Financial Analysis: Towne Bank (TOWN) vs. Eagle Bancorp Montana (EBMT)

Towne Bank (NASDAQ: TOWN) and Eagle Bancorp Montana (NASDAQ:EBMT) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Valuation & Earnings

This table compares Towne Bank and Eagle Bancorp Montana’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Towne Bank $428.48 million 4.90 $91.02 million $1.47 23.06
Eagle Bancorp Montana $36.88 million 1.95 $4.95 million $1.30 14.54

Towne Bank has higher revenue and earnings than Eagle Bancorp Montana. Eagle Bancorp Montana 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 and Insider Ownership

42.3% of Towne Bank shares are held by institutional investors. Comparatively, 31.5% of Eagle Bancorp Montana shares are held by institutional investors. 9.9% of Eagle Bancorp Montana shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk & Volatility

Towne Bank has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500. Comparatively, Eagle Bancorp Montana has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Towne Bank 19.27% 8.30% 1.12%
Eagle Bancorp Montana 12.06% 8.36% 0.74%

Analyst Ratings

This is a breakdown of current ratings and price targets for Towne Bank and Eagle Bancorp Montana, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Towne Bank 0 2 0 0 2.00
Eagle Bancorp Montana 0 0 0 0 N/A

Towne Bank presently has a consensus price target of $31.00, suggesting a potential downside of 8.55%. Given Towne Bank’s higher possible upside, analysts clearly believe Towne Bank is more favorable than Eagle Bancorp Montana.

Dividends

Towne Bank pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Eagle Bancorp Montana pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Towne Bank pays out 38.1% of its earnings in the form of a dividend. Eagle Bancorp Montana pays out 27.7% 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. Eagle Bancorp Montana is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Towne Bank beats Eagle Bancorp Montana on 10 of the 14 factors compared between the two stocks.

Towne Bank Company Profile

TowneBank is a community bank. The Bank offers personal banking services and business banking services. The Bank operates through three segments: Banking, Realty and Insurance. The Banking segment provides loan and deposit services to retail and commercial customers. The Realty segment provides residential real estate services, originations of a range of mortgage loans, resort property management, and residential and commercial title insurance. The Insurance segment provides property and casualty insurance, as well as employee and group benefits. The Bank provides checking accounts, cards, savings, money markets and certificate of deposits (CDs), mobile banking, financial management software, private banking and switch kit. The Bank also offers auto loans, home equity loans, construction loans, lot loans, recreational vehicles, mortgage loans, land acquisition loans, construction loans, development Loans, and personal loans and lines of credit.

Eagle Bancorp Montana Company Profile

Eagle Bancorp Montana, Inc. is the bank holding company for Opportunity Bank of Montana (the Bank). The Bank is a Montana-chartered commercial bank. The Bank has equity investments in Certified Development Entities, which have received allocations of New Markets Tax Credits (NMTC). The Company offers wealth management services at its locations through financial advisors employed by the Bank. The Bank originates residential mortgages (one- to four-family) and commercial real estate loans, real estate construction loans, home equity loans, consumer loans and commercial loans. The Bank offers a range of deposit accounts, which include certificates of deposit accounts ranging in terms from 90 days to 5 years, as well as, checking, savings and money market accounts. Individual retirement accounts (IRAs) are included in certificates of deposit.

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