Cathay General shares jump on results, lower NPAs

By Supantha Mukherjee

BANGALORE (Reuters) - Shares of Cathay General Bancorp (CATY.O: Quote, Profile, Research) rose as much as 19 percent on Friday, a day after the company posted strong quarterly results amid a turmoil in the banking sector, and reported a drop in non-performing assets.

The Los Angeles-based company has lesser exposure to land and residential construction loans and a better loan-workout staff than some of the other competitors in the area, FTN Midwest Securities analyst Brett Rabatin said.

On Thursday, Cathay General, which competes with companies like UCBH Holdings Inc (UCBH.O: Quote, Profile, Research), Nara Bancorp Inc (NARA.O: Quote, Profile, Research) and East West Bancorp Inc (EWBC.O: Quote, Profile, Research), said its total non-performing assets fell to $69.9 million at March 31 from $83.7 million at December 31.

It was a tough quarter for many California banks, and it is positive that Cathay had lower non-performing assets, Rabatin said, adding charge-offs were relatively restrained and credit metrics were solid versus expectations.

Rabatin has a "neutral" rating on the company's stock, which was one of the top gainers on Friday on Nasdaq.

Cathay General, the first Chinese-American bank in Southern California, reported first-quarter earnings of 55 cents a share. Analysts expected 51 cents a share, before items, according to Reuters Estimates.

Earlier this week, East West reported an 88 percent drop in first-quarter profit due to a huge amount it set aside to cover bad loans in its residential real estate portfolio.

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