Towne Bank (NASDAQ:TOWN) and M&F Bancorp (OTCMKTS:MFBP) Financial Comparison

Towne Bank (NASDAQ:TOWN) and M&F Bancorp (OTCMKTS:MFBP) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings for Towne Bank and M&F Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Towne Bank	1	1	2	0	2.25
M&F Bancorp	0	0	0	0	0.00

Towne Bank presently has a consensus price target of $39.50, indicating a potential upside of 13.80%. Given Towne Bank’s stronger consensus rating and higher probable upside, research analysts plainly believe Towne Bank is more favorable than M&F Bancorp.

Institutional & Insider Ownership

56.0% of Towne Bank shares are owned by institutional investors. 8.1% of Towne Bank shares are owned by company insiders. Comparatively, 2.9% of M&F Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Towne Bank has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, M&F Bancorp has a beta of -0.53, suggesting that its share price is 153% less volatile than the S&P 500.

Dividends

Towne Bank pays an annual dividend of $1.08 per share and has a dividend yield of 3.1%. M&F Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Towne Bank pays out 54.5% of its earnings in the form of a dividend. M&F Bancorp pays out 18.5% 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. 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.

Profitability

This table compares Towne Bank and M&F 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%
M&F Bancorp	N/A	N/A	N/A

Earnings & Valuation

This table compares Towne Bank and M&F Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Towne Bank	$1.12 billion	2.45	$169.53 million	$1.98	17.53
M&F Bancorp	$29.72 million	1.86	$4.30 million	$1.30	21.88

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

Summary

Towne Bank beats M&F Bancorp on 15 of the 17 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 M&F Bancorp

M&F Bancorp, Inc. operates as a bank holding company for the Mechanics and Farmers Bank that provides consumer and commercial banking products and services in North Carolina. It offers deposit products, including demand deposits; checking, savings, and money market accounts, as well as certificates of deposit. The company provides loans for commercial and residential real estate, and construction; and consumer and other loans; as well as ATM services. M&F Bancorp, Inc. was founded in 1907 and is headquartered in Durham, North Carolina.