Critical Contrast: East West Bancorp (NASDAQ:EWBC) versus TriCo Bancshares (NASDAQ:TCBK)

TriCo Bancshares (NASDAQ:TCBK) and East West Bancorp (NASDAQ:EWBC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, dividends, risk and profitability.

Analyst Ratings

This is a summary of recent ratings and recommmendations for TriCo Bancshares and East West Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TriCo Bancshares	0	4	3	0	2.43
East West Bancorp	1	4	11	0	2.63

TriCo Bancshares presently has a consensus target price of $48.60, indicating a potential upside of 1.36%. East West Bancorp has a consensus target price of $126.08, indicating a potential upside of 8.24%. Given East West Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe East West Bancorp is more favorable than TriCo Bancshares.

Dividends

TriCo Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 3.0%. East West Bancorp pays an annual dividend of $2.40 per share and has a dividend yield of 2.1%. TriCo Bancshares pays out 40.4% of its earnings in the form of a dividend. East West Bancorp pays out 26.5% 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. TriCo Bancshares has raised its dividend for 12 consecutive years and East West Bancorp has raised its dividend for 8 consecutive years. TriCo Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares TriCo Bancshares and East West Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TriCo Bancshares	$531.04 million	2.94	$114.87 million	$3.56	13.47
East West Bancorp	$4.53 billion	3.54	$1.17 billion	$9.07	12.84

East West Bancorp has higher revenue and earnings than TriCo Bancshares. East West Bancorp is trading at a lower price-to-earnings ratio than TriCo Bancshares, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

TriCo Bancshares has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, East West Bancorp has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Insider & Institutional Ownership

59.1% of TriCo Bancshares shares are owned by institutional investors. Comparatively, 89.5% of East West Bancorp shares are owned by institutional investors. 4.8% of TriCo Bancshares shares are owned by company insiders. Comparatively, 1.0% of East West Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares TriCo Bancshares and East West Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TriCo Bancshares	21.87%	9.27%	1.19%
East West Bancorp	27.16%	15.55%	1.63%

Summary

East West Bancorp beats TriCo Bancshares on 13 of the 17 factors compared between the two stocks.

About TriCo Bancshares

TriCo Bancshares operates as a bank holding company for Tri Counties Bank that provides commercial banking services to individual and corporate customers. The company accepts demand, savings, and time deposits. It also provides small business loans; real estate mortgage loans, such as residential and commercial loans; consumer loans; mortgage, auto, other vehicle, and personal loans; commercial loans, including agricultural loans; and real estate construction loans. In addition, the company offers treasury management services; credit and debit cards; and other customary banking services, including safe deposit boxes; and independent financial and broker-dealer services. Further, it provides checking, saving, and money market accounts, as well as individual retirement accounts; equipment financing; certificate of deposit account registry service; certificated of deposit; and IntraFi cash service. TriCo Bancshares was founded in 1975 and is headquartered in Chico, California.

About East West Bancorp

East West Bancorp, Inc. operates as the bank holding company for East West Bank that provides a range of personal and commercial banking services to businesses and individuals in the United States. The company operates through three segments: Consumer and Business Banking, Commercial Banking, and Other. It accepts various deposit products, such as personal and business checking and savings accounts, money market, and time deposits. The company’s loan products include mortgage and home equity, commercial and residential real estate, working capital lines of credit, construction finance, trade finance, letters of credit, commercial business, affordable housing loans, asset-based lending, asset-backed finance, project finance, loan syndication, and equipment financing, as well as financing services for clients to facilitate their business transactions between the United States and Asia. It also provides various wealth management, treasury management, foreign exchange, and interest rate and commodity risk hedging services; and mobile and online banking services. The company was founded in 1973 and is headquartered in Pasadena, California.