TCF Financial Corporation (NYSE: TCF) and City Holding (NASDAQ:CHCO) are both banks – nec companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Institutional & Insider Ownership

81.6% of TCF Financial Corporation shares are owned by institutional investors. Comparatively, 62.5% of City Holding shares are owned by institutional investors. 2.5% of TCF Financial Corporation shares are owned by insiders. Comparatively, 3.9% of City Holding shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares TCF Financial Corporation and City Holding’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TCF Financial Corporation 15.27% 9.63% 0.98%
City Holding 29.25% 12.34% 1.45%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for TCF Financial Corporation and City Holding, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TCF Financial Corporation 1 7 3 0 2.18
City Holding 0 2 0 0 2.00

TCF Financial Corporation currently has a consensus price target of $17.89, suggesting a potential upside of 0.50%. City Holding has a consensus price target of $66.50, suggesting a potential upside of 1.53%. Given City Holding’s higher possible upside, analysts plainly believe City Holding is more favorable than TCF Financial Corporation.

Risk and Volatility

TCF Financial Corporation has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, City Holding has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Dividends

TCF Financial Corporation pays an annual dividend of $0.30 per share and has a dividend yield of 1.7%. City Holding pays an annual dividend of $1.76 per share and has a dividend yield of 2.7%. TCF Financial Corporation pays out 26.5% of its earnings in the form of a dividend. City Holding pays out 45.8% 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.

Valuation and Earnings

This table compares TCF Financial Corporation and City Holding’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
TCF Financial Corporation $1.40 billion 2.19 $212.12 million $1.13 15.75
City Holding $190.98 million 5.36 $52.12 million $3.84 17.06

TCF Financial Corporation has higher revenue and earnings than City Holding. TCF Financial Corporation is trading at a lower price-to-earnings ratio than City Holding, indicating that it is currently the more affordable of the two stocks.

Summary

City Holding beats TCF Financial Corporation on 9 of the 16 factors compared between the two stocks.

TCF Financial Corporation Company Profile

TCF Financial Corporation (TCF) is a bank holding company. The Company’s principal subsidiary is TCF National Bank (TCF Bank). The Company operates in three segments: Consumer Banking, Wholesale Banking and Enterprise Services. Consumer Banking comprises all of the Company’s consumer-facing businesses. The Consumer Banking segment includes retail banking, consumer real estate and auto finance. Wholesale Banking comprises commercial real estate and business lending, leasing and equipment finance and inventory finance. TCF’s consumer banking strategy is primarily to generate deposits to use for funding high credit quality secured loans and leases. Enterprise Services comprises corporate treasury, corporate functions and the Holding Company. As of December 31, 2016, the Company’s total securities available for sale were $1.4 billion. As of December 31, 2016, the Company’s total loans were $17.8 billion. As of December 31, 2016, the Company’s total deposits were $17.2 billion.

City Holding Company Profile

City Holding Company is a financial holding company. The Company conducts its principal activities through its subsidiary, City National Bank of West Virginia (City National). As of December 31, 2016, the City National provided banking, trust and investment management and other financial solutions through its network of 85 banking offices located in the states of West Virginia, Virginia, eastern Kentucky and southeastern Ohio. City National offers various products and services, including commercial banking, consumer banking, mortgage banking, and wealth management and trust services. City National provides credit, deposit and investment advisory products and services to rural and small community markets in addition to cities, including Charleston, Huntington, Martinsburg, Winchester, Staunton, Virginia Beach, Ashland and Lexington. City National offers a range of commercial banking services to corporations and other business customers.

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