Wednesday, January 26, 2011

Cathay General (NASDAQ:CATY) Jumps, EPS Estimates Raised

Shares of Cathay General Bancorp (NASDAQ:CATY) jumped as the company reported fourth-quarter earnings that exceeded expectations.

FBR says, "Overall, 4Q results were generally better than anticipated, accentuated by greater-than-expected NIM expansion and lower credit costs. Management's guidance for NIM exceeds what is baked into Street assumptions for 2011 and 2012, albeit benefit to net interest income will be moderated by a smaller balance sheet. Reserve releases will also continue to drive earnings visibility, especially as management addresses the company's watch list loans. This should pave the way to lift the memorandum of understanding (MOU) that CATY is under as well as facilitate the repayment of TARP (likely in early 2012). We are increasing our respective FY11 and FY12 core EPS estimates to $1.05 (from $0.85) and $1.65 (from $1.40) to reflect higher net interest margin and lower provision expense assumptions."

FBR Capital maintains a "Market Perform" rating on Cathay General Bancorp (CATY), which closed Tuesday at $17.49, gaining $1.28, or 7.90 percent. FBR raised their price target on Cathay from $15 to $17.

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