Critical Review: 1st Source (NASDAQ:SRCE) vs. United Bancorp (NASDAQ:UBCP)

United Bancorp (NASDAQ:UBCP) and 1st Source (NASDAQ:SRCE) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

Insider & Institutional Ownership

15.4% of United Bancorp shares are owned by institutional investors. Comparatively, 74.5% of 1st Source shares are owned by institutional investors. 12.9% of United Bancorp shares are owned by company insiders. Comparatively, 19.6% of 1st Source shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

United Bancorp pays an annual dividend of $0.76 per share and has a dividend yield of 5.2%. 1st Source pays an annual dividend of $1.60 per share and has a dividend yield of 2.3%. United Bancorp pays out 56.7% of its earnings in the form of a dividend. 1st Source pays out 25.0% 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. United Bancorp has increased its dividend for 13 consecutive years and 1st Source has increased its dividend for 38 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for United Bancorp and 1st Source, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Bancorp	0	1	0	0	2.00
1st Source	0	3	2	0	2.40

1st Source has a consensus price target of $75.33, suggesting a potential upside of 6.64%. Given 1st Source’s stronger consensus rating and higher possible upside, analysts plainly believe 1st Source is more favorable than United Bancorp.

Earnings and Valuation

This table compares United Bancorp and 1st Source”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Bancorp	$32.48 million	2.61	$7.75 million	$1.34	10.96
1st Source	$600.00 million	2.86	$158.28 million	$6.41	11.02

1st Source has higher revenue and earnings than United Bancorp. United Bancorp is trading at a lower price-to-earnings ratio than 1st Source, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares United Bancorp and 1st Source’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Bancorp	16.32%	12.44%	0.91%
1st Source	26.38%	12.44%	1.75%

Risk & Volatility

United Bancorp has a beta of 0.39, meaning that its stock price is 61% less volatile than the S&P 500. Comparatively, 1st Source has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Summary

1st Source beats United Bancorp on 15 of the 16 factors compared between the two stocks.

About United Bancorp

United Bancorp, Inc. operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio. The company provides range of banking and financial services, which includes accepting demand, savings, and time deposits. It also offers commercial, real estate and consumer loans. United Bancorp, Inc. was founded in 1902 and is headquartered in Martins Ferry, Ohio.

About 1st Source

1st Source Corporation operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients. Its consumer banking services include checking and savings accounts; certificates of deposit; individual retirement accounts; online and mobile banking products; consumer loans, real estate mortgage loans, and home equity lines of credit; and financial planning, financial literacy, and other consultative services, as well as debit and credit cards. The company also offers commercial, small business, agricultural, and real estate loans for general corporate purposes, including financing for industrial and commercial properties, equipment, inventories, accounts receivables, and renewable energy and acquisition financing; and commercial leasing, treasury management, and retirement planning services. In addition, it provides trust, investment, agency, and custodial services comprising administration of estates and personal trusts, as well as management of investment accounts for individuals, employee benefit plans, and charitable foundations. Further, the company offers equipment loan and lease products for construction equipment, new and pre-owned aircraft, auto and light trucks, and medium and heavy duty trucks; and finances construction equipment, aircrafts, medium and heavy duty trucks, step vans, vocational work trucks, motor coaches, shuttle buses, funeral cars, automobiles, and other equipment. Additionally, it provides corporate and personal property, casualty, and individual and group health and life insurance products and services. 1st Source Corporation was founded in 1863 and is headquartered in South Bend, Indiana.