Financial Survey: Community Bank System (CBU) versus First Horizon National (FHN)

Community Bank System (NYSE: FHN) and First Horizon National (NYSE:FHN) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

70.9% of Community Bank System shares are owned by institutional investors. Comparatively, 84.3% of First Horizon National shares are owned by institutional investors. 2.3% of Community Bank System shares are owned by insiders. Comparatively, 1.8% of First Horizon National shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Community Bank System and First Horizon National, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Community Bank System 0 6 0 0 2.00
First Horizon National 0 2 8 0 2.80

Community Bank System currently has a consensus target price of $57.75, indicating a potential downside of 12.42%. First Horizon National has a consensus target price of $20.68, indicating a potential upside of 10.94%. Given First Horizon National’s stronger consensus rating and higher probable upside, analysts clearly believe First Horizon National is more favorable than Community Bank System.

Profitability

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

Net Margins Return on Equity Return on Assets
Community Bank System 33.19% 10.03% 1.51%
First Horizon National 10.74% 9.64% 1.02%

Earnings & Valuation

This table compares Community Bank System and First Horizon National’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Community Bank System $531.88 million 6.34 $150.71 million $2.79 23.63
First Horizon National $1.48 billion 4.09 $165.51 million $1.11 16.79

First Horizon National has higher revenue and earnings than Community Bank System. First Horizon National 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.

Risk & Volatility

Community Bank System has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, First Horizon National has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500.

Dividends

Community Bank System pays an annual dividend of $1.36 per share and has a dividend yield of 2.1%. First Horizon National pays an annual dividend of $0.48 per share and has a dividend yield of 2.6%. Community Bank System pays out 48.7% of its earnings in the form of a dividend. First Horizon National pays out 43.2% 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 7 consecutive years and First Horizon National has increased its dividend for 2 consecutive years. First Horizon National is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Community Bank System beats First Horizon National on 9 of the 17 factors compared between the two stocks.

About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and financial services to retail, commercial, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as checking, savings, and money market accounts, as well as time deposits. It also provides loans comprising consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory services; and asset management services to individuals, corporations, corporate pension and profit sharing plans, and foundations, as well as operates as a full-service insurance agency that offers personal and commercial property insurance, and other risk management products and services. Further, it offers contribution plan administration services, actuarial and benefits consulting services, and collective investment fund administration and institutional trust services, as well as employee benefit trust, retirement plan administration, VEBA/HRA, and health and welfare consulting services. Additionally, the company provides wealth management, higher educational planning, fiduciary, risk management, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and advisory products, as well as transfer agency and master recordkeeping services. As of December 31, 2017, it had 225 branches in Upstate New York as well as Northeastern Pennsylvania, Vermont, and Western Massachusetts. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.

About First Horizon National

First Horizon National Corporation operates as the bank holding company for First Tennessee Bank National Association that provides various financial services. It operates through four segments: Regional Banking, Fixed Income, Corporate, and Non-Strategic. The company offers general banking services for consumers, businesses, financial institutions, and governments. It also provides investment, financial planning, trust, asset management, and cash management services. In addition, the company is involved in fixed income securities sales, trading, and strategies for institutional clients; underwriting of bank-eligible securities and other fixed-income securities eligible for underwriting by financial subsidiaries; loan sales; derivative sales; and provision of advisory services. Further, it offers discount and full-service brokerage services; correspondent banking services; transaction processing services comprising nationwide check clearing and remittance processing; trust, fiduciary, and agency services; credit card products; equipment finance; and investment and financial advisory services. Additionally, the company engages in mutual fund and retail insurance sales, as well as provides mortgage banking services. As of February 27, 2018, it operated approximately 350 branches under the First Tennessee Bank and Capital Bank brands across the southeast United States. The company was founded in 1864 and is headquartered in Memphis, Tennessee.

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