Critical Review: Salisbury Bancorp (SAL) and Territorial Bancorp (TBNK)

Salisbury Bancorp (NASDAQ: SAL) and Territorial Bancorp (NASDAQ:TBNK) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Salisbury Bancorp and Territorial Bancorp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Salisbury Bancorp 0 0 1 0 3.00
Territorial Bancorp 2 2 0 0 1.50

Salisbury Bancorp presently has a consensus target price of $51.00, indicating a potential upside of 14.86%. Territorial Bancorp has a consensus target price of $33.50, indicating a potential upside of 11.83%. Given Salisbury Bancorp’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Salisbury Bancorp is more favorable than Territorial Bancorp.

Profitability

This table compares Salisbury Bancorp and Territorial Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Salisbury Bancorp 14.13% 7.80% 0.78%
Territorial Bancorp 20.73% 7.24% 0.87%

Insider & Institutional Ownership

9.6% of Salisbury Bancorp shares are held by institutional investors. Comparatively, 46.7% of Territorial Bancorp shares are held by institutional investors. 13.0% of Salisbury Bancorp shares are held by insiders. Comparatively, 13.1% of Territorial Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Salisbury Bancorp pays an annual dividend of $1.12 per share and has a dividend yield of 2.5%. Territorial Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.7%. Salisbury Bancorp pays out 39.7% of its earnings in the form of a dividend. Territorial Bancorp pays out 44.9% 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.

Earnings and Valuation

This table compares Salisbury Bancorp and Territorial Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Salisbury Bancorp $43.76 million 2.83 $6.25 million $2.82 15.74
Territorial Bancorp $72.18 million 4.04 $14.96 million $1.78 16.83

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

Risk and Volatility

Salisbury Bancorp has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, Territorial Bancorp has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.

Summary

Territorial Bancorp beats Salisbury Bancorp on 9 of the 16 factors compared between the two stocks.

About Salisbury Bancorp

Salisbury Bancorp, Inc. is a bank holding company for Salisbury Bank and Trust Company (the Bank). The Bank is a Connecticut-chartered and Federal Deposit Insurance Corporation (the FDIC) insured commercial bank. The Bank provides commercial banking, consumer financing, retail banking and trust and wealth advisory services through a network of over 10 banking offices and approximately nine automated teller machines (ATMs). The Bank originates commercial loans, commercial real estate loans, residential and commercial construction loans, residential real estate loans collateralized by one- to four- family residences, home equity lines of credit, fixed rate loans and other consumer loans. The Bank’s securities portfolio include the United States Government and Agency securities, mortgage-backed securities, collateralized mortgage obligations and tax exempt municipal bonds. The Bank uses deposits, repayments and sales, and borrowings to fund lending, investing and general operations.

About Territorial Bancorp

Territorial Bancorp Inc. is the holding company for Territorial Savings Bank (the Bank). The Bank provides financial services to individuals, families and businesses through its banking offices located throughout the State of Hawaii. Its business consists primarily of accepting deposits from the general public and investing those deposits together with funds generated from operations and borrowings in one- to four-family residential mortgage loans and investment securities. The Bank offers a range of deposit accounts, including passbook and statement savings accounts, certificates of deposit (CDs), money market accounts, and commercial and regular checking accounts. Through its subsidiary, Territorial Financial Services, Inc., the Bank engages in insurance agency activities. It also offers various non-deposit investments to its customers, including annuities and mutual funds, through a third-party broker-dealer.

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