QNB (OTCMKTS:QNBC) and Bank of Hawaii (NYSE:BOH) Critical Analysis

QNB (OTCMKTS:QNBC) and Bank of Hawaii (NYSE:BOH) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Risk and Volatility

QNB has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, Bank of Hawaii has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Institutional & Insider Ownership

0.7% of QNB shares are held by institutional investors. Comparatively, 82.2% of Bank of Hawaii shares are held by institutional investors. 16.0% of QNB shares are held by insiders. Comparatively, 2.1% of Bank of Hawaii 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
QNB	10.28%	9.61%	0.50%
Bank of Hawaii	14.54%	12.25%	0.64%

Dividends

QNB pays an annual dividend of $1.48 per share and has a dividend yield of 5.1%. Bank of Hawaii pays an annual dividend of $2.80 per share and has a dividend yield of 4.5%. QNB pays out 67.6% of its earnings in the form of a dividend. Bank of Hawaii pays out 72.2% 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. QNB is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for QNB and Bank of Hawaii, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
QNB	0	0	0	0	N/A
Bank of Hawaii	2	3	0	0	1.60

Bank of Hawaii has a consensus target price of $60.40, indicating a potential downside of 3.88%. Given Bank of Hawaii’s higher possible upside, analysts plainly believe Bank of Hawaii is more favorable than QNB.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
QNB	$73.92 million	1.46	$9.48 million	$2.19	13.37
Bank of Hawaii	$635.91 million	3.92	$171.20 million	$3.88	16.20

Bank of Hawaii has higher revenue and earnings than QNB. QNB 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.

Summary

Bank of Hawaii beats QNB on 11 of the 14 factors compared between the two stocks.

About QNB

QNB Corp. operates as the bank holding company for QNB Bank that engages in the provision of commercial and retail banking products, and retail brokerage services. It offers various deposit products, which include demand and savings accounts, such as money market, interest-bearing demand, club, traditional statement savings, and online savings accounts; and time deposits comprising certificates of deposit and individual retirement accounts. The company also provides commercial and industrial loans, commercial and residential real estate loans, construction and land development loans, indirect lease financing, 1-4 family residential mortgage loans, home equity loans and lines of credit, and consumer loans. In addition, it offers retail brokerage and advisory services; credit cards and insurance products; merchant services; ATM and debit card services; and internet and mobile-banking, electronic bill pay, and remote deposit capture services. The company serves other community banks, thrift institutions, credit unions and other non-bank financial organizations, such as mutual fund companies, insurance companies, and brokerage companies. QNB Corp. was founded in 1877 and is based in Quakertown, Pennsylvania.

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.