Financial Contrast: Associated Banc (NYSE:ASB) versus Meridian (NASDAQ:MRBK)

Associated Banc (NYSE:ASB) and Meridian (NASDAQ:MRBK) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Earnings and Valuation

This table compares Associated Banc and Meridian”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Associated Banc	$2.46 billion	2.33	$474.78 million	$2.89	10.67
Meridian	$205.49 million	0.93	$21.84 million	$1.91	8.42

Associated Banc has higher revenue and earnings than Meridian. Meridian is trading at a lower price-to-earnings ratio than Associated Banc, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and price targets for Associated Banc and Meridian, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Associated Banc	0	6	6	0	2.50
Meridian	1	1	2	0	2.25

Associated Banc currently has a consensus target price of $32.70, suggesting a potential upside of 6.04%. Meridian has a consensus target price of $20.00, suggesting a potential upside of 24.38%. Given Meridian’s higher possible upside, analysts clearly believe Meridian is more favorable than Associated Banc.

Dividends

Associated Banc pays an annual dividend of $0.96 per share and has a dividend yield of 3.1%. Meridian pays an annual dividend of $0.56 per share and has a dividend yield of 3.5%. Associated Banc pays out 33.2% of its earnings in the form of a dividend. Meridian pays out 29.3% 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. Associated Banc has raised its dividend for 13 consecutive years. Meridian is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Associated Banc has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Meridian has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares Associated Banc and Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Associated Banc	19.87%	10.75%	1.13%
Meridian	11.46%	11.34%	0.89%

Institutional and Insider Ownership

83.0% of Associated Banc shares are held by institutional investors. Comparatively, 58.6% of Meridian shares are held by institutional investors. 0.7% of Associated Banc shares are held by company insiders. Comparatively, 14.1% of Meridian 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.

Summary

Associated Banc beats Meridian on 12 of the 17 factors compared between the two stocks.

About Associated Banc

Associated Banc-Corp is a bank holding company headquartered in Green Bay, Wisconsin. Its principal subsidiary, Associated Bank, provides banking and financial services to individuals, businesses, and organizations. The company offers consumer and commercial banking products, including deposit accounts, mortgage and other lending, business financing, and cash-management services. It also provides wealth management and related financial services. Associated Bank primarily serves customers in Wisconsin, Illinois, and Minnesota through its branches and other service channels.

About Meridian

Meridian Corporation is a bank holding company headquartered in Malvern, Pennsylvania. Through its principal subsidiary, Meridian Bank, the company provides commercial and community banking services to businesses, professionals and individuals in the Mid-Atlantic region. Meridian Bank offers business lending, commercial real estate financing, construction loans, equipment financing, residential and consumer lending, deposit accounts, cash-management services and online banking. The company also provides mortgage banking and wealth management services, including investment and financial planning solutions.