CATY - Cathay General Bancorp: Upcoming CECL Adoption To Hurt Earnings
Cathay General Bancorp's (CATY) earnings decreased by 30% quarter-over-quarter in the first quarter, mostly due to a hike in provision expense. As CATY intends to adopt CECL, the new accounting standard for credit losses, later this year, provision expense will likely remain high for the rest of 2020. The elevated provision expense will pressure earnings this year. Additionally, further net interest margin compression will suppress earnings. On the other hand, the demand for relief loans will support the bottom line. Overall, I'm expecting earnings to decline by 31% year-over-year to $2.41 in 2020. The December