United Community Banks (UCBI) & Bank Mutual Corporation (BKMU) Critical Contrast

United Community Banks (NASDAQ: UCBI) and Bank Mutual Corporation (NASDAQ:BKMU) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Analyst Ratings

This is a summary of recent ratings for United Community Banks and Bank Mutual Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Community Banks 0 2 4 1 2.86
Bank Mutual Corporation 0 2 0 0 2.00

United Community Banks currently has a consensus price target of $31.14, indicating a potential upside of 9.12%. Bank Mutual Corporation has a consensus price target of $10.75, indicating a potential downside of 0.46%. Given United Community Banks’ stronger consensus rating and higher possible upside, research analysts plainly believe United Community Banks is more favorable than Bank Mutual Corporation.

Earnings and Valuation

This table compares United Community Banks and Bank Mutual Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
United Community Banks $424.67 million 4.77 $103.63 million $1.46 19.55
Bank Mutual Corporation $95.97 million 5.17 $15.62 million $0.34 31.76

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

Risk & Volatility

United Community Banks has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Bank Mutual Corporation has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500.

Institutional and Insider Ownership

86.7% of United Community Banks shares are owned by institutional investors. Comparatively, 56.1% of Bank Mutual Corporation shares are owned by institutional investors. 2.2% of United Community Banks shares are owned by insiders. Comparatively, 10.0% of Bank Mutual Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

United Community Banks pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. Bank Mutual Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 2.0%. United Community Banks pays out 27.4% of its earnings in the form of a dividend. Bank Mutual Corporation pays out 64.7% 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.

Profitability

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

Net Margins Return on Equity Return on Assets
United Community Banks 23.07% 10.42% 1.07%
Bank Mutual Corporation 14.19% 5.72% 0.62%

Summary

United Community Banks beats Bank Mutual Corporation on 13 of the 17 factors compared between the two stocks.

About United Community Banks

United Community Banks, Inc. (United) is a bank holding company. United conducts its operations through a community-focused operating model of separate community banks, which, as of December 31, 2016, operated at 139 locations throughout the Atlanta-Sandy Springs-Roswell, Georgia, and Gainesville, Georgia metropolitan statistical areas, upstate and coastal South Carolina, north and coastal Georgia, western North Carolina, and east Tennessee. The community banks offer a range of retail and corporate banking services, including checking, savings and time deposit accounts, secured and unsecured loans, wire transfers, brokerage services and other financial services. The Company operates through its subsidiary, United Community Bank, Blairsville, Georgia (the Bank). The Bank owns an insurance agency, United Community Insurance Services, Inc., known as United Community Advisory Services, which is a subsidiary of the Bank.

About Bank Mutual Corporation

Bank Mutual Corporation is a savings and loan holding company. The Company owns Bank Mutual (the Bank), a federally-chartered savings bank. The Bank is engaged in the business of community banking, which includes attracting deposits from and making loans to the general public and private businesses, as well as governmental and non-profit entities. In addition to deposits, the Bank obtains funds through borrowings from the Federal Home Loan Bank (FHLB) of Chicago. These funding sources are used to originate loans, including commercial and industrial loans, multi-family residential loans, non-residential commercial real estate loans, one- to four-family loans, home equity loans and other consumer loans. The Bank also purchases and/or participates in loans from third-party financial institutions and is a seller of residential loans in the secondary market. It also invests in mortgage-related and other investment securities.

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