Three banking companies that cater to Chinese-Americans in Southern California are well positioned for earnings growth this year, because of the market's attractive demographics, an analyst said Friday.
Following recent meetings with managers at the three companies, Joe Morford of Royal Bank of Canada's RBC Capital Markets Inc. issued research notes on the $10.8 billion-asset East West Bancorp Inc. in Pasadena, the $10.3 billion-asset UCBH Holdings Inc. in San Francisco, and the $8 billion-asset Cathay General Bancorp in Los Angeles.
The Chinese-American community is still one of the fastest-growing demographics in the country, he said in an interview. We walked away feeling good about the prospects for all these banks, particularly relative to the average Western bank, which may see a more challenging year.
Mr. Morford reiterated his ratings on all three companies: outperform for East West and UCBH and sector perform for Cathay General.
Partly because of strong regional and demographic trends, this year he expects UCBH to earn $1.13 a share, or a penny more than the average of analysts' estimates, according to Thomson Financial. During its last earnings report Jan. 25, UCBH said it expects profits of $1.13 to $1.15 a share.
Mr. Morford wrote that its commercial loan pipeline is solid, driven in part by increased referrals from existing customers.
He said, None of the companies are seeing any cracks emerge in their portfolios. That's reflective of a healthy economy.
UCBH said 75% of its trade finance customers would benefit from having a full-service branch in mainland China. The company is making headway on that front. In January it announced a deal to buy the $322 million-asset CAB Holding LLC and its Chinese American Bank of New York for $130.7 million in cash and stock to gain a foothold …