S&T Bancorp (NASDAQ:STBA) vs. Towne Bank (NASDAQ:TOWN) Head to Head Review

Towne Bank (NASDAQ:TOWN) and S&T Bancorp (NASDAQ:STBA) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, valuation, institutional ownership, risk, earnings, dividends and profitability.

Valuation and Earnings

This table compares Towne Bank and S&T Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$1.12 billion	2.57	$169.53 million	$3.56	10.21
S&T Bancorp	$568.51 million	3.09	$134.23 million	$3.76	13.25

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

Insider and Institutional Ownership

56.0% of Towne Bank shares are owned by institutional investors. Comparatively, 65.2% of S&T Bancorp shares are owned by institutional investors. 8.1% of Towne Bank shares are owned by company insiders. Comparatively, 1.2% of S&T Bancorp 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.

Dividends

Towne Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.1%. S&T Bancorp pays an annual dividend of $1.48 per share and has a dividend yield of 3.0%. Towne Bank pays out 31.5% of its earnings in the form of a dividend. S&T Bancorp pays out 39.4% 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 S&T Bancorp has increased its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Towne Bank and S&T Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Towne Bank	25.64%	9.60%	1.22%
S&T Bancorp	24.51%	9.74%	1.42%

Analyst Ratings

This is a summary of current ratings and recommmendations for Towne Bank and S&T Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	0	2	1	1	2.75
S&T Bancorp	0	4	2	1	2.57

Towne Bank presently has a consensus price target of $39.50, indicating a potential upside of 8.64%. S&T Bancorp has a consensus price target of $51.60, indicating a potential upside of 3.57%. Given Towne Bank’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Towne Bank is more favorable than S&T Bancorp.

Risk & Volatility

Towne Bank has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, S&T Bancorp has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

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 S&T Bancorp

S&T Bancorp, Inc. is a bank holding company, which engages in the provision of consumer, commercial, and small business banking services. It operates through the following segments: Commercial Real Estate, Commercial and Industrial, Commercial Construction, Business Banking, Consumer Real Estate, and Other Consumer. The Commercial Real Estate segment includes both owner-occupied properties and investment properties for various purposes such as hotels, retail, multifamily and health care. The Commercial and Industrial segment focuses on the companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The Commercial Construction segment refers to the finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. The Business Banking segment is made to small businesses that are standard, non-complex products evaluated through a streamlined credit approval process that has been designed to maximize efficiency while maintaining high credit quality standards. The Consumer Real Estate segment offers first and second liens such as 1-4 family residential mortgages, home equity loans and home equity lines of credit. The Other Consumer segment consists of individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. The company was founded on March 17, 1983 and is headquartered in Indiana, PA.