Analyzing Bank of Hawaii (NYSE:BOH) & Cathay General Bancorp (NASDAQ:CATY)

Bank of Hawaii (NYSE:BOH) and Cathay General Bancorp (NASDAQ:CATY) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Dividends

Bank of Hawaii pays an annual dividend of $2.80 per share and has a dividend yield of 3.8%. Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. Bank of Hawaii pays out 56.6% of its earnings in the form of a dividend. Cathay General Bancorp pays out 31.3% 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. Bank of Hawaii has raised its dividend for 1 consecutive years. Bank of Hawaii is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Bank of Hawaii and Cathay General Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bank of Hawaii	$1.07 billion	2.76	$205.90 million	$4.95	14.99
Cathay General Bancorp	$1.38 billion	2.74	$315.12 million	$4.85	11.65

Cathay General Bancorp has higher revenue and earnings than Bank of Hawaii. Cathay General Bancorp is trading at a lower price-to-earnings ratio than Bank of Hawaii, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Bank of Hawaii and Cathay General Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank of Hawaii	20.46%	14.97%	0.92%
Cathay General Bancorp	23.79%	11.37%	1.38%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Bank of Hawaii and Cathay General Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank of Hawaii	0	4	3	0	2.43
Cathay General Bancorp	1	3	1	0	2.00

Bank of Hawaii currently has a consensus target price of $85.40, indicating a potential upside of 15.08%. Cathay General Bancorp has a consensus target price of $51.75, indicating a potential downside of 8.42%. Given Bank of Hawaii’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Bank of Hawaii is more favorable than Cathay General Bancorp.

Insider and Institutional Ownership

82.2% of Bank of Hawaii shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 2.0% of Bank of Hawaii shares are held by company insiders. Comparatively, 4.5% of Cathay General Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Bank of Hawaii has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500.

Summary

Bank of Hawaii beats Cathay General Bancorp on 10 of the 17 factors compared between the two stocks.

About Bank of Hawaii

Bank of Hawaii Corporation operates as the bank holding company for Bank of Hawaii that provides various financial products and services in Hawaii, Guam, and other Pacific Islands. It operates in three segments: Consumer Banking, Commercial Banking, and Treasury and Other. The Consumer Banking segment offers checking, savings, and time deposit accounts; residential mortgage loans, home equity lines of credit, automobile loans and leases, overdraft lines of credit, installment loans, small business loans and leases, and credit cards; private and international client banking, investment, credit, and trust services to individuals and families, as well as high-net-worth individuals; investment management; institutional investment advisory services to corporations, government entities, and foundations; and brokerage offerings, including equities, mutual funds, life insurance, and annuity products. The Commercial Banking segment provides corporate banking, commercial real estate loans, commercial lease financing, auto dealer financing, and deposit products. This segment also offers commercial lending and deposit products to middle-market and large companies, and government entities; commercial real estate mortgages to investors, developers, and builders; and international banking and merchant services. The Treasury and Other segment provides corporate asset and liability management services, including interest rate risk management and foreign exchange services. Bank of Hawaii Corporation was founded in 1897 and is headquartered in Honolulu, Hawaii.

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.