Contrasting Towne Bank (NASDAQ:TOWN) and Customers Bancorp (NYSE:CUBI)

Customers Bancorp (NYSE:CUBI) and Towne Bank (NASDAQ:TOWN) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Customers Bancorp	15.15%	14.05%	1.14%
Towne Bank	15.12%	9.95%	1.23%

Volatility and Risk

Customers Bancorp has a beta of 1.66, suggesting that its stock price is 66% more volatile than the S&P 500. Comparatively, Towne Bank has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Insider & Institutional Ownership

89.3% of Customers Bancorp shares are owned by institutional investors. Comparatively, 56.0% of Towne Bank shares are owned by institutional investors. 8.7% of Customers Bancorp shares are owned by insiders. Comparatively, 8.1% of Towne Bank shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Customers Bancorp and Towne Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Customers Bancorp	$1.48 billion	1.59	$224.09 million	$6.20	11.12
Towne Bank	$1.12 billion	2.36	$169.53 million	$2.20	15.18

Customers Bancorp has higher revenue and earnings than Towne Bank. Customers 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 ratings and target prices for Customers Bancorp and Towne Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Customers Bancorp	0	5	6	1	2.67
Towne Bank	1	0	2	0	2.33

Customers Bancorp presently has a consensus target price of $87.67, indicating a potential upside of 27.21%. Towne Bank has a consensus target price of $41.00, indicating a potential upside of 22.75%. Given Customers Bancorp’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Customers Bancorp is more favorable than Towne Bank.

Summary

Customers Bancorp beats Towne Bank on 12 of the 15 factors compared between the two stocks.

About Customers Bancorp

Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to individual consumers, and small and middle market businesses. The company provides deposit banking products, which includes commercial and consumer checking, non-interest-bearing and interest-bearing demand, MMDA, savings, and time deposit accounts. Its lending business offers commercial and industrial, commercial real estate, and multifamily and residential mortgage loans; SBA lending and financing; specialty lending includes fund finance, real estate specialty finance, technology and venture, and healthcare and financial institutions group; commercial loans to mortgage companies, and commercial equipment financing; and fund finance, such as variable rate loans secured by collateral pools to private debt funds; and cash management services. In addition, the company provides digital banking including Banking-as-a-Service to fintech companies, payments and treasury services to businesses, and consumer loans through fintech companies and the TassatPay, a blockchain-based instant B2B payments platform which offers instant payments including over-the-counter desks, exchanges, liquidity providers, market makers, funds, and other B2B verticals. Further, it offers mobile phone and internet banking, wire transfers, electronic bill payment, lock box, remote deposit capture, courier, merchant processing, cash vault, controlled disbursements, positive pay, and cash management services, such as account reconciliation, collections, and sweep accounts. The company was incorporated in 2010 and is headquartered in West Reading, Pennsylvania.

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.