Reviewing Towne Bank (NASDAQ:TOWN) and Regions Financial (NYSE:RF)

Towne Bank (NASDAQ:TOWN) and Regions Financial (NYSE:RF) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Towne Bank and Regions Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	0	1	2	0	2.67
Regions Financial	1	8	9	0	2.44

Towne Bank presently has a consensus price target of $41.00, suggesting a potential upside of 25.84%. Regions Financial has a consensus price target of $28.19, suggesting a potential upside of 16.76%. Given Towne Bank’s stronger consensus rating and higher possible upside, analysts plainly believe Towne Bank is more favorable than Regions Financial.

Profitability

This table compares Towne Bank and Regions Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Towne Bank	15.69%	9.86%	1.23%
Regions Financial	22.49%	13.05%	1.40%

Institutional and Insider Ownership

56.0% of Towne Bank shares are owned by institutional investors. Comparatively, 79.4% of Regions Financial shares are owned by institutional investors. 8.1% of Towne Bank shares are owned by company insiders. Comparatively, 0.3% of Regions Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.3%. Regions Financial pays an annual dividend of $1.06 per share and has a dividend yield of 4.4%. Towne Bank pays out 48.2% of its earnings in the form of a dividend. Regions Financial pays out 46.7% 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. Towne Bank has raised its dividend for 13 consecutive years and Regions Financial has raised its dividend for 12 consecutive years. Regions Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Towne Bank and Regions Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$749.92 million	3.26	$161.76 million	$2.24	14.54
Regions Financial	$7.42 billion	2.90	$1.89 billion	$2.27	10.64

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

Volatility & Risk

Towne Bank has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Regions Financial has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Summary

Regions Financial beats Towne Bank on 11 of the 17 factors compared between the two stocks.

About Towne Bank

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals. The company operates through three segments: Banking, Realty, and Insurance. It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts. The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans. In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services. Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans. Additionally, it provides residential real estate, relocation, property management, vacation rentals, and title and settlement services; and originates residential mortgage loans. The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance. It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina. TowneBank was incorporated in 1998 and is based in Portsmouth, Virginia.

About Regions Financial

Regions Financial Corporation, a financial holding company, provides banking and bank-related services to individual and corporate customers. It operates through three segments: Corporate Bank, Consumer Bank, and Wealth Management. The Corporate Bank segment offers commercial banking services, such as commercial and industrial, commercial real estate, and investor real estate lending; equipment lease financing; deposit products; and securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition, and other advisory services. It serves corporate, middle market, and commercial real estate developers and investors. The Consumer Bank segment provides consumer banking products and services related to residential first mortgages, home equity lines and loans, consumer credit cards, and other consumer loans, as well as deposits. The Wealth Management segment offers credit related products, and retirement and savings solutions; and trust and investment management, asset management, and estate planning services to individuals, businesses, governmental institutions, and non-profit entities. It also provides investment and insurance products; low-income housing tax credit corporate fund syndication services; and other specialty financing services. The company was founded in 1971 and is headquartered in Birmingham, Alabama.