Financial Review: Associated Banc (NYSE:ASB) vs. TowneBank (NASDAQ:TOWN)

Associated Banc (NYSE:ASB) and TowneBank (NASDAQ:TOWN) are both mid-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, valuation, risk, institutional ownership and earnings.

Dividends

Associated Banc pays an annual dividend of $0.88 per share and has a dividend yield of 3.8%. TowneBank pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. Associated Banc pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TowneBank pays out 49.8% of its earnings in the form of a dividend. TowneBank has raised its dividend for 12 consecutive years.

Risk & Volatility

Associated Banc has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, TowneBank has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Associated Banc and TowneBank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Associated Banc	0	8	1	0	2.11
TowneBank	0	2	1	0	2.33

Associated Banc currently has a consensus price target of $23.11, indicating a potential downside of 1.49%. TowneBank has a consensus price target of $29.50, indicating a potential downside of 6.62%. Given Associated Banc’s higher probable upside, equities research analysts plainly believe Associated Banc is more favorable than TowneBank.

Institutional & Insider Ownership

83.0% of Associated Banc shares are held by institutional investors. Comparatively, 56.0% of TowneBank shares are held by institutional investors. 1.5% of Associated Banc shares are held by insiders. Comparatively, 8.1% of TowneBank shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Associated Banc and TowneBank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Associated Banc	6.86%	8.31%	0.80%
TowneBank	15.50%	7.45%	0.89%

Earnings and Valuation

This table compares Associated Banc and TowneBank’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Associated Banc	$2.22 billion	1.60	$182.96 million	$0.99	23.70
TowneBank	$941.58 million	2.52	$153.71 million	$2.01	15.72

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

About Associated Banc

Associated Banc-Corp, a bank holding company, provides various banking and nonbanking products to individuals and businesses in Wisconsin, Illinois, and Minnesota. The company offers lending solutions, including commercial loans and lines of credit, commercial real estate financing, construction loans, letters of credit, leasing, asset based lending and equipment finance, loan syndications products, residential mortgages, home equity loans and lines of credit, personal and installment loans, auto finance and business loans, and business lines of credit. It also provides deposit and cash management solutions, such as commercial checking and interest-bearing deposit products, cash vault and night depository services, liquidity solutions, payables and receivables solutions, and information services; specialized financial services, such as interest rate risk management and foreign exchange solutions; fiduciary services, such as administration of pension, profit-sharing and other employee benefit plans, fiduciary and corporate agency services, and institutional asset management services; and investable funds solutions, including savings, money market deposit accounts, IRA accounts, CDs, fixed and variable annuities, full-service, discount, and online investment brokerage; investment advisory services; and trust and investment management accounts. In addition, the company offers deposit and transactional solutions, including checking, credit, debit and pre-paid cards, online banking and bill pay; and money transfer services. Associated Banc-Corp was founded in 1861 and is headquartered in Green Bay, Wisconsin.

About TowneBank

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.