Head to Head Comparison: Cathay General Bancorp (NASDAQ:CATY) & Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL)

Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) and Cathay General Bancorp (NASDAQ:CATY) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, earnings, risk, valuation and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations for Farmers & Merchants Bank of Long Beach and Cathay General Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bank of Long Beach	0	0	0	0	0.00
Cathay General Bancorp	0	3	2	0	2.40

Cathay General Bancorp has a consensus price target of $52.50, suggesting a potential upside of 3.75%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Cathay General Bancorp is more favorable than Farmers & Merchants Bank of Long Beach.

Profitability

This table compares Farmers & Merchants Bank of Long Beach and Cathay General Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bank of Long Beach	15.22%	4.89%	0.59%
Cathay General Bancorp	22.76%	10.89%	1.32%

Dividends

Farmers & Merchants Bank of Long Beach pays an annual dividend of $112.00 per share and has a dividend yield of 1.4%. Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 3.0%. Farmers & Merchants Bank of Long Beach pays out 20.8% of its earnings in the form of a dividend. Cathay General Bancorp pays out 33.5% 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.

Earnings & Valuation

This table compares Farmers & Merchants Bank of Long Beach and Cathay General Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bank of Long Beach	$449.19 million	2.21	$68.35 million	$538.20	15.38
Cathay General Bancorp	$817.89 million	4.14	$315.12 million	$4.54	11.15

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

Volatility & Risk

Farmers & Merchants Bank of Long Beach has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Insider and Institutional Ownership

7.6% of Farmers & Merchants Bank of Long Beach shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 12.8% of Farmers & Merchants Bank of Long Beach shares are held by insiders. Comparatively, 4.9% of Cathay General Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Cathay General Bancorp beats Farmers & Merchants Bank of Long Beach on 12 of the 16 factors compared between the two stocks.

About Farmers & Merchants Bank of Long Beach

Farmers & Merchants Bank of Long Beach provides various banking products and services to individuals, professionals, and small to medium-sized businesses in Los Angeles, Orange, and Santa Barbara Counties. It offers checking, savings, Christmas club savings, health savings, market rate savings, and money market accounts; demand and time deposits; certificates of deposit; and individual retirement account. The company also provides personal, home, commercial real estate, real estate and construction, and commercial business loans, as well as lines of credit; financing for residential loans comprising single-family and multifamily loans; and credit and debit cards. In addition, it offers account management, receivables and payables, and risk management services; commercial lending services; and faith-based and healthcare banking services, as well as online and mobile banking services. Farmers & Merchants Bank of Long Beach was founded in 1907 and is headquartered in Long Beach, California.

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.