Critical Comparison: Cathay General Bancorp (NASDAQ:CATY) and Red River Bancshares (NASDAQ:RRBI)

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

Insider & Institutional Ownership

75.0% of Cathay General Bancorp shares are owned by institutional investors. Comparatively, 27.6% of Red River Bancshares shares are owned by institutional investors. 4.5% of Cathay General Bancorp shares are owned by insiders. Comparatively, 16.6% of Red River Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Cathay General Bancorp and Red River Bancshares, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cathay General Bancorp	1	5	1	0	2.00
Red River Bancshares	0	3	0	1	2.50

Cathay General Bancorp presently has a consensus price target of $62.25, indicating a potential upside of 2.60%. Red River Bancshares has a consensus price target of $106.00, indicating a potential upside of 4.69%. Given Red River Bancshares’ stronger consensus rating and higher possible upside, analysts clearly believe Red River Bancshares is more favorable than Cathay General Bancorp.

Earnings and Valuation

This table compares Cathay General Bancorp and Red River Bancshares”s gross 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	2.92	$315.12 million	$5.12	11.85
Red River Bancshares	$169.85 million	3.92	$42.76 million	$6.95	14.57

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cathay General Bancorp	24.66%	11.71%	1.43%
Red River Bancshares	26.25%	12.47%	1.39%

Dividends

Cathay General Bancorp pays an annual dividend of $1.52 per share and has a dividend yield of 2.5%. Red River Bancshares pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. Cathay General Bancorp pays out 29.7% of its earnings in the form of a dividend. Red River Bancshares pays out 14.4% 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. Red River Bancshares has increased its dividend for 3 consecutive years.

Volatility and Risk

Cathay General Bancorp has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Red River Bancshares has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500.

Summary

Red River Bancshares beats Cathay General Bancorp on 11 of the 18 factors compared between the two stocks.

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 Red River Bancshares

Red River Bancshares, Inc. operates as a bank holding company for Red River Bank that provides banking products and services to commercial and retail customers in Louisiana. The company provides various deposit products, including checking, saving, money market accounts, and time deposits. It offers commercial real estate loans; one-to-four family mortgage loans and home equity lines of credit; construction and development loans; commercial and industrial loans; small business administration paycheck protection program loans; tax-exempt loans; consumer loans to individuals for personal, family, and household purposes, including secured and unsecured installment and term loans; home mortgage loans; and lines of credit and standby letters of credit. In addition, the company provides treasury management, private banking, and brokerage; investment advisory, financial planning, and a suite of retirement plans; debit and credit cards, direct deposits, cashier's checks, and wire transfer services; online banking services, including access to account balances, online transfers, online bill payment, and electronic delivery of customer statements; and banking services in person, through ATMs, drive-through facilities, night deposits, telephone, mail, mobile banking, and remote deposits. Red River Bancshares, Inc. was incorporated in 1998 and is headquartered in Alexandria, Louisiana.