Financial Review: United Community Banks (NYSE:UCB) and Security Federal (OTCMKTS:SFDL)

Security Federal (OTCMKTS:SFDL) and United Community Banks (NYSE:UCB) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Risk & Volatility

Security Federal has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, United Community Banks has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Earnings and Valuation

This table compares Security Federal and United Community Banks”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Security Federal	$87.55 million	1.10	$9.81 million	$3.12	9.87
United Community Banks	$1.50 billion	2.57	$252.40 million	$2.20	14.45

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

Profitability

This table compares Security Federal and United Community Banks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Security Federal	13.07%	11.20%	0.73%
United Community Banks	17.93%	8.91%	1.09%

Dividends

Security Federal pays an annual dividend of $0.60 per share and has a dividend yield of 1.9%. United Community Banks pays an annual dividend of $1.00 per share and has a dividend yield of 3.1%. Security Federal pays out 19.2% of its earnings in the form of a dividend. United Community Banks pays out 45.5% 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.

Institutional & Insider Ownership

82.3% of United Community Banks shares are owned by institutional investors. 36.4% of Security Federal shares are owned by company insiders. Comparatively, 0.5% of United Community Banks shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Security Federal and United Community Banks, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Security Federal	0	0	0	0	0.00
United Community Banks	0	1	0	0	2.00

Summary

United Community Banks beats Security Federal on 10 of the 14 factors compared between the two stocks.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.

About United Community Banks

United Community Banks, Inc. operates as the financial holding company for United Community Bank that provides financial products and services to commercial, retail, government, education, energy, health care, and real estate sectors. The company accepts various deposit products, including checking, savings, money market, and other deposit accounts. It also offers lending services, including real estate, consumer, and commercial loans, to individuals, small businesses, mid-sized commercial businesses, and non-profit organizations, as well as secured and unsecured, and mortgage loans. In addition, the company originate loans partially guaranteed by the SBA and USDA loan programs. Further, it provides wealth management services comprising financial planning, customized portfolio management, and investment advice; trust services to manage fiduciary assets; non-deposit investment products; and insurance products, including life insurance, long-term care insurance, and tax-deferred annuities, as well as invests in residential and commercial mortgage-backed securities, asset-backed securities, the U.S. treasury, the U.S. agency, and municipal obligations. Additionally, the company offers reinsurance on a property insurance contract; insurance agency services; brokerage services; and payment processing, merchant, wire transfer, private banking, and other related financial services. It operates through a network of 171 branches in Florida, Georgia, North Carolina, South Carolina, and Tennessee. United Community Banks, Inc. was founded in 1950 and is headquartered in Blairsville, Georgia.