United Community Banks (NASDAQ:UCB) vs. TowneBank (NASDAQ:TOWN) Head-To-Head Contrast

United Community Banks (NASDAQ:UCB) and TowneBank (NASDAQ:TOWN) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Volatility and Risk

United Community Banks has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, TowneBank has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Dividends

United Community Banks pays an annual dividend of $0.96 per share and has a dividend yield of 3.2%. TowneBank pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. United Community Banks pays out 62.3% of its earnings in the form of a dividend. TowneBank pays out 50.3% 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. TowneBank has increased its dividend for 13 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for United Community Banks and TowneBank, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Community Banks	0	2	1	0	2.33
TowneBank	0	0	1	0	3.00

United Community Banks presently has a consensus price target of $31.00, suggesting a potential upside of 4.03%. TowneBank has a consensus price target of $40.00, suggesting a potential upside of 24.49%. Given TowneBank’s stronger consensus rating and higher possible upside, analysts plainly believe TowneBank is more favorable than United Community Banks.

Profitability

This table compares United Community Banks and TowneBank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Community Banks	13.04%	8.36%	0.99%
TowneBank	14.89%	7.32%	0.90%

Earnings and Valuation

This table compares United Community Banks and TowneBank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Community Banks	$860.29 million	4.13	$187.54 million	$1.54	19.35
TowneBank	$673.10 million	3.58	$153.71 million	$1.99	16.15

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

Institutional & Insider Ownership

82.3% of United Community Banks shares are owned by institutional investors. Comparatively, 56.0% of TowneBank shares are owned by institutional investors. 0.5% of United Community Banks shares are owned by company insiders. Comparatively, 8.1% of TowneBank shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

United Community Banks beats TowneBank on 8 of the 15 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. It accepts various deposit products, including checking, savings, money market, and other deposit accounts. The company also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, it originates loans partially guaranteed by the SBA and USDA loan programs. Further, the company provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, it offers reinsurance on a property insurance contract; insurance agency services; treasury management; credit cards; payment and commerce solution, equipment finance, investment advisory, and other related financial services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. The company was founded in 1950 and is headquartered in Blairsville, Georgia.

About TowneBank

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.