Critical Analysis: Kentucky Bancshares (OTCMKTS:KTYB) and Customers Bancorp (OTCMKTS:CUBI)

Kentucky Bancshares (OTCMKTS:KTYB) and Customers Bancorp (NYSE:CUBI) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Volatility and Risk

Kentucky Bancshares has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Customers Bancorp has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Profitability

This table compares Kentucky Bancshares and Customers Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kentucky Bancshares 21.41% 11.15% 1.16%
Customers Bancorp 14.56% 10.53% 0.74%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Kentucky Bancshares and Customers Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kentucky Bancshares 0 0 0 0 N/A
Customers Bancorp 0 1 2 0 2.67

Customers Bancorp has a consensus target price of $34.00, indicating a potential upside of 53.50%. Given Customers Bancorp’s higher possible upside, analysts clearly believe Customers Bancorp is more favorable than Kentucky Bancshares.

Earnings and Valuation

This table compares Kentucky Bancshares and Customers Bancorp’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kentucky Bancshares $55.77 million 2.55 $12.43 million N/A N/A
Customers Bancorp $544.68 million 1.27 $79.33 million $2.25 9.84

Customers Bancorp has higher revenue and earnings than Kentucky Bancshares.

Insider and Institutional Ownership

2.9% of Kentucky Bancshares shares are held by institutional investors. Comparatively, 80.1% of Customers Bancorp shares are held by institutional investors. 15.0% of Kentucky Bancshares shares are held by company insiders. Comparatively, 9.5% of Customers Bancorp shares are held 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.

About Kentucky Bancshares

Kentucky Bancshares, Inc. operates as a bank holding company for Kentucky Bank that provides commercial and consumer banking products and services. It accepts various deposit products, including checking, savings, and money market accounts; and certificates of deposit, safe deposits, interest and noninterest bearing deposits, and time deposits. The company also offers commercial, agricultural, and real estate loans to small-to-medium-sized industrial, service, and agricultural businesses; and residential mortgages, installments, and other loans to individual and other non-commercial customers. In addition, it provides credit cards and other consumer-oriented financial services; brokerage services, annuities, life and long term care insurance, personal trust, and agency services; and Internet banking services, such as bill payment. The company has operations in Bourbon, Clark, Elliott, Fayette, Harrison, Jessamine, Madison, Rowan, Scott, Woodford, and other counties in Kentucky. Kentucky Bancshares, Inc. was founded in 1851 and is headquartered in Paris, Kentucky.

About Customers Bancorp

Customers Bancorp, Inc. operates as the bank holding company for Customers Bank that provides financial products and services to small and middle market businesses, not-for-profits, and consumers. The company operates in two segments, Customers Bank Business Banking and BankMobile. The company accepts various deposit products, such as checking, savings, money market deposit, time deposit, and individual retirement accounts, as well as certificates of deposit. It also provides commercial and industrial lending services; small business administration loans; multi-family and commercial real estate loans; commercial loans to mortgage companies; equipment financing services; and home equity and residential mortgage loans. In addition, the company offers private banking services; mobile phone banking, Internet banking, wire transfers, electronic bill payment, lock box, remote deposit capture, courier, merchant processing, cash vault, controlled disbursements, and positive pay services; and cash management services, such as account reconciliation, collections, and sweep accounts. It operates 13 full-service branches, as well as limited purpose offices in Boston, Massachusetts; Providence, Rhode Island; Portsmouth, New Hampshire; Manhattan and Melville, New York; Philadelphia, Pennsylvania; Washington D.C.; and Chicago, Illinois. Customers Bancorp, Inc. was founded in 1994 and is headquartered in Wyomissing, Pennsylvania.

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