Reviewing Commonwealth Business Bank (OTCMKTS:CBBI) & City (NASDAQ:CHCO)

City (NASDAQ:CHCO) and Commonwealth Business Bank (OTCMKTS:CBBI) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, earnings, profitability, risk and dividends.

Insider & Institutional Ownership

72.4% of City shares are held by institutional investors. 1.9% of City shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

City pays an annual dividend of $3.48 per share and has a dividend yield of 2.9%. Commonwealth Business Bank pays an annual dividend of $0.50 per share and has a dividend yield of 4.5%. City pays out 40.0% of its earnings in the form of a dividend. Commonwealth Business Bank pays out 27.8% 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. City has raised its dividend for 6 consecutive years. Commonwealth Business Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares City and Commonwealth Business Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City	32.33%	16.66%	1.93%
Commonwealth Business Bank	15.89%	N/A	N/A

Earnings & Valuation

This table compares City and Commonwealth Business Bank”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$297.42 million	5.80	$117.10 million	$8.70	13.67
Commonwealth Business Bank	$122.69 million	N/A	$22.43 million	$1.80	6.11

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

Risk and Volatility

City has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Commonwealth Business Bank has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for City and Commonwealth Business Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	5	1	0	2.17
Commonwealth Business Bank	0	0	0	0	0.00

City presently has a consensus price target of $133.25, indicating a potential upside of 12.05%. Given City’s stronger consensus rating and higher possible upside, equities research analysts plainly believe City is more favorable than Commonwealth Business Bank.

Summary

City beats Commonwealth Business Bank on 14 of the 16 factors compared between the two stocks.

About City

City Holding Company operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States. The company offers checking, savings, and money market accounts, as well as certificates of deposit and individual retirement accounts. It also provides commercial and industrial loans that consist of loans to corporate and other legal entity borrowers primarily in small to mid-size industrial and commercial companies; commercial real estate loans comprising commercial mortgages, which are secured by nonresidential and multi-family residential properties; residential real estate loans to consumers for the purchase or refinance of residence; first-priority home equity loans; home equity lines of credit; amortized home equity loans; consumer loans that are secured and unsecured by automobiles, boats, recreational vehicles, certificates of deposit, and other personal property; and demand deposit account overdrafts, as well as owner-occupied real estate and construction, land development, and lines of credit. In addition, the company offers mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government-insured mortgages, secondary marketing, and mortgage servicing. Further, it provides deposit services for commercial customers comprising treasury management, lockbox, and other cash management services; merchant credit card services; wealth management, trust, investment, and custodial services for commercial and individual customers; and corporate trust and institutional custody, financial and estate planning, and retirement plan services, as well as automated-teller-machine, interactive-teller-machine, mobile banking, interactive voice response systems, and credit and debit card services. City Holding Company was founded in 1957 and is headquartered in Charleston, West Virginia.

About Commonwealth Business Bank

CBB Bancorp, Inc. operates as the holding company for Commonwealth Business Bank that provides various commercial banking products and services to individuals and businesses in the United States. It offers checking, savings, money market, and certification of deposit accounts; SBA lending; business lines of credit; business term loans; business and commercial property loans; construction loans; and credit cards. The company also provides treasury management, and mobile and online banking services, as well as title and escrow services. In addition, it engages in investing activities; and offers trade finance services, including commercial letters of credit, standby letters of credit, and documentary collection services. The company offers its services through full-service and limited-service branches in Southern California, Dallas, Texas and Honolulu, and Hawaii; and loan production offices in the states of Colorado, Georgia, Texas, and Washington. CBB Bancorp, Inc. was founded in 2005 and is headquartered in Los Angeles, California.