Critical Survey: Bank Mutual (BKMU) versus Community Bankers Trust (ESXB)

Community Bankers Trust (NASDAQ: ESXB) and Bank Mutual (NASDAQ:BKMU) are both small-cap financials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Community Bankers Trust and Bank Mutual, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Community Bankers Trust 0 3 1 0 2.25
Bank Mutual 0 2 0 0 2.00

Community Bankers Trust presently has a consensus target price of $9.33, indicating a potential upside of 15.94%. Bank Mutual has a consensus target price of $10.75, indicating a potential upside of 0.00%. Given Community Bankers Trust’s stronger consensus rating and higher possible upside, equities analysts plainly believe Community Bankers Trust is more favorable than Bank Mutual.

Profitability

This table compares Community Bankers Trust and Bank Mutual’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Community Bankers Trust 19.82% 7.87% 0.75%
Bank Mutual 14.19% 5.72% 0.62%

Institutional & Insider Ownership

54.8% of Bank Mutual shares are owned by institutional investors. 10.0% of Bank Mutual shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Community Bankers Trust and Bank Mutual’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Community Bankers Trust N/A N/A N/A $0.47 17.13
Bank Mutual $109.99 million 4.50 $16.95 million $0.34 31.62

Bank Mutual has higher revenue and earnings than Community Bankers Trust. Community Bankers Trust is trading at a lower price-to-earnings ratio than Bank Mutual, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Community Bankers Trust has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500. Comparatively, Bank Mutual has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500.

Dividends

Bank Mutual pays an annual dividend of $0.22 per share and has a dividend yield of 2.0%. Community Bankers Trust does not pay a dividend. Bank Mutual pays out 64.7% of its earnings in the form of a dividend.

Summary

Community Bankers Trust beats Bank Mutual on 8 of the 14 factors compared between the two stocks.

Community Bankers Trust Company Profile

Community Bankers Trust Corporation is the holding company for Essex Bank (the Bank). The Bank is engaged in a general commercial banking business and provides a range of financial services to individuals and small businesses, including individual and commercial demand and time deposit accounts, commercial and industrial loans, consumer and small business loans, real estate and mortgage loans, investment services and safe deposit box facilities. Essex Services, Inc., a subsidiary of the Bank, and its financial consultants offer a range of investment products and alternatives. It operates in over three business lines: retail and small business banking, commercial and industrial banking and real estate lending. Its investment securities include the United States treasury issue and other United States Government agencies; the United States Government sponsored agencies, and state, county and municipal securities. Its lending and investing activities are funded through its deposits.

Bank Mutual Company Profile

Bank Mutual Corporation is a savings and loan holding company. The Company owns Bank Mutual (the Bank), a federally-chartered savings bank. The Bank is engaged in the business of community banking, which includes attracting deposits from and making loans to the general public and private businesses, as well as governmental and non-profit entities. In addition to deposits, the Bank obtains funds through borrowings from the Federal Home Loan Bank (FHLB) of Chicago. These funding sources are used to originate loans, including commercial and industrial loans, multi-family residential loans, non-residential commercial real estate loans, one- to four-family loans, home equity loans and other consumer loans. The Bank also purchases and/or participates in loans from third-party financial institutions and is a seller of residential loans in the secondary market. It also invests in mortgage-related and other investment securities.

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