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Cathay General Bancorp (CATY)
NASDAQ:CATY

Cathay General Bancorp (CATY) AI Stock Analysis

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Cathay General Bancorp

(NASDAQ:CATY)

69Neutral
Cathay General Bancorp has a strong financial foundation with solid revenue growth and a robust balance sheet, although profitability and cash flow generation need improvement. The stock's technical indicators show mixed trends with potential overbought conditions. The valuation appears reasonable, offering a good dividend yield. The earnings call presented a mixed outlook, with positive net interest margin developments but challenges in income and growth guidance due to economic uncertainties.
Positive Factors
Earnings and Profitability
NIM compression of 4 basis points was better than the estimated 6 basis points, with 2024 guidance reiterated.
Financial Flexibility
The company's strong capital position provides flexibility to reduce deposit costs and generate prudent growth in a lower rate environment.
Share Repurchases
Share repurchases are guided to $35 million per quarter, with a potential increase by $7.5 million, which is better than expected.
Negative Factors
Credit Quality
Credit quality weakened as nonperforming loans increased 5% to $111 million, with net-charge offs rising by $7 million in the second quarter.
Financial Performance
Higher than expected expenses, tax rate, and provision for loan losses resulted in a combined earnings reduction of $0.11 per share.
Loan Growth
Loan growth guidance for 2024 was lowered to -1% to 0% year-over-year, falling below previous expectations of 0%-2%.

Cathay General Bancorp (CATY) vs. S&P 500 (SPY)

Cathay General Bancorp Business Overview & Revenue Model

Company DescriptionCathay 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, traveler's check, safe deposit, night deposit, social security payment deposit, collection, bank-by-mail, drive-up and walk-up window, automatic teller machine, Internet banking, investment, and other customary bank services, as well as securities and insurance products. As of March 1, 2022, it operated 31 branches in Southern California, 16 branches in Northern California, 10 branches in New York, four branches in Washington, two branches in Illinois, and two branches in Texas, as well as one branch each in Maryland, Massachusetts, Nevada, and New Jersey, and Hong Kong; and a representative office each in Beijing, Taipei, and Shanghai. The company was founded in 1962 and is headquartered in Los Angeles, California.
How the Company Makes MoneyCathay General Bancorp generates revenue mainly through the interest income from its loan portfolio, which includes commercial, industrial, and real estate loans. The company also earns money from service charges and fees associated with deposit accounts, loan servicing, and other banking services. Non-interest income streams include wealth management fees, foreign exchange services, and gain on sale of loans. Cathay Bank benefits from its strategic location in Asian-American communities, providing tailored banking services that cater to this demographic, which strengthens its deposit base and loan origination. Additionally, the bank's international operations facilitate cross-border trade and finance activities, contributing to its revenue. Strategic partnerships with local businesses and community organizations also help in expanding its customer base and enhancing its service offerings.

Cathay General Bancorp Financial Statement Overview

Summary
Cathay General Bancorp shows strong revenue growth, but faces challenges in profitability and operational efficiency. The balance sheet is robust with low leverage and strong equity, but cash flow performance is weakened by reduced operating cash flow despite positive free cash flow.
Income Statement
72
Positive
Cathay General Bancorp demonstrates solid revenue growth over the years, with a notable increase from $784 million in 2023 to $1.33 billion in 2024. However, the net profit margin has decreased from 45.17% in 2023 to 21.42% in 2024, indicating a decline in profitability. The EBIT margin also dropped significantly from 68.47% in 2023 to 1.77% in 2024, suggesting operational challenges. Despite these issues, the overall revenue trajectory remains positive.
Balance Sheet
80
Positive
The balance sheet reflects a strong equity position with stockholders' equity increasing to $2.85 billion in 2024. The debt-to-equity ratio improved from 0.26 in 2023 to 0.04 in 2024, indicating reduced leverage and enhanced financial stability. The equity ratio stands at 12.34%, highlighting a stable capital structure despite the decrease in total assets.
Cash Flow
75
Positive
Operating cash flow decreased from $384 million in 2023 to $209 million in 2024, indicating reduced cash generation efficiency. However, free cash flow remained positive, and the company maintained strong free cash flow to net income ratios across the periods. The decline in operating cash flow suggests potential challenges in maintaining cash flow levels.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
729.72M784.06M790.51M652.36M594.93M
Gross Profit
1.33B784.06M790.51M652.36M594.93M
EBIT
23.70M537.06M590.12M381.84M253.97M
EBITDA
0.000.0027.11M42.49M30.58M
Net Income Common Stockholders
285.98M354.12M360.64M298.30M228.86M
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.70B828.80M2.63B3.58B2.46B
Total Assets
23.05B23.08B21.99B20.89B19.04B
Total Debt
119.14M709.72M659.25M192.97M326.33M
Net Debt
-38.03M535.73M463.81M58.83M187.72M
Total Liabilities
20.21B20.34B19.51B192.97M326.33M
Stockholders Equity
2.85B2.74B2.47B2.45B2.42B
Cash FlowFree Cash Flow
209.37M381.34M464.00M330.59M314.18M
Operating Cash Flow
209.37M384.74M467.39M334.32M319.95M
Investing Cash Flow
184.03M-1.48B-1.85B-859.92M-242.20M
Financing Cash Flow
-183.46M758.74M94.74M1.55B749.55M

Cathay General Bancorp Technical Analysis

Technical Analysis Sentiment
Positive
Last Price42.94
Price Trends
50DMA
42.39
Positive
100DMA
44.95
Negative
200DMA
44.66
Negative
Market Momentum
MACD
0.15
Negative
RSI
58.57
Neutral
STOCH
76.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CATY, the sentiment is Positive. The current price of 42.94 is above the 20-day moving average (MA) of 40.00, above the 50-day MA of 42.39, and below the 200-day MA of 44.66, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 58.57 is Neutral, neither overbought nor oversold. The STOCH value of 76.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CATY.

Cathay General Bancorp Risk Analysis

Cathay General Bancorp disclosed 45 risk factors in its most recent earnings report. Cathay General Bancorp reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Cathay General Bancorp Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
CBCBU
73
Outperform
$3.00B15.8010.92%3.32%14.34%13.06%
72
Outperform
$3.12B11.9810.25%1.15%5.14%
69
Neutral
$3.01B10.8410.07%3.23%2.76%-12.43%
68
Neutral
$2.77B9.6710.60%4.14%21.45%5.62%
68
Neutral
$2.91B19.853.38%4.88%17.57%-35.93%
FHFHB
66
Neutral
$2.90B12.499.11%4.53%-0.47%5.97%
64
Neutral
$12.65B9.748.04%17044.64%12.65%-5.11%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CATY
Cathay General Bancorp
42.94
7.60
21.51%
CBU
Community Bank System
56.85
12.37
27.81%
FULT
Fulton Financial
17.36
0.98
5.98%
WSBC
WesBanco
30.42
3.44
12.75%
WSFS
Wsfs Financial
53.30
7.76
17.04%
FHB
First Hawaiian
23.26
2.38
11.40%

Cathay General Bancorp Earnings Call Summary

Earnings Call Date:Apr 21, 2025
(Q1-2025)
|
% Change Since: 11.24%|
Next Earnings Date:Jul 28, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with several positive aspects such as an increase in net interest margin and deposit growth, but also significant challenges including a decrease in net income, reduced non-interest income, and increased tax rates. The revision of loan growth guidance due to economic uncertainties further dampens the outlook.
Q1-2025 Updates
Positive Updates
Net Interest Margin Increase
The net interest margin increased to 3.25% for Q1 2025 from 3.07% for Q4 2024, leading to an increase in 2025 NIM guidance to 3.35%.
Net Charge-Offs Decrease
Net charge-offs decreased significantly to $2 million in Q1 2025 compared to $16.3 million in Q4 2024.
Loan Portfolio Stability
The average loan-to-value of CRE loans remained at 49% with a decrease in non-accrual loans by $14.5 million to $154.6 million.
Deposit Growth
Total deposits increased by $131 million or 2.7% annualized during Q1 2025, with a rise in core deposits by $67 million.
Negative Updates
Decrease in Net Income
Net income decreased by 13.3% to $69.5 million in Q1 2025 compared to $80.2 million in Q4 2024.
Decrease in Non-Interest Income
Non-interest income decreased $4.3 million to $11.2 million in Q1 2025, primarily due to a $2.9 million mark-to-market loss on equity securities.
Effective Tax Rate Increase
The effective tax rate increased significantly to 19.82% in Q1 2025 from 7.57% in Q4 2024 due to no investment in solar tax credit funds.
Loan Growth Guidance Revision
Loan growth guidance was revised down to 1% to 4% from the previous 3% to 4% due to economic uncertainties and tariff impacts.
Company Guidance
During the first quarter of 2025, Cathay General Bancorp reported a net income of $69.5 million, reflecting a 13.3% decline from the previous quarter. The diluted earnings per share dropped by 12.5% to $0.98. The company completed its $125 million stock repurchase program by buying back 876,906 shares at an average price of $46.83 per share. Total gross loans slightly decreased by $23 million, or 0.5% annualized, with significant changes in various loan categories, including a $100 million drop in commercial loans and a $127 million increase in CRE loans. Despite economic uncertainties, the bank adjusted its loan growth guidance for 2025 to a range of 1% to 4%. The net interest margin rose to 3.25% from 3.07% in the previous quarter, prompting an upward revision of the 2025 NIM guidance to 3.35%. Non-interest income decreased by $4.3 million, while non-interest expenses rose by $0.5 million. The provision for credit loss increased to $15.5 million, largely due to one commercial client, raising the reserve to loan ratio to 0.91%. Total deposits grew by $131 million, with uninsured deposits at $8.5 billion, accounting for 42.7% of total deposits. The company's tier one leverage capital ratio increased slightly to 11.06%.

Cathay General Bancorp Corporate Events

Stock BuybackFinancial Disclosures
Cathay General Bancorp Reports Q1 2025 Financial Results
Neutral
Apr 21, 2025

On April 21, 2025, Cathay General Bancorp announced its unaudited financial results for the first quarter of 2025, reporting a net income of $69.5 million, or $0.98 per diluted share. The company experienced a decrease in net income compared to the previous quarter, with a notable increase in net interest margin to 3.25%. Despite a decrease in total loans, total deposits increased by $131.3 million. The company also completed a $125 million share repurchase program, repurchasing 876,906 shares at an average cost of $46.83 per share.

Spark’s Take on CATY Stock

According to Spark, TipRanks’ AI Analyst, CATY is a Outperform.

Cathay General Bancorp’s overall stock score reflects its strong financial stability and attractive valuation. However, challenges in profitability and cash flow generation, coupled with bearish market momentum, moderate the score. Positive earnings call insights provide some optimism for future growth, but key risks like declining deposits and increased nonaccrual loans remain.

To see Spark’s full report on CATY stock, click here.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.