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Cathay General Bancorp (CATY) Up 1.2% on New Share Buyback Plan

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Shares of Cathay General Bancorp (CATY - Free Report) have rallied 1.2% in response to the new share buyback program announced last week. The company’s board of directors authorized repurchase of up to $75 million worth of shares. The program has no expiration date.

The plan was unveiled following the completion of the earlier buyback authorization in December 2020. This program, announced in May 2019, had authorization to repurchase $50 million worth of shares. Under the program, Cathay General Bancorp had repurchased more than 1.5 million shares at an average price of $32.43.

Notably, as of Mar 31, 2021, Cathay General Bancorp had nearly 79.6 million shares outstanding.

In addition to the share repurchases, Cathay General Bancorp pays regular quarterly dividends. The company has been paying dividend of 31 cents per share since November 2018, marking an increase of 29.2% from prior payout of 24 cents per share.

Considering the last day’s closing price of $41.27, the company’s dividend yield currently stands at 3%. This yield is not only attractive to income investors but also represents a steady income stream. Further, the yield is impressive compared with industry’s average of 1.82%.

Cathay General Bancorp has a solid balance sheet and liquidity position. The company has a debt/equity ratio of 0.12 compared with the industry average of 0.14. This reflects that it has a lesser debt burden compared with the peers and it will be financially stable, even in adverse economic conditions.

Apart from these, its earning strength indicates that Cathay General Bancorp’s capital deployments seem sustainable and will continue enhancing shareholder value. However, low interest rates and a tough operating backdrop are likely to keep hurting its financials in the near term.

Shares of Cathay General Bancorp have rallied 72.7% over the past six months, outperforming the industry’s growth of 64.4%.

Currently, Cathay General Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Similar Moves by Other Banks

Over the past few months, several banks have announced new share-repurchase programs. Some of these are The Bank of Princeton (BPRN - Free Report) , Amerant Bancorp Inc. (AMTB - Free Report) and City Holding Company (CHCO - Free Report) .

Bank of Princeton’s board of directors authorized repurchase of 339,788 shares worth up to $10.4 million this year. Amerant Bancorp announced a new share repurchase program authorizing $40 million worth of its Class B common stock. Further, City Holding’s board of directors has authorized the buyback of up to 1 million shares, with no expiration date.

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