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Piper Jaffray upgrades Cathay General Bancorp


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Piper Jaffray upgrades Cathay General Bancorp


* Piper Jaffray analyst Matthew Clark upgraded Los Angeles-based Cathay General Bancorp from "neutral" to "overweight" due to valuation and his view that the consensus is too low.

Clark noted that the company has a strong return on assets of around 1.30% to 1.35%, compared to the 1.12% of peers, but currently trades at 13.8x his 2018 EPS estimate, which is lower than peers trading at 16.4x the 2018 EPS estimate.

The analyst believes that the company has good earnings visibility as expenses are being cut due to its pending acquisition of Los Angeles peer, SinoPac Bancorp, which he thinks will bring an active capital management once it is completed.

Clark increased his price target to $43 from $41.

Notable reiterations

* Sandler O'Neill & Partners analyst Frank Schiraldi reiterated his rating of "hold" for Philadelphia-based Beneficial Bancorp Inc.

The analyst commended the company's revenues, strong loan growth and optimistic management. However, he also noted the company's expenses increased by 4% compared to the previous quarter, and was up 4% than his estimate. He thinks the increase in expenses were due to compensation expenses.

Schiraldi also thinks that the company won't execute another stock repurchase program as the stock is now trading higher. He believes that entering an M&A transaction would be a more likely use of capital. He said the management is looking at expanding in the Southeastern Pennsylvania area.

Schiraldi lowered his price target to $18 from $19.

* Also at Sandler, analyst Casey Whitman reiterated her rating of "buy" for Bowie, Md.-based Old Line Bancshares Inc., while increasing her price target to $32 from $30.

Whitman noted that the pending deal between Old Line and Damascus, Md.-based DCB Bancshares Inc. is a good fit, even though it is only fairly neutral to EPS until the second half of the first year of the merger. Aside from being a financially attractive deal, the company's commercial real estate lending strength would match DCB Bancshares' well-positioned markets with heavier deposit bases. She also believes the deal will ease the company's commercial real estate concentration.