MB Financial (NASDAQ:MBFI) and First Midwest Bancorp (NASDAQ:FMBI) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Volatility and Risk

MB Financial has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, First Midwest Bancorp has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Dividends

MB Financial pays an annual dividend of $0.96 per share and has a dividend yield of 2.3%. First Midwest Bancorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.3%. MB Financial pays out 35.6% of its earnings in the form of a dividend. First Midwest Bancorp pays out 28.7% 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. MB Financial has increased its dividend for 7 consecutive years and First Midwest Bancorp has increased its dividend for 6 consecutive years. MB Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares MB Financial and First Midwest Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MB Financial 19.58% 8.06% 1.12%
First Midwest Bancorp 21.67% 8.88% 1.15%

Valuation and Earnings

This table compares MB Financial and First Midwest Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MB Financial $1.09 billion 3.28 $213.91 million $2.70 15.70
First Midwest Bancorp $727.08 million 3.12 $157.87 million $1.67 12.71

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

Institutional and Insider Ownership

74.2% of MB Financial shares are owned by institutional investors. Comparatively, 82.5% of First Midwest Bancorp shares are owned by institutional investors. 2.7% of MB Financial shares are owned by company insiders. Comparatively, 1.5% of First Midwest Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for MB Financial and First Midwest Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MB Financial 0 1 1 0 2.50
First Midwest Bancorp 0 4 1 0 2.20

MB Financial presently has a consensus price target of $54.20, suggesting a potential upside of 27.89%. First Midwest Bancorp has a consensus price target of $26.70, suggesting a potential upside of 25.77%. Given MB Financial’s stronger consensus rating and higher possible upside, equities research analysts clearly believe MB Financial is more favorable than First Midwest Bancorp.

Summary

MB Financial beats First Midwest Bancorp on 10 of the 16 factors compared between the two stocks.

MB Financial Company Profile

MB Financial, Inc. operates as a bank holding company for MB Financial Bank, N.A. that provides various financial services to small and middle market businesses, and individuals primarily in Chicago, Illinois metropolitan area. The company operates through three segments: Banking, Leasing, and Mortgage Banking. The Banking segment offers commercial banking products, including working capital loans and lines of credit; accounts receivable financing; inventory and equipment financing; industrial revenue bond financing; ESOP financing; business acquisition loans; owner occupied real estate loans; asset-based loans; and financial, performance, and commercial letters of credit. Its commercial banking products also comprise deposit and treasury management products and services, such as Internet banking products, investment sweep and zero balance accounts, automated tax payments, ATM access, telephone banking, lockboxes, automated clearing house transactions, account reconciliation, controlled disbursement, information reporting, wire transfers, vault services, remote deposit capture, and checking accounts; capital markets and international banking services; and credit, deposit, and treasury management services for real estate operators and investors. In addition, this segment offers loans to equipment lessors; retail banking services; cards and bank sponsorships; and wealth management solutions. The Leasing segment provides lease originations and related services. This segment's lease portfolio consists of computer systems, satellite equipment, and medical equipment, as well as general manufacturing, industrial, construction, and transportation equipment. The Mortgage Banking segment originates and services residential mortgage loans for sale to investors. The company offers its products and services through 86 banking offices in the Chicago metropolitan area; and 119 ATMs. MB Financial, Inc. was founded in 1911 and is headquartered in Chicago, Illinois.

First Midwest Bancorp Company Profile

First Midwest Bancorp, Inc. operates as the bank holding company for First Midwest Bank that provides various banking products and services. The company accepts checking, NOW, money market, and savings accounts, as well as various types of short-term and long-term certificates of deposit. Its loan products include working capital loans; accounts receivable financing; inventory and equipment financing; sector-based lending, including healthcare, asset-based lending, structured finance, and syndications; agricultural loans; and mortgages, home equity lines and loans, personal loans, specialty loans, and consumer secured loans, as well as funding for the construction, purchase, refinance, or improvement of commercial real estate properties. In addition, the company offers treasury management products and services comprising automated clearing house collection, lockbox, remote deposit capture, and financial electronic data interchange; wire transfer, account reconciliation, controlled disbursement, direct deposit, and positive pay services; information reporting services; corporate credit cards; and liquidity management, fraud prevention, and merchant services. Further, it provides fiduciary and executor, financial planning, investment advisory, employee benefit plan, and private banking services to corporate and public retirement plans, foundations and endowments, high net worth individuals, and multi-employer trust funds. Additionally, the company offers debit and automated teller machine, and credit cards; Internet and mobile, and telephone banking services; and financial education services. It serves commercial and industrial, commercial real estate, municipal, and consumer customers. The company operates 120 locations and 177 automated teller machines in greater Chicago metropolitan area, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest Bancorp, Inc. was incorporated in 1982 and is headquartered in Chicago, Illinois.

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