Financial Analysis: Cathay General Bancorp (NASDAQ:CATY) versus TriCo Bancshares (NASDAQ:TCBK)

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

Analyst Ratings

This is a summary of current recommendations and price targets for Cathay General Bancorp and TriCo Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cathay General Bancorp	1	3	1	0	2.00
TriCo Bancshares	0	2	4	1	2.86

Cathay General Bancorp presently has a consensus target price of $51.75, indicating a potential downside of 11.37%. TriCo Bancshares has a consensus target price of $54.60, indicating a potential upside of 7.71%. Given TriCo Bancshares’ stronger consensus rating and higher probable upside, analysts clearly believe TriCo Bancshares is more favorable than Cathay General Bancorp.

Volatility & Risk

Cathay General Bancorp has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, TriCo Bancshares has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Dividends

Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.6%. TriCo Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 2.8%. Cathay General Bancorp pays out 31.3% of its earnings in the form of a dividend. TriCo Bancshares pays out 36.5% 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 increased its dividend for 12 consecutive years. TriCo Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

75.0% of Cathay General Bancorp shares are held by institutional investors. Comparatively, 59.1% of TriCo Bancshares shares are held by institutional investors. 4.5% of Cathay General Bancorp shares are held by company insiders. Comparatively, 4.9% of TriCo Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Cathay General Bancorp and TriCo Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cathay General Bancorp	$1.38 billion	2.83	$315.12 million	$4.85	12.04
TriCo Bancshares	$538.91 million	3.00	$121.56 million	$3.95	12.83

Cathay General Bancorp has higher revenue and earnings than TriCo Bancshares. Cathay General 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.

Profitability

This table compares Cathay General Bancorp and TriCo Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cathay General Bancorp	23.79%	11.37%	1.38%
TriCo Bancshares	23.71%	9.87%	1.30%

About Cathay General Bancorp

Cathay General Bancorp operates as the holding company for Cathay Bank that offers various commercial banking products and services to individuals, professionals, and small to medium-sized businesses in the United States. The company offers various deposit products, including passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, and public funds deposits. It also provides loan products, such as commercial mortgage loans, commercial loans, small business administration loans, residential mortgage loans, real estate construction loans, and home equity lines of credit, as well as installment loans to individuals for household, and other consumer expenditures. In addition, the company offers trade financing, letter of credit, wire transfer, forward currency spot and forward contract, safe deposit, collection, automatic teller machine, Internet banking, investment, and other customary bank services, as well as securities and insurance products. Cathay General Bancorp was founded in 1962 and is headquartered in Los Angeles, California.

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.