Critical Review: Associated Banc (NYSE:ASB) and M&F Bancorp (OTCMKTS:MFBP)

M&F Bancorp (OTCMKTS:MFBP) and Associated Banc (NYSE:ASB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, dividends, valuation, earnings, profitability and analyst recommendations.

Profitability

This table compares M&F Bancorp and Associated Banc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&F Bancorp	N/A	N/A	N/A
Associated Banc	7.93%	8.14%	0.78%

Valuation and Earnings

This table compares M&F Bancorp and Associated Banc”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&F Bancorp	N/A	N/A	N/A	N/A	N/A
Associated Banc	$1.08 billion	3.23	$182.96 million	$0.99	23.39

Associated Banc has higher revenue and earnings than M&F Bancorp.

Insider and Institutional Ownership

83.0% of Associated Banc shares are owned by institutional investors. 2.9% of M&F Bancorp shares are owned by company insiders. Comparatively, 1.5% of Associated Banc shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

M&F Bancorp has a beta of -0.09, suggesting that its stock price is 109% less volatile than the S&P 500. Comparatively, Associated Banc has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for M&F Bancorp and Associated Banc, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&F Bancorp	0	0	0	0	N/A
Associated Banc	0	9	1	0	2.10

Associated Banc has a consensus price target of $23.78, suggesting a potential upside of 2.67%. Given Associated Banc’s higher probable upside, analysts plainly believe Associated Banc is more favorable than M&F Bancorp.

Dividends

M&F Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. Associated Banc pays an annual dividend of $0.88 per share and has a dividend yield of 3.8%. Associated Banc pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Associated Banc has raised its dividend for 12 consecutive years. Associated Banc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Associated Banc beats M&F Bancorp on 10 of the 12 factors compared between the two stocks.

About M&F Bancorp

M&F Bancorp, Inc. operates as a bank holding company for the Mechanics and Farmers Bank that provides consumer and commercial banking products and services in North Carolina. It offers deposit products, including demand deposits; checking, savings, and money market accounts, as well as certificates of deposit. The company provides loans for commercial and residential real estate, and construction; and consumer and other loans; as well as ATM services. M&F Bancorp, Inc. was founded in 1907 and is headquartered in Durham, North Carolina.

About Associated Banc

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses in Wisconsin, Illinois, and Minnesota. The company offers lending solutions, including commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending and equipment finance, loan syndications products, residential mortgages, home equity loans and lines of credit, personal and installment loans, auto finance and business loans, and business lines of credit. It also provides deposit and cash management solutions, such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services; specialized financial services, such as interest rate risk management and foreign exchange solutions; fiduciary services, such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management services; and investable funds solutions, including savings, money market deposit accounts, IRA accounts, CDs, fixed and variable annuities, full-service, discount, and online investment brokerage; investment advisory services; and trust and investment management accounts. In addition, the company offers deposit and transactional solutions, including checking, credit, debit and pre-paid cards, online banking and bill pay; and money transfer services. Associated Banc-Corp was founded in 1861 and is headquartered in Green Bay, Wisconsin.