Critical Analysis: Community Bank System (NYSE:CBU) & Trustmark (NASDAQ:TRMK)

Trustmark (NASDAQ:TRMK) and Community Bank System (NYSE:CBU) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.

Dividends

Trustmark pays an annual dividend of $0.92 per share and has a dividend yield of 2.4%. Community Bank System pays an annual dividend of $1.84 per share and has a dividend yield of 2.6%. Trustmark pays out 27.8% of its earnings in the form of a dividend. Community Bank System pays out 57.3% 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. Community Bank System has increased its dividend for 33 consecutive years. Community Bank System is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Trustmark and Community Bank System”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trustmark	$1.10 billion	2.18	$165.49 million	$3.31	11.82
Community Bank System	$756.22 million	4.92	$131.92 million	$3.21	22.07

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

Profitability

This table compares Trustmark and Community Bank System’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trustmark	17.62%	9.48%	0.92%
Community Bank System	18.82%	10.52%	1.12%

Insider and Institutional Ownership

67.6% of Trustmark shares are held by institutional investors. Comparatively, 73.8% of Community Bank System shares are held by institutional investors. 1.5% of Trustmark shares are held by company insiders. Comparatively, 1.9% of Community Bank System shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Trustmark has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Community Bank System has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Trustmark and Community Bank System, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trustmark	0	4	1	0	2.20
Community Bank System	0	2	0	1	2.67

Trustmark presently has a consensus target price of $35.20, indicating a potential downside of 10.04%. Community Bank System has a consensus target price of $58.67, indicating a potential downside of 17.18%. Given Trustmark’s higher probable upside, analysts plainly believe Trustmark is more favorable than Community Bank System.

Summary

Community Bank System beats Trustmark on 11 of the 18 factors compared between the two stocks.

About Trustmark

Trustmark Corporation operates as the bank holding company for Trustmark National Bank that provides banking and other financial solutions to individuals and corporate institutions in the United States. The company operates through three segments: General Banking, Wealth Management, and Insurance. It offers checking, savings, and money market accounts; certificates of deposits and individual retirement accounts; financing for commercial and industrial projects, income-producing commercial real estate, owner-occupied real estate, and construction and land development; and installment and real estate loans, and lines of credit, as well as treasury management services. The company also provides mortgage banking services, including construction financing, production of conventional and government-insured mortgages, and secondary marketing and mortgage servicing. In addition, it provides wealth management and trust services, such as administration of personal trusts and estates; management of investment accounts for individuals, employee benefit plans, and charitable foundations; and corporate trust and institutional custody, securities brokerage, financial and estate planning, retirement plan, and investment management services. Further, the company offers business insurance products and services for medical professionals, construction, manufacturing, hospitality, real estate, and group life and health plans; and life and health insurance, and personal line policies for individual customers. Trustmark Corporation was founded in 1889 and is headquartered in Jackson, Mississippi.

About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and other financial services to retail, commercial, institutional, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as interest and noninterest -bearing checking, savings, and money market deposit accounts, as well as time deposits. It also provides loans, including consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; paycheck protection program loans; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and check credit lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory; cash management, investment, and treasury services; asset management services; and employee benefit services, as well as operates as a full-service insurance agency that provides personal and commercial lines of insurance, and other risk management products and services. Further, it offers contribution plan administration, employee benefit trust, collective investment fund, retirement plan administration and benefit consulting, fund administration, transfer agency, actuarial and benefit consulting, and health and welfare consulting services; and act as an investor in residential and commercial real estate activities. Additionally, the company offers wealth management, retirement planning, higher educational planning, fiduciary, risk management, trust, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and insurance and advisory products, as well as master recordkeeping services. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.