Cathay General Bancorp (CATY) AI Stock Analysis

• Market Cap: $3.00B
• Dividend Yield: 3.19%
• Average Volume (3M): 434.20K
• Price to Earnings (P/E): 10.8
• Beta (1Y): 1.07
• Revenue Growth: 8.05%
• EPS Growth: -18.64%
• Country: US
• Employees: 1,266
• Sector: Financial
• Sector Strength: 82
• Industry: Banks - Regional
• EPS (TTM): 3.96
• Shares Outstanding: 70,285,290
• 10 Day Avg. Volume: 618,397
• 30 Day Avg. Volume: 434,198
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 4.39
• Price to Cash Flow (P/CF): 8.80
• P/FCF Ratio: 3.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $52.50
• Price Target Upside: 23.15% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

Cathay General Bancorp's robust financial performance, marked by strong revenue growth and a solid balance sheet, is tempered by challenges in profitability and cash flow generation. Technical indicators suggest a bearish trend, while valuation metrics indicate the stock is fairly priced. The earnings call highlights potential risks with deposit decreases and rising nonaccrual loans, though strong capital ratios provide some reassurance.

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 Business Overview & Revenue Model

Company Description

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, 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 Money

Cathay 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

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

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

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 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
729.72M	784.06M	790.51M	652.36M	594.93M
	Gross Profit
1.33B	784.06M	790.51M	652.36M	594.93M
	EBIT
23.70M	537.06M	590.12M	381.84M	253.97M
	EBITDA
0.00	0.00	27.11M	42.49M	30.58M
	Net Income Common Stockholders
285.98M	354.12M	360.64M	298.30M	228.86M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.70B	828.80M	2.63B	3.58B	2.46B
	Total Assets
23.05B	23.08B	21.99B	20.89B	19.04B
	Total Debt
119.14M	709.72M	659.25M	192.97M	326.33M
	Net Debt
-38.03M	535.73M	463.81M	58.83M	187.72M
	Total Liabilities
20.21B	20.34B	19.51B	192.97M	326.33M
	Stockholders Equity
2.85B	2.74B	2.47B	2.45B	2.42B
Cash Flow		Free Cash Flow
209.37M	381.34M	464.00M	330.59M	314.18M
	Operating Cash Flow
209.37M	384.74M	467.39M	334.32M	319.95M
	Investing Cash Flow
184.03M	-1.48B	-1.85B	-859.92M	-242.20M
	Financing Cash Flow
-183.46M	758.74M	94.74M	1.55B	749.55M

Cathay General Bancorp Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 42.63
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CATY, the sentiment is Negative. The current price of 42.63 is below the 20-day moving average (MA) of 43.81, below the 50-day MA of 45.53, and below the 200-day MA of 44.19, indicating a bearish trend. The MACD of -0.66 indicates Negative momentum. The RSI at 37.86 is Neutral, neither overbought nor oversold. The STOCH value of 36.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CATY.

Cathay General Bancorp Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EWBC	72 Outperform	$12.33B	10.70	15.89%	2.53%	13.84%	2.04%
HAFC	71 Outperform	$681.83M	11.02	8.60%	4.52%	8.33%	-21.76%
CATY	68 Neutral	$3.00B	10.78	10.25%	3.19%	8.05%	-18.64%
COLB	68 Neutral	$5.18B	9.70	10.55%	5.82%	7.84%	54.79%
Sector *	64 Neutral	$14.25B	10.26	8.97%	4.33%	16.33%	-11.91%
CVBF	61 Neutral	$2.58B	12.84	9.35%	4.33%	2.84%	-9.63%
BANC	55 Neutral	$2.39B	27.40	3.68%	2.82%	345.02%	―

Cathay General Bancorp Corporate Events

Cathay General Bancorp Reports Strong 2024 Financial Results

On January 22, 2025, Cathay General Bancorp announced its unaudited financial results for the fourth quarter and full year 2024. The company achieved a net income of $286.0 million for the year and $80.2 million for the fourth quarter. An increase in net interest margin and a rise in total deposits marked the period, though total loans decreased. These results reflect operational adjustments and strategic repurchases, impacting its financial positioning.

Cathay General Bancorp Announces Leadership Transition Changes

Cathay General Bancorp announced that Kim R. Bingham will retire as Chief Risk Officer of Cathay Bank on January 21, 2025. He will continue to serve as Executive Vice President, Special Advisor for a transition period ending March 31, 2025. Diana Deen will succeed Mr. Bingham as Executive Vice President and Chief Risk Officer, effective January 21, 2025, bringing over 20 years of experience in banking, particularly in risk management and compliance. Her previous roles include leadership positions at Bank of the West, Wells Fargo, and JPMorgan Chase.