Critical Analysis: Colony Bankcorp (NYSE:CBAN) and City (NASDAQ:CHCO)

City (NASDAQ:CHCO) and Colony Bankcorp (NYSE:CBAN) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings for City and Colony Bankcorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
City	0	5	1	0	2.17
Colony Bankcorp	0	1	1	0	2.50

City currently has a consensus target price of $134.50, indicating a potential upside of 6.32%. Given City’s higher possible upside, analysts plainly believe City is more favorable than Colony Bankcorp.

Volatility & Risk

City has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500. Comparatively, Colony Bankcorp has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500.

Earnings & Valuation

This table compares City and Colony Bankcorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
City	$398.98 million	4.57	$130.49 million	$8.94	14.15
Colony Bankcorp	$190.23 million	2.30	$28.25 million	$1.59	12.93

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

Insider and Institutional Ownership

72.4% of City shares are owned by institutional investors. Comparatively, 50.4% of Colony Bankcorp shares are owned by institutional investors. 1.9% of City shares are owned by insiders. Comparatively, 6.6% of Colony Bankcorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock 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 2.8%. Colony Bankcorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.3%. City pays out 38.9% of its earnings in the form of a dividend. Colony Bankcorp pays out 30.2% 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. City has increased its dividend for 6 consecutive years. City is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares City and Colony Bankcorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
City	32.56%	16.61%	1.95%
Colony Bankcorp	14.85%	10.78%	1.01%

Summary

City beats Colony Bankcorp on 12 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 Colony Bankcorp

Colony Bankcorp, Inc. operates as the bank holding company for Colony Bank that provides various banking products and services to commercial and consumer customers. The company offers various deposit products, including demand, savings, and time deposits. It also provides loans to small and medium-sized businesses; residential and commercial construction, and land development loans; commercial real estate loans; commercial loans; agri-business and production loans; residential mortgage loans; home equity loans; and consumer loans. In addition, the company offers internet banking services, electronic bill payment services, safe deposit box rentals, telephone banking, credit and debit card services, and remote depository products, as well as access to a network of ATMs. As of January 20, 2022, it operated 39 locations throughout Georgia. The company was founded in 1975 and is headquartered in Fitzgerald, Georgia.