ownership

97.9% of First BanCorp. shares are held by institutional investors. 1.9% of First BanCorp. shares are held by company insiders. Comparatively, 36.4% of Security Federal shares are held by company 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 Security Federal”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First BanCorp.	$1.26 billion	2.87	$344.87 million	$2.25	10.34
Security Federal	$90.14 million	1.27	$13.67 million	$4.00	9.25

First BanCorp. has higher revenue and earnings than Security Federal. Security Federal 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 Security Federal on 15 of the 18 factors compared between the two stocks.

About First BanCorp.

First BanCorp. operates as a bank holding company for FirstBank Puerto Rico that provides a range of financial products and services to consumers and commercial customers. The company operates through six segments: Commercial and Corporate Banking, Mortgage Banking, Consumer (Retail) Banking, Treasury and Investments, United States Operations, and Virgin Islands Operations. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, as well as other products, such as cash management and business management services. The Mortgage Banking segment engages in the origination, sale, and servicing of various residential mortgage loans; hedging activities; and purchase of mortgage loans from branch and mortgage bankers. The Consumer (Retail) Banking segment provides auto loans, finance leases, boat and personal loans, credit card loans, and lines of credit; and interest-bearing and non-interest-bearing checking and savings accounts, and individual retirement accounts and retail certificates of deposit (CDs), as well as insurance agency services. The Treasury and Investments segment offers funding and liquidity management services. The United States Operations segment provides checking, savings, and money market accounts, as well as retail CDs; traditional commercial and industrial, and commercial real estate loans, residential mortgages, term and construction loan, home equity loans, lines of credit, FHLB advances, and brokered CDs; and internet banking, cash management, remote deposit capture, and automated clearing house transactions services. The Virgin Islands Operations segment is involved in consumer, commercial lending, and deposit-taking activities. First BanCorp. was founded in 1948 and is headquartered in San Juan, Puerto Rico.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.