Critical Analysis: Community Trust Bancorp (NASDAQ:CTBI) versus Washington Trust Bancorp (NASDAQ:WASH)

Washington Trust Bancorp (NASDAQ:WASH) and Community Trust Bancorp (NASDAQ:CTBI) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Washington Trust Bancorp and Community Trust Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Washington Trust Bancorp	0	3	1	0	2.25
Community Trust Bancorp	0	2	1	1	2.75

Washington Trust Bancorp presently has a consensus target price of $35.50, indicating a potential downside of 8.65%. Community Trust Bancorp has a consensus target price of $81.50, indicating a potential upside of 7.86%. Given Community Trust Bancorp’s stronger consensus rating and higher possible upside, analysts clearly believe Community Trust Bancorp is more favorable than Washington Trust Bancorp.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Washington Trust Bancorp	14.50%	10.18%	0.84%
Community Trust Bancorp	25.55%	12.52%	1.60%

Institutional and Insider Ownership

65.8% of Washington Trust Bancorp shares are owned by institutional investors. Comparatively, 60.2% of Community Trust Bancorp shares are owned by institutional investors. 1.3% of Washington Trust Bancorp shares are owned by company insiders. Comparatively, 2.6% of Community Trust Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Washington Trust Bancorp pays an annual dividend of $2.24 per share and has a dividend yield of 5.8%. Community Trust Bancorp pays an annual dividend of $2.60 per share and has a dividend yield of 3.4%. Washington Trust Bancorp pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Community Trust Bancorp pays out 43.6% of its earnings in the form of a dividend. Community Trust Bancorp has increased its dividend for 44 consecutive years.

Valuation & Earnings

This table compares Washington Trust Bancorp and Community Trust Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Washington Trust Bancorp	$234.01 million	3.17	$52.24 million	$2.88	13.49
Community Trust Bancorp	$409.34 million	3.35	$98.06 million	$5.97	12.66

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

Volatility and Risk

Washington Trust Bancorp has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Community Trust Bancorp has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Summary

Community Trust Bancorp beats Washington Trust Bancorp on 13 of the 17 factors compared between the two stocks.

About Washington Trust Bancorp

Washington Trust Bancorp, Inc. operates as the bank holding company for The Washington Trust Company, of Westerly that provides various banking and financial services to individuals and businesses. The company operates in two segments, Commercial Banking and Wealth Management Services. The Commercial Banking segment offers deposit accounts, including interest-bearing and noninterest-bearing demand deposits, NOW and savings accounts, money market and retirement deposit accounts, and time deposits; various commercial and retail lending products, such as commercial real estate loans, including commercial mortgages, and construction and development loans; commercial and industrial loans comprising working capital, equipment financing, and financing for other business-related purposes; residential real estate loans that consist of mortgage and homeowner construction loans; and consumer loans comprising home equity loans and lines of credit, personal installment loans, and loans to individuals secured by general aviation aircraft. This segment also provides debit cards; automated teller machines (ATMs); telephone banking, internet banking, mobile banking, remote deposit capture, and other cash management services; and investment portfolio and wholesale funding services. The Wealth Management Services segment offers investment management; financial planning; personal trust and estate services, such as trustee, personal representative, custodian, and guardian; and settlement of decedents’ estates, as well as institutional trust services comprising custody and fiduciary services for personal and institutional clients. Washington Trust Bancorp, Inc. was founded in 1800 and is headquartered in Westerly, Rhode Island.

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.