Towne Bank (NASDAQ:TOWN – Get Free Report) and Home Bancorp (NASDAQ:HBCP – Get Free Report) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.
Dividends
Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.2%. Home Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 1.9%. Towne Bank pays out 54.5% of its earnings in the form of a dividend. Home Bancorp pays out 20.8% 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 raised its dividend for 13 consecutive years and Home Bancorp has raised its dividend for 10 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of recent recommendations and price targets for Towne Bank and Home Bancorp, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Towne Bank | 1 | 1 | 2 | 0 | 2.25 |
| Home Bancorp | 0 | 3 | 1 | 1 | 2.60 |
Volatility and Risk
Towne Bank has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500. Comparatively, Home Bancorp has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.
Insider and Institutional Ownership
56.0% of Towne Bank shares are held by institutional investors. Comparatively, 49.4% of Home Bancorp shares are held by institutional investors. 8.1% of Towne Bank shares are held by insiders. Comparatively, 6.2% of Home Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Profitability
This table compares Towne Bank and Home Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Towne Bank | 13.51% | 9.91% | 1.24% |
| Home Bancorp | 22.18% | 10.86% | 1.32% |
Valuation & Earnings
This table compares Towne Bank and Home Bancorp”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Towne Bank | $1.12 billion | 2.41 | $169.53 million | $1.98 | 17.21 |
| Home Bancorp | $209.23 million | 2.41 | $46.06 million | $5.95 | 10.82 |
Towne Bank has higher revenue and earnings than Home Bancorp. Home 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.
Summary
Towne Bank beats Home Bancorp on 10 of the 18 factors compared between the two stocks.
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 Home Bancorp
Home Bancorp, Inc. operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas. It offers deposit products, including interest-bearing and noninterest-bearing checking, money market, savings, NOW, and certificates of deposit accounts. The company also provides various loan products comprising one-to four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. In addition, it invests in securities; and offers credit cards and online banking services. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.
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