Territorial Bancorp (NASDAQ:TBNK) and First Capital (NASDAQ:FCAP) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Volatility & Risk

Territorial Bancorp has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, First Capital has a beta of -0.19, indicating that its share price is 119% less volatile than the S&P 500.

Institutional & Insider Ownership

49.1% of Territorial Bancorp shares are held by institutional investors. Comparatively, 13.6% of First Capital shares are held by institutional investors. 10.8% of Territorial Bancorp shares are held by insiders. Comparatively, 4.5% of First Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Territorial Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 4.1%. First Capital pays an annual dividend of $0.96 per share and has a dividend yield of 2.0%. Territorial Bancorp pays out 39.3% of its earnings in the form of a dividend. Territorial Bancorp has raised its dividend for 7 consecutive years and First Capital has raised its dividend for 3 consecutive years. Territorial Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Territorial Bancorp and First Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Territorial Bancorp 0 1 1 0 2.50
First Capital 0 0 0 0 N/A

Territorial Bancorp presently has a consensus target price of $30.00, suggesting a potential upside of 33.04%. Given Territorial Bancorp’s higher probable upside, equities analysts clearly believe Territorial Bancorp is more favorable than First Capital.

Profitability

This table compares Territorial Bancorp and First Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Territorial Bancorp 24.58% 8.18% 0.96%
First Capital 25.81% 12.83% 1.50%

Earnings and Valuation

This table compares Territorial Bancorp and First Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Territorial Bancorp $83.40 million 2.57 $22.00 million $2.34 9.64
First Capital $38.98 million 4.18 $10.32 million N/A N/A

Territorial Bancorp has higher revenue and earnings than First Capital.

Summary

Territorial Bancorp beats First Capital on 9 of the 15 factors compared between the two stocks.

About Territorial Bancorp

Territorial Bancorp, Inc. operates as the bank holding company for Territorial Savings Bank, which provides financial services to individuals, families, and businesses in Hawaii. Its business consists primarily of accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in one- to four-family residential mortgage loans and investment securities. The firm operates through the following portfolio segments: Residential Mortgage; Construction, Commercial and Other Mortgage Loans; Home Equity Loans and Lines of Credit; and Consumer and Other. It also offers deposit accounts, including passbook and statement savings accounts, certificates of deposit, money market accounts, commercial, and regular checking accounts. The company was founded on November 3, 2008 and is headquartered in Honolulu, HI.

About First Capital

First Capital, Inc. operates as the bank holding company for First Harrison Bank that provides various banking services to individuals and business customers. The company offers a range of deposit instruments, including non-interest bearing checking accounts, negotiable order of withdrawal accounts, money market accounts, regular savings accounts, certificates of deposit, and retirement savings plans. It also provides real estate mortgage loans, such as fixed-rate and adjustable rate mortgage residential loans, construction loans for residential and commercial properties, and commercial real estate loans, as well as commercial business loans. In addition, the company originates mortgage loans for sale in the secondary market and sells non-deposit investment products; and offers various secured or guaranteed consumer loans comprising automobile and truck loans, home equity loans, home improvement loans, boat loans, mobile home loans, and loans secured by savings deposits, as well as unsecured consumer loans. It provides its products and services through 18 locations in Indiana and Kentucky. First Capital, Inc. was founded in 1891 and is headquartered in Corydon, Indiana.

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