Financial Contrast: Community Bank System (NYSE:CBU) and Cullen/Frost Bankers (NYSE:CFR)

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

Dividends

Cullen/Frost Bankers pays an annual dividend of $4.00 per share and has a dividend yield of 3.1%. Community Bank System pays an annual dividend of $1.84 per share and has a dividend yield of 3.3%. Cullen/Frost Bankers pays out 43.9% of its earnings in the form of a dividend. Community Bank System pays out 51.0% 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. Cullen/Frost Bankers has increased its dividend for 32 consecutive years and 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.

Analyst Recommendations

This is a summary of current ratings for Cullen/Frost Bankers and Community Bank System, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cullen/Frost Bankers	3	9	2	0	1.93
Community Bank System	0	2	0	1	2.67

Cullen/Frost Bankers currently has a consensus target price of $131.93, suggesting a potential upside of 3.70%. Community Bank System has a consensus target price of $71.00, suggesting a potential upside of 26.62%. Given Community Bank System’s stronger consensus rating and higher possible upside, analysts clearly believe Community Bank System is more favorable than Cullen/Frost Bankers.

Insider and Institutional Ownership

86.9% of Cullen/Frost Bankers shares are held by institutional investors. Comparatively, 73.8% of Community Bank System shares are held by institutional investors. 2.9% of Cullen/Frost Bankers shares are held by company insiders. Comparatively, 1.0% of Community Bank System shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Cullen/Frost Bankers and Community Bank System’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cullen/Frost Bankers	20.44%	15.95%	1.17%
Community Bank System	19.40%	10.94%	1.17%

Risk and Volatility

Cullen/Frost Bankers has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Community Bank System has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.

Earnings and Valuation

This table compares Cullen/Frost Bankers and Community Bank System”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cullen/Frost Bankers	$2.10 billion	3.89	$582.54 million	$9.11	13.97
Community Bank System	$765.28 million	3.87	$182.48 million	$3.61	15.53

Cullen/Frost Bankers has higher revenue and earnings than Community Bank System. Cullen/Frost Bankers 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.

Summary

Cullen/Frost Bankers beats Community Bank System on 10 of the 17 factors compared between the two stocks.

About Cullen/Frost Bankers

Cullen/Frost Bankers, Inc. operates as the bank holding company for Frost Bank that provides commercial and consumer banking services in Texas. The company offers commercial banking services to corporations, including financing for industrial and commercial properties, interim construction related to industrial and commercial properties, equipment, inventories and accounts receivables, and acquisitions; and treasury management services, as well as originates commercial leasing services. It also provides consumer banking services, such as checking accounts, savings programs, automated-teller machines (ATMs), overdraft facilities, installment and real estate loans, first mortgage loans, home equity loans and lines of credit, drive-in and night deposit services, safe deposit facilities, and brokerage services. In addition, the company offers international banking services comprising deposits, loans, letters of credit, foreign collections, funds transmitting, and foreign exchange services; correspondent banking activities, including check clearing, transfer of funds, fixed income security services, and securities custody and clearance services. Further, it offers trust, investment, agency, and custodial services for individual and corporate clients; capital market services that include sales and trading, new issue underwriting, money market trading, advisory, and securities safekeeping and clearance; and support for international business activities, including foreign exchange, letters of credit, export-import financing, and other related activities. Additionally, the company offers insurance and securities brokerage services; holding of securities for investment purposes; and investment management services for mutual funds, institutions, and individuals. It serves energy, manufacturing, services, construction, retail, telecommunications, healthcare, military, and transportation industries. The company was founded in 1868 and is headquartered in San Antonio, Texas.

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.