Critical Review: First Business Financial Services (NASDAQ:FBIZ) and Banco Santander Chile (NYSE:BSAC)

Banco Santander Chile (NYSE:BSAC) and First Business Financial Services (NASDAQ:FBIZ) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares Banco Santander Chile and First Business Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Banco Santander Chile	27.04%	22.94%	1.70%
First Business Financial Services	19.28%	14.92%	1.29%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Banco Santander Chile and First Business Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Banco Santander Chile	1	4	3	1	2.44
First Business Financial Services	0	0	3	1	3.25

Banco Santander Chile presently has a consensus price target of $35.40, suggesting a potential upside of 0.45%. First Business Financial Services has a consensus price target of $75.50, suggesting a potential upside of 4.53%. Given First Business Financial Services’ stronger consensus rating and higher possible upside, analysts plainly believe First Business Financial Services is more favorable than Banco Santander Chile.

Institutional & Insider Ownership

6.4% of Banco Santander Chile shares are owned by institutional investors. Comparatively, 60.1% of First Business Financial Services shares are owned by institutional investors. 5.0% of First Business Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Banco Santander Chile has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Valuation & Earnings

This table compares Banco Santander Chile and First Business Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Banco Santander Chile	$4.50 billion	3.69	$1.12 billion	$2.62	13.45
First Business Financial Services	$279.25 million	2.16	$50.32 million	$6.56	11.01

Banco Santander Chile has higher revenue and earnings than First Business Financial Services. First Business Financial Services is trading at a lower price-to-earnings ratio than Banco Santander Chile, indicating that it is currently the more affordable of the two stocks.

Dividends

Banco Santander Chile pays an annual dividend of $1.10 per share and has a dividend yield of 3.1%. First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 1.9%. Banco Santander Chile pays out 42.0% of its earnings in the form of a dividend. First Business Financial Services pays out 20.7% 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 Business Financial Services has increased its dividend for 13 consecutive years.

About Banco Santander Chile

Banco Santander-Chile, together with its subsidiaries, provides commercial and retail banking services in Chile. It operates through Retail Banking, Middle-Market, Corporate Investment Banking, and Corporate Activities segments. The company offers debit and credit cards, checking accounts, and savings products; consumer, automobile, commercial, mortgage, and government-guaranteed loans; and Chilean peso and foreign currency-denominated loans to finance various commercial transactions, trade, foreign currency forward contracts, and credit lines, as well as mortgage financing services. It also provides mutual fund management, insurance and securities brokerage, foreign exchange services, financial leasing, financial consulting and advisory, investment management, foreign trade, leasing, factoring, treasury, and transactional services, as well as specialized services to finance residential projects. In addition, the company offers short-term financing and fundraising, and brokerage services, as well as derivatives, securitization, and other products; and manages capital allocations. It serves individuals, small to middle-sized entities, companies, and large corporations, as well as universities, government entities, and local and regional governments. The company was incorporated in 1977 and is headquartered in Santiago, Chile. Banco Santander-Chile operates as a subsidiary of Banco Santander, S.A.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.