Head to Head Analysis: South Plains Financial (NASDAQ:SPFI) versus Towne Bank (NASDAQ:TOWN)

South Plains Financial (NASDAQ:SPFI) and Towne Bank (NASDAQ:TOWN) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Earnings and Valuation

This table compares South Plains Financial and Towne Bank”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
South Plains Financial	$296.89 million	2.62	$58.47 million	$3.57	11.37
Towne Bank	$1.12 billion	2.41	$169.53 million	$1.98	17.21

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

Institutional & Insider Ownership

55.0% of South Plains Financial shares are owned by institutional investors. Comparatively, 56.0% of Towne Bank shares are owned by institutional investors. 24.3% of South Plains Financial shares are owned by insiders. Comparatively, 8.1% of Towne Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares South Plains Financial and Towne Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
South Plains Financial	20.22%	12.58%	1.35%
Towne Bank	13.51%	9.91%	1.24%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for South Plains Financial and Towne Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
South Plains Financial	0	1	5	0	2.83
Towne Bank	1	1	2	0	2.25

South Plains Financial presently has a consensus target price of $46.25, suggesting a potential upside of 13.94%. Towne Bank has a consensus target price of $39.50, suggesting a potential upside of 15.94%. Given Towne Bank’s higher possible upside, analysts clearly believe Towne Bank is more favorable than South Plains Financial.

Risk and Volatility

South Plains Financial has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500. Comparatively, Towne Bank has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Dividends

South Plains Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.7%. Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.2%. South Plains Financial pays out 19.0% of its earnings in the form of a dividend. Towne Bank pays out 54.5% 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. South Plains Financial has increased its dividend for 5 consecutive years and Towne Bank has increased its dividend for 13 consecutive years. Towne Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

South Plains Financial beats Towne Bank on 9 of the 17 factors compared between the two stocks.

About South Plains Financial

South Plains Financial, Inc. operates as a bank holding company for City Bank that provides commercial and consumer financial services to small and medium-sized businesses and individuals. The company operates through two segments, Banking and Insurance. It offers deposit products, including demand deposit accounts, interest-bearing products, savings accounts, and certificate of deposits. The company also provides commercial real estate loans; general and specialized commercial loans, including agricultural production and real estate, energy, finance, investment, and insurance loans, as well as loans to goods, services, restaurant and retail, construction, and other industries; residential construction loans; and 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. In addition, it offers crop insurance products; trust products and services; investment services; mortgage banking services; online and mobile banking services; and debit and credit cards. The company was founded in 1941 and is headquartered in Lubbock, Texas.

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.