United Bancorp (NASDAQ:UBCP) vs. Cathay General Bancorp (NASDAQ:CATY) Critical Review

United Bancorp (NASDAQ:UBCP) and Cathay General Bancorp (NASDAQ:CATY) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
United Bancorp	18.28%	12.56%	0.96%
Cathay General Bancorp	20.57%	11.30%	1.35%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Bancorp	$40.90 million	1.79	$8.95 million	$1.38	9.14
Cathay General Bancorp	$1.31 billion	2.80	$354.12 million	$3.97	12.97

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

Analyst Recommendations

This is a summary of recent ratings for United Bancorp and Cathay General Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Bancorp	0	0	0	0	0.00
Cathay General Bancorp	1	2	1	0	2.00

Cathay General Bancorp has a consensus target price of $44.00, suggesting a potential downside of 14.58%. Given Cathay General Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Cathay General Bancorp is more favorable than United Bancorp.

Institutional & Insider Ownership

15.4% of United Bancorp shares are held by institutional investors. Comparatively, 75.0% of Cathay General Bancorp shares are held by institutional investors. 11.7% of United Bancorp shares are held by insiders. Comparatively, 4.8% of Cathay General Bancorp 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.

Risk & Volatility

United Bancorp has a beta of 0.41, suggesting that its share price is 59% less volatile than the S&P 500. Comparatively, Cathay General Bancorp has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Dividends

United Bancorp pays an annual dividend of $0.71 per share and has a dividend yield of 5.6%. Cathay General Bancorp pays an annual dividend of $1.36 per share and has a dividend yield of 2.6%. United Bancorp pays out 51.4% of its earnings in the form of a dividend. Cathay General Bancorp pays out 34.3% 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. United Bancorp has increased its dividend for 12 consecutive years. United Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Cathay General Bancorp beats United Bancorp on 13 of the 17 factors compared between the two stocks.

About United Bancorp

United Bancorp, Inc. operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio. The company provides range of banking and financial services, which includes accepting demand, savings, and time deposits. It also offers commercial, real estate and consumer loans. United Bancorp, Inc. was founded in 1902 and is headquartered in Martins Ferry, Ohio.

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.