Analyzing Towne Bank (NASDAQ:TOWN) and Community Trust Bancorp (NASDAQ:CTBI)

Towne Bank (NASDAQ:TOWN) and Community Trust Bancorp (NASDAQ:CTBI) 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, profitability, risk, earnings, dividends and institutional ownership.

Insider and Institutional Ownership

56.0% of Towne Bank shares are held by institutional investors. Comparatively, 60.2% of Community Trust Bancorp shares are held by institutional investors. 8.1% of Towne Bank shares are held by insiders. Comparatively, 2.6% of Community Trust Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Towne Bank and Community Trust Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Towne Bank	13.51%	9.91%	1.24%
Community Trust Bancorp	24.85%	12.27%	1.56%

Risk and Volatility

Towne Bank has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Community Trust Bancorp has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500.

Dividends

Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.2%. Community Trust Bancorp pays an annual dividend of $2.12 per share and has a dividend yield of 3.2%. Towne Bank pays out 54.5% of its earnings in the form of a dividend. Community Trust Bancorp pays out 37.1% 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 increased its dividend for 13 consecutive years and Community Trust Bancorp has increased its dividend for 44 consecutive years.

Valuation and Earnings

This table compares Towne Bank and Community Trust Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$1.12 billion	2.39	$169.53 million	$1.98	17.09
Community Trust Bancorp	$409.34 million	2.99	$98.06 million	$5.71	11.78

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

Analyst Ratings

This is a breakdown of current recommendations for Towne Bank and Community Trust Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	1	1	2	0	2.25
Community Trust Bancorp	0	0	2	2	3.50

Towne Bank presently has a consensus price target of $39.50, indicating a potential upside of 16.76%. Community Trust Bancorp has a consensus price target of $63.50, indicating a potential downside of 5.63%. Given Towne Bank’s higher probable upside, research analysts clearly believe Towne Bank is more favorable than Community Trust Bancorp.

Summary

Community Trust Bancorp beats Towne Bank on 10 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 Community Trust Bancorp

Community Trust Bancorp, Inc. operates as the bank holding company for Community Trust Bank, Inc. that engages in the provision of commercial and personal banking, and trust and wealth management services to small and mid-sized communities in eastern, northeastern, central, and south-central Kentucky, as well as southern West Virginia, and northeastern Tennessee. The company accepts time and demand deposits, checking accounts, savings accounts and savings certificates, individual retirement accounts and Keogh plans, and money market accounts. Its loan portfolio includes commercial, construction, mortgage, and personal loans; lease-financing, lines of credit, revolving lines of credit, and term loans, as well as other specialized loans, including asset-based financing; residential and commercial real estate loans; and consumer loans. The company also provides cash management, renting safe deposit boxes, and funds transfer services; issues letters of credit; and acts as a trustee of personal trusts, executor of estates, trustee for employee benefit trusts, and paying agent for bond and stock issues, as well as an investment agent and depositor for securities. In addition, it offers securities brokerage services; debit cards; annuity and life insurance products; and repurchase agreements, as well as mobile, internet banking, and e-statement services. The company was founded in 1903 and is headquartered in Pikeville, Kentucky.