Cathay General Bancorp vice chairman sells $903k in stock
In a recent transaction, Peter Wu, Vice Chairman of Cathay General Bancorp (NASDAQ:), sold 20,000 shares of the company’s stock at an average price of $45.1862, resulting in a total sale value of approximately $903,724.
The sale, which took place on July 26, 2024, was reported in a Form 4 filing with the Securities and Exchange Commission. Following the transaction, Wu’s direct holdings in Cathay General Bancorp decreased to zero, while indirect holdings through entities such as PACJU, LLC and The Wu Family Trust amounted to 396,901 shares.
The shift in ownership structure was partially due to a transfer of 2,412 shares of common stock from Wu’s direct ownership to The Wu Family Trust as indirect ownership, which occurred on May 9, 2024. This transfer was made without any payment of consideration, as noted in the footnotes of the filing.
Investors keep a close eye on insider transactions such as these, as they can provide insights into the executives’ perspectives on the company’s current valuation and future prospects. Peter Wu’s role as Vice Chairman gives his trading activities particular significance in the eyes of the market.
Cathay General Bancorp, headquartered in Los Angeles, California, operates as a state commercial bank and is incorporated in Delaware. The company’s common stock is publicly traded on the NASDAQ under the ticker symbol CATY.
In other recent news, Cathay General Bancorp has experienced a decrease in earnings, with net income dropping by 6.4% to $66.8 million, and diluted earnings per share falling by 6.1% to $0.92 in the second quarter. Truist Securities adjusted its outlook on Cathay General Bancorp, raising the price target to $45 from $38, citing the company’s recent financial performance and revised Core Earnings Per Share estimates for 2024 and 2025. Truist’s revised Core EPS forecasts now stand at $4.20 for 2024 and $3.95 for 2025, an increase of 4% and 2% respectively.
These changes are primarily attributed to an anticipated higher Net Interest Margin, reduced expenses projected for 2025, and a lower tax rate expected in the second half of 2024. Despite a decrease in total gross loans and deposits, Cathay General Bancorp revised its loan growth outlook downward, expecting commercial real estate to be the main growth driver in a challenging economic environment. The company has no current plans for mergers and acquisitions and anticipates deposit growth to range between 3% and 4%.
Analysts from Truist Securities expect the company’s net charge-offs to remain manageable moving forward, despite a notable increase in classified loans in the recent quarter. The new price target of $45 is based on 11.5 times the projected EPS for 2025, reflecting the firm’s updated expectations following Cathay General Bancorp’s recent financial performance. Despite decreased earnings and loan growth expectations, Cathay General Bancorp maintains a cautious but stable outlook for its financial trajectory.
InvestingPro Insights
In light of the recent insider transaction by Vice Chairman Peter Wu at Cathay General Bancorp, investors might be keen on understanding the company’s financial health and performance metrics. According to InvestingPro data, Cathay General Bancorp currently boasts a market capitalization of $3.18 billion and maintains a price-to-earnings (P/E) ratio of 10.55, which slightly increased to 10.75 over the last twelve months as of Q2 2024. Despite challenges in revenue growth, which saw a decrease of 9.45% over the same period, the company has demonstrated a robust operating income margin of 62.11%.
InvestingPro Tips highlight several key points that may be of interest to investors analyzing the implications of Wu’s stock sale. Notably, Cathay General Bancorp has a high shareholder yield, which is a positive sign for investors looking for returns. Additionally, the company has maintained dividend payments for an impressive 34 consecutive years, with a current dividend yield of 3.09%. This consistency in rewarding shareholders may be a reassuring factor amidst the changes in insider ownership.
On the performance front, Cathay General Bancorp has shown a strong return over the last month, with a 16.62% increase in its stock price, and an even more impressive three-month price total return of 27.76%. This could indicate a positive market sentiment and a potentially undervalued stock price, as the InvestingPro Fair Value estimate stands at $53.93, above the current price of $45.24.
For those looking to delve deeper into Cathay General Bancorp’s financials and future outlook, InvestingPro offers a comprehensive list of additional tips. It’s worth noting that 5 analysts have revised their earnings upwards for the upcoming period, and while the company is expected to remain profitable this year, analysts predict a drop in net income. To access these insights and more, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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