Cathay General Bancorp of Los Angeles, vying to become the biggest Asian American bank after completing a major merger last fall, on Tuesday said fourth-quarter profit rose 39% on strong loan growth.
The combination of Cathay Bancorp and GBC Bancorp, each with a core clientele of Chinese Americans, earned $16.8 million, or 71 cents a share, in the quarter, in line with analysts' estimates. That was up from $12.1 million, or 67 cents, at Cathay Bancorp during the same period in 2002, a quarter in which GBC lost $600,000, or 5 cents.
Cathay's operating income from lending rose 72% to $43.7 million on what officials described as "strong organic growth" in loans as well as the addition of GBC's portfolio.
For the full year, Cathay earned $55.6 million, or $2.85 a share, up from $48.7 million, or $2.69, in 2002.
Cathay acquired local rival GBC, parent of General Bank, in a cash and stock transaction valued at $478 million when the deal closed in October. General had been weakened by several investments that soured, including a foray into airline leasing that contributed heavily to the fourth-quarter 2002 loss.
Cathay Chairman Dunson Cheng said the company is positioned "to become the bank of choice catering primarily to Asian American business and retail customers in key U.S. markets." As demonstrations of the bank's strength, he cited the loan growth, net interest margins that widened compared with the third quarter and fewer loans being charged off as uncollectable.
The rapid growth of Chinese American banks, and their expansion into mainstream business lending, has been a major success story on the California banking scene in recent years. When the Cathay-GBC deal was announced in May, it appeared that the merger would make Cathay the largest such bank in the nation, just ahead of San Francisco's UCBH Holdings Inc.
But as of Dec. 31, Cathay had $5.54 billion in assets, compared with $5.58 billion at UCBH, parent of United Commercial Bank, which bought First Continental Bank of Rosemead last year.
Cathay shares fell 19 cents to $55.60 on Nasdaq before the results were announced.