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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on CATY

Cathay General Bancorp's recent performance was driven by several positive factors. The company's Q1 2025 earnings conference call highlighted its strong loan growth, with a 10% increase in average loans outstanding year-over-year. Additionally, Cathay Bank's announcement of the 48th Annual Charity Golf Tournament demonstrates its commitment to community involvement and corporate social responsibility. Furthermore, the company's recent share buyback authorization, announced in June 2025, will help reduce outstanding shares and increase earnings per share. The declaration of a $0.34 per share dividend in May 2025 also indicates the company's confidence in its financial position and commitment to returning value to shareholders.

1.c. Company Highlights

2. Cathay General Bancorp Reports Solid Q2 2025 Earnings

Cathay General Bancorp reported a net income of $77.4 million for Q2 2025, an 11.4% increase from $69.5 million in Q1 2025. Diluted earnings per share increased 12.2% to $1.10 for Q2 2025, aligning with analysts' estimates. The company's net interest margin increased from 3.25% for Q1 2025 to 3.27% for Q2 2025, a positive sign for the company's profitability. Total gross loans increased $432 million or 8.9% annualized, driven by increases in commercial loans, commercial real estate loans, and residential loans. The company revised its 2025 loan growth guidance to 3% to 4% from 1% to 4%.

Publication Date: Jul -24

📋 Highlights
  • Earnings Growth: Cathay General Bancorp reported a net income of $77.4 million for Q2 2025, an 11.4% increase from $69.5 million in Q1 2025.
  • Share Repurchase: The company repurchased 804,179 shares of its common stock at an average cost of $44.22 per share for $35.6 million during Q2 2025.
  • Loan Growth: Total gross loans increased $432 million or 8.9% annualized, driven by increases in commercial loans, commercial real estate loans, and residential loans.
  • Net Interest Margin: The net interest margin increased from 3.25% for Q1 2025 to 3.27% for Q2 2025.

Financial Performance and Guidance

The company's noninterest income increased $4.2 million to $15.4 million, primarily due to a change in mark-to-market unrealized loss in equity securities and higher foreign exchange income and derivative fee income. Noninterest expense increased by $3.4 million or 4% to $89.1 million. The effective tax rate for Q2 2025 was 19.56%, and the company updated its guidance for the effective tax rate to between 18.5% to 19% from the previous guidance between 19.5% to 20.5%. The tax credit amortization expectations for 3Q and 4Q are about $11 million per quarter.

Capital Management and Valuation

The company's Tier 1 leverage capital ratio increased to 11.07% as of June 30, 2025. The allowance for credit losses (ACL) decreased 2 basis points quarter-over-quarter. The company had $12.7 million in net charge-offs in Q2 2025. With a Price-to-Tangible Book Value (P/TBV) of 1.23 and a Dividend Yield of 2.8%, the stock appears to be reasonably valued. According to a statement from the company's management, "We continue to focus on maintaining a strong capital position and returning value to our shareholders through dividends and share repurchases." The P/E Ratio of 11.53 and P/B Ratio of 1.18 also suggest that the stock may be attractively valued.

Asset Quality and Liquidity

The company's classified loans increased to $432 million from $380 million for Q1 2025 due to the downgrade of a large loan relationship to substandard. Total deposits increased by $189 million or 3.8% annualized during Q2 2025. Uninsured deposits were $8.7 billion, or 43.3% of total deposits, as of June 30, 2025. The company has an unused borrowing capacity of over $100% of uninsured and uncollateralized deposits, indicating a strong liquidity position.

Outlook and Estimates

Analysts estimate next year's revenue growth at 6.6%. With a solid financial performance and a reasonable valuation, Cathay General Bancorp appears to be a stable investment opportunity in the banking sector. The stock's Free Cash Flow Yield of 9.83% and ROE of 10.31% also suggest that the company is generating strong returns for its shareholders.

3. NewsRoom

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Cathay General Bancorp: Still Cheap Amid Ongoing NIM Expansion

Dec -04

Source: seekingalpha.com

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Critical Comparison: Glacier Bancorp (NYSE:GBCI) and Cathay General Bancorp (NASDAQ:CATY)

Dec -02

Source: defenseworld.net

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Cathay General Bancorp Declares $0.34 Per Share Dividend

Nov -21

Source: businesswire.com

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Cathay Bank Participates in CFA Institute Research Challenge

Nov -10

Source: businesswire.com

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Cathay General Bancorp: Time To Get A Little Bullish (Upgrade)

Nov -04

Source: seekingalpha.com

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Cathay General: Earnings Outlook Remains Upbeat; Upgrading To Buy

Oct -26

Source: seekingalpha.com

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First National of Nebraska (OTCMKTS:FINN) versus Cathay General Bancorp (NASDAQ:CATY) Financial Analysis

Oct -22

Source: defenseworld.net

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Cathay General Bancorp (CATY) Q3 2025 Earnings Call Transcript

Oct -22

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.90%)

6. Segments

Banking

Expected Growth: 7.2%

The banking segment is expected to grow at a rate slightly above the global revenue growth hypothesis of 6.9% due to its diversified product offerings and strong customer relationships. The segment's focus on customer service and community involvement is likely to drive growth, as is the overall recovery in the economy. Additionally, the segment's ability to adapt to changing market conditions will be crucial in maintaining its competitive edge. The expected growth rate reflects a positive outlook for the banking industry.

7. Detailed Products

Commercial Banking

Provides financial solutions to small and medium-sized businesses, including loans, lines of credit, and cash management services.

Consumer Banking

Offers personal banking services, including checking and savings accounts, credit cards, and personal loans.

Mortgage Lending

Provides residential and commercial mortgage loans to individuals and businesses.

Wealth Management

Offers investment and wealth management services, including financial planning, investment management, and trust services.

International Banking

Provides international banking services, including trade finance, foreign exchange, and correspondent banking.

8. Cathay General Bancorp's Porter Forces

Forces Ranking

Threat Of Substitutes

Cathay General Bancorp operates in a highly competitive industry, and customers have various alternatives for their banking needs. However, the company's strong brand recognition and extensive branch network help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Cathay General Bancorp's customers are primarily individuals and small businesses, which have limited bargaining power. The company's diverse customer base and lack of concentration in a single industry also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Cathay General Bancorp's suppliers are primarily technology and service providers, which have limited bargaining power. The company's scale and diversified supplier base also reduce the bargaining power of suppliers.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and significant capital requirements. While fintech companies are increasing competition, Cathay General Bancorp's established brand and extensive branch network provide a competitive advantage.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. Cathay General Bancorp faces intense competition from larger banks and fintech companies, which can lead to pricing pressure and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.04%
Debt Cost 5.22%
Equity Weight 79.96%
Equity Cost 9.55%
WACC 8.68%
Leverage 25.06%

11. Quality Control: Cathay General Bancorp passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Bank OZK

A-Score: 7.5/10

Value: 7.7

Growth: 8.3

Quality: 8.0

Yield: 7.0

Momentum: 7.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Popular

A-Score: 6.9/10

Value: 6.3

Growth: 5.9

Quality: 7.0

Yield: 6.0

Momentum: 8.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
First Bank

A-Score: 6.9/10

Value: 6.5

Growth: 6.6

Quality: 8.0

Yield: 7.0

Momentum: 5.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Cathay Bank

A-Score: 6.6/10

Value: 6.3

Growth: 6.1

Quality: 7.4

Yield: 6.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Fulton Financial

A-Score: 6.5/10

Value: 6.1

Growth: 6.3

Quality: 6.0

Yield: 8.0

Momentum: 5.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Citizens Financial Group

A-Score: 6.5/10

Value: 5.8

Growth: 5.2

Quality: 6.4

Yield: 7.0

Momentum: 7.5

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

49.86$

Current Price

49.86$

Potential

-0.00%

Expected Cash-Flows