Cathay General Bancorp : 1Q 2025 Financial Results Press Release

Published: 2025-04-21 18:21:57 ET CATY

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $5.6 million, or 3.3%, to $176.6 million during the first quarter of 2025, compared to $171.0 million in the fourth quarter of 2024. The increase was due primarily to a decrease in interest deposit expense, partially offset by a decrease in interest income from loans and securities.

The net interest margin was 3.25% for the first quarter of 2025 compared to 3.07% for the fourth quarter of 2024.

For the first quarter of 2025, the yield on average interest-earning assets was 5.89%, the cost of funds on average interest-bearing liabilities was 3.46%, and the cost of average interest-bearing deposits was 3.43%. In comparison, for the fourth quarter of 2024, the yield on average interest-earning assets was 5.92%, the cost of funds on average interest-bearing liabilities was 3.75%, and the cost of average interest-bearing deposits was 3.72%. The decrease in the yield on average interest-bearing liabilities resulted mainly from lower interest rates on deposits driven by the lower repricing of maturing time deposits in the first quarter. The decrease in the yield on average interest-earning assets resulted mainly from lower interest rates on loans due to the decreasing rate environment. The net interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, was 2.43% for the first quarter of 2025, compared to 2.17% for the fourth quarter of 2024.

Provision for credit losses

The Company recorded a provision for credit losses of $15.5 million in the first quarter of 2025 compared to $14.5 million in the fourth quarter of 2024. As of March 31, 2025, the allowance for credit losses increased by $13.6 million to $185.0 million, or 0.96% of gross loans, compared to $171.4 million, or 0.88% of gross loans as of December 31, 2024.

The following table sets forth the charge-offs and recoveries for the periods indicated:

Three months ended

March 31, 2025

December 31, 2024

March 31, 2024

(In thousands) (Unaudited)

Charge-offs:

Commercial loans

2,344

14,064

1,939

Real estate loans (1)

2,472

254

Installment and other loans

Total charge-offs

2,344

16,543

2,193

Recoveries:

Commercial loans

270

812

Real estate loans (1)

133

241

Installment and other loans

Total recoveries

367

210

1,053

Net charge-offs

1,977

16,333

1,140

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Non-interest income

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wealth management fees, and other sources of fee income, was $11.2 million for the first quarter of 2025, a decrease of $4.3 million, or 27.6%, compared to $15.5 million for the fourth quarter of 2024. The decrease was primarily due to a decrease of $2.9 million in gain on equity securities, when compared to the fourth quarter of 2024.

Non-interest expense

Non-interest expense increased $0.5 million, or 0.6%, to $85.7 million in the first quarter of 2025 compared to $85.2 million in the fourth quarter of 2024. The increase in non-interest expense in the first quarter of 2025 was primarily due to an increase of $2.2 million, in FDIC and State assessments, an increase of $1.1 million in computer and equipment offset, in part, by a decrease of $1.7 million in amortization expense of investments in low-income housing and alternative energy partnerships, and a decrease of $1.3 million in professional services, when compared to the fourth quarter of 2024. The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non- interest income, was 45.60% in the first quarter of 2025 compared to 45.70% for the fourth quarter of 2024.

Income taxes

The effective tax rate for the first quarter of 2025 was 19.82% compared to 7.57% for the fourth quarter of 2024. The effective tax rate for the first quarter of 2025 includes the impact of low-income housing tax credits and for the fourth quarter of 2024 includes the impact of alternative energy investments and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans, excluding loans held for sale, were $19.35 billion as of March 31, 2025, a decrease of $22.9 million, or 0.12%, from $19.38 billion as of December 31, 2024. The decrease was primarily due to a decrease of $99.6 million, or 3.2%, in commercial loans, and $65.5 million, or 1.2%, in residential mortgage loans offset by an increase of $127.1 million, or 1.3%, in commercial real estate loans.

The loan balances and composition as of March 31, 2025, compared to December 31, 2024, and March 31, 2024, are presented below:

March 31, 2025

December 31, 2024

March 31, 2024

(In thousands) (Unaudited)

Commercial loans

2,998,423

3,098,004

3,132,580

Construction loans

332,729

319,649

382,775

Commercial real estate loans

10,160,934

10,033,830

9,821,807

Residential mortgage loans

5,623,564

5,689,097

5,841,846

Equity lines

231,184

229,995

245,222

Installment and other loans

6,169

5,380

5,166

Gross loans

19,353,003

19,375,955

19,429,396

Allowance for loan losses

(173,936)

(161,765)

(154,589)

Unamortized deferred loan fees

(11,657)

(10,541)

(11,737)

Total loans held for investment, net

19,167,410

19,203,649

19,263,070

Loans held for sale

11,759

23,171

Total deposits were $19.82 billion as of March 31, 2025, an increase of $131.3 million, or 0.7%, from $19.69 billion as of December 31, 2024.

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The deposit balances and composition as of March 31, 2025, compared to December 31, 2024, and March 31, 2024, are presented below:

March 31, 2025

December 31, 2024

March 31, 2024

(In thousands) (Unaudited)

Non-interest-bearing demand deposits

3,361,245

3,284,342

3,289,539

NOW deposits

2,131,445

2,205,695

2,331,486

Money market deposits

3,423,953

3,372,773

3,117,557

Savings deposits

1,266,561

1,252,788

1,039,144

Time deposits

9,634,324

9,570,601

10,068,533

Total deposits

19,817,528

19,686,199

19,846,259

ASSET QUALITY REVIEW

As of March 31, 2025, total non-accrual loans were $154.6 million, a decrease of $14.6 million, or 8.6%, from $169.2 million as of December 31, 2024.

The allowance for loan losses was $173.9 million and the allowance for off-balance sheet unfunded credit commitments was $11.0 million as of March 31, 2025. The allowances represent the amount estimated by management to be appropriate to absorb expected credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for loan losses represented 0.90% of period-end gross loans, and 112.06% of non-performing loans as of March 31, 2025. The comparable ratios were 0.83% of period- end gross loans, and 93.39% of non-performing loans as of December 31, 2024.

The changes in non-performing assets and loan modifications to borrowers experiencing financial difficulty as of March 31, 2025, compared to December 31, 2024, and March 31, 2024, are presented below:

March 31, 2025

December 31, 2024

March 31, 2024

(In thousands) (Unaudited)

Change

Non-performing assets

Accruing loans past due 90 days or more

595

4,050

(85)

7,560

(92)

Non-accrual loans:

Construction loans

22,998

(100)

Commercial real estate loans

76,802

83,128

(8)

47,465

Commercial loans

53,362

59,767

(11)

14,642

264

Residential mortgage loans

24,462

26,266

(7)

13,002

Total non-accrual loans:

154,626

169,161

(9)

98,107

Total non-performing loans

155,221

173,211

(10)

105,667

Other real estate owned

18,484

23,071

(20)

19,441

(5)

Total non-performing assets

173,705

196,282

(12)

125,108

Accruing loan modifications to borrowers experiencing

financial difficulties

8,213

Allowance for loan losses

173,936

161,765

154,589

Total gross loans outstanding, at period-end

19,353,003

19,375,955

(0)

19,429,396

(0)

Allowance for loan losses to non-performing loans, at period-end

112.06%

93.39%

146.30%

Allowance for loan losses to gross loans, at period-end

0.90%

0.83%

0.80%

The ratio of non-performing assets to total assets was 0.75% as of March 31, 2025, compared to 0.85% as of December 31, 2024. Total non-performing assets decreased $22.6 million, or 11.5%, to $173.7 million as of March 31, 2025, compared to $196.3 million as of December 31, 2024, primarily due to a decrease of $14.5 million, or 8.6%, in non-accrual loans, a decrease of $4.6 million, or 19.9%, in other real estate owned, and a decrease of $3.5 million, or 85.3%, in accruing loans past due 90 days or more.

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CAPITAL ADEQUACY REVIEW

As of March 31, 2025, the Company's Tier 1 risk-based capital ratio of 13.57%, total risk-based capital ratio of 15.19%, and Tier 1 leverage capital ratio of 11.06%, calculated under the Basel III capital rules, continue to place the Company in the "well capitalized" category for regulatory purposes, which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 8%, a total risk-based capital ratio equal to or greater than 10%, and a Tier 1 leverage capital ratio equal to or greater than 5%. As of December 31, 2024, the Company's Tier 1 risk-based capital ratio was 13.54%, total risk-based capital ratio was 15.08%, and Tier 1 leverage capital ratio was 10.96%.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its first quarter 2025 financial results this afternoon, Monday, April 21, 2025, at 3:00 p.m., Pacific Time. Analysts and investors may dial in and participate in the question-and-answer session. To access the call, please dial 1-833-816-1377 and enter Conference ID 10198304. The presentation accompanying this call and access to the live webcast is available on our site at www.cathaygeneralbancorp.comand a replay of the webcast will be archived for one year within 24 hours after the event.

ABOUT CATHAY GENERAL BANCORP

Cathay General Bancorp is a publicly traded company (Nasdaq: CATY) and is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services and currently operate over 60 branches across the United States in California, New York, Washington, Texas, Illinois, Massachusetts, Maryland, Nevada, and New Jersey. Overseas, it has a branch outlet in Hong Kong, and representative offices in Beijing, Shanghai, and Taipei. To learn more about Cathay Bank, please visit www.cathaybank.com. Cathay General Bancorp's website is at www.cathaygeneralbancorp.com. Information set forth on such websites is not incorporated into this press release.

FORWARD-LOOKING STATEMENTS

Statements made in this press release, other than statements of historical fact, are forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management's beliefs, projections, and assumptions concerning future results and events. These forward-looking statements may include, but are not limited to, such words as "aims," "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "predicts," "potential," "possible," "optimistic," "seeks," "shall," "should," "will," and variations of these words and similar expressions. Forward-looking statements are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from local, regional, national and international business, market and economic conditions and events, the potential for new or increased tariffs, trade restrictions or geopolitical tensions that could affect economic activity or specific industry sectors and the impact they may have on us, our customers and our operations, assets and liabilities; possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to including potential future supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation; higher capital requirements from the implementation of the Basel III capital standards; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; our ability to generate anticipated returns on our investments and financings, including in tax-advantaged projects; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational

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risk; natural disasters, public health crises and geopolitical events; general economic or business conditions in Asia, and other regions where Cathay Bank has operations; failures, interruptions, or security breaches of our information systems; our ability to adapt our systems to technological changes; risk management processes and strategies; adverse results in legal proceedings; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in accounting standards or tax laws and regulations; market disruption and volatility; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuance of preferred stock; successfully raising additional capital, if needed, and the resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; and general competitive, economic political, and market conditions and fluctuations.

These and other factors are further described in Cathay General Bancorp's Annual Report on Form 10-K for the year ended December 31, 2024 (Item 1A in particular), other reports filed with the Securities and Exchange Commission ("SEC"), and other filings Cathay General Bancorp makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this press release. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward- looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we undertake no obligation to update or review any forward-looking statement to reflect circumstances, developments or events occurring after the date on which the statement is made or to reflect the occurrence of unanticipated events.

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CATHAY GENERAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

Three months ended

(In thousands, except per share data)

March 31, 2025

December 31, 2024

March 31, 2024

Financial performance

Net interest income before provision for credit losses

176,639

171,012

168,572

Provision for credit losses

15,500

14,500

1,900

Net interest income after provision for credit losses

161,139

156,512

166,672

Non-interest income

11,204

15,473

6,611

Non-interest expense

85,656

85,219

93,239

Income before income tax expense

86,687

86,766

80,044

Income tax expense

17,181

6,565

8,609

Net income

69,506

80,201

71,435

Net income per common share:

Basic

0.99

1.13

0.98

Diluted

0.98

1.12

0.98

Cash dividends paid per common share

0.34

Selected ratios

Return on average assets

1.22%

1.37%

1.23%

Return on average total stockholders' equity

9.84%

11.18%

10.40%

Efficiency ratio

45.60%

45.70%

53.22%

Dividend payout ratio

34.32%

29.95%

34.59%

Yield analysis (Fully taxable equivalent)

Total interest-earning assets

5.89%

5.92%

6.01%

Total interest-bearing liabilities

3.46%

3.75%

3.87%

Net interest spread

2.43%

2.17%

2.14%

Net interest margin

3.25%

3.07%

3.05%

Capital ratios

March 31, 2025

December 31, 2024

March 31, 2024

Tier 1 risk-based capital ratio

13.57%

13.54%

13.08%

Total risk-based capital ratio

15.19%

15.08%

14.55%

Tier 1 leverage capital ratio

11.06%

10.96%

10.71%

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CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

March 31, 2025

December 31, 2024

March 31, 2024

Assets

Cash and due from banks

175,027

157,167

165,284

Short-term investments and interest bearing deposits

1,209,487

882,353

1,010,651

Securities available-for-sale (amortized cost of $1,535,896 at March 31, 2025,

$1,668,661 at December 31, 2024 and $1,783,915 at March 31, 2024)

1,434,040

1,547,128

1,653,167

Loans held for sale

11,759

23,171

Loans

19,353,003

19,375,955

19,429,396

Less: Allowance for loan losses

(173,936)

(161,765)

(154,589)

Unamortized deferred loan fees, net

(11,657)

(10,541)

(11,737)

Loans, net

19,167,410

19,203,649

19,263,070

Equity securities

30,238

34,429

31,380

Federal Home Loan Bank stock

17,250

Other real estate owned, net

18,484

23,071

19,441

Affordable housing investments and alternative energy partnerships, net

285,707

289,611

330,912

Premises and equipment, net

89,760

88,676

90,454

Customers' liability on acceptances

12,678

14,061

17,074

Accrued interest receivable

95,755

97,779

97,937

Goodwill

375,696

Other intangible assets, net

3,101

3,335

4,131

Right-of-use assets- operating leases

30,021

28,645

31,698

Other assets

248,609

291,831

273,487

Total assets

23,205,022

23,054,681

23,404,803

Liabilities and Stockholders' Equity

Deposits:

Non-interest-bearing demand deposits

3,361,245

3,284,342

3,289,539

Interest-bearing deposits:

NOW deposits

2,131,445

2,205,695

2,331,486

Money market deposits

3,423,953

3,372,773

3,117,557

Savings deposits

1,266,561

1,252,788

1,039,144

Time deposits

9,634,324

9,570,601

10,068,533

Total deposits

19,817,528

19,686,199

19,846,259

Advances from the Federal Home Loan Bank

95,000

60,000

265,000

Other borrowings for affordable housing investments

17,696

17,740

17,557

Long-term debt

119,136

Acceptances outstanding

12,678

14,061

17,074

Lease liabilities - operating leases

32,120

30,851

34,325

Other liabilities

245,705

280,990

327,380

Total liabilities

20,339,863

20,208,977

20,626,731

Stockholders' equity

2,865,159

2,845,704

2,778,072

Total liabilities and equity

23,205,022

23,054,681

23,404,803

Book value per common share

40.91

40.16

38.22

Number of common shares outstanding

70,034,708

70,863,324

72,688,191

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CATHAY GENERAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended

March 31, 2025

December 31, 2024

March 31, 2024

(In thousands, except share and per share data)

Interest and Dividend Income

Loan receivable, including loan fees

Investment securities

Federal Home Loan Bank stock

Deposits with banks

Total interest and dividend income

Interest Expense Time deposits Other deposits

Advances from Federal Home Loan Bank Long-term debt

Short-term borrowings Total interest expense

Net interest income before provision for credit losses Provision for credit losses

Net interest income after provision for credit losses

Non-Interest Income

Net losses from equity securities

Debt securities losses, net

Letters of credit commissions

Depository service fees

Wealth management fees

Other operating income

Total non-interest income

Non-Interest Expense Salaries and employee benefits Occupancy expense

Computer and equipment expense Professional services expense Data processing service expense FDIC and State assessments Marketing expense

Other real estate owned expense

Amortization of investments in low income housing and alternative energy partnerships

Amortization of core deposit intangibles Other operating expense

Total non-interest expense

Income before income tax expense

Income tax expense

Net income

Net income per common share:

Basic

Diluted

Cash dividends paid per common share Basic average common shares outstanding Diluted average common shares outstanding

293,984

300,991

302,528

12,103

13,587

14,951

379

431

12,929

15,025

14,732

319,395

329,982

332,642

96,066

111,082

109,546

42,434

44,557

42,788

1,904

766

9,316

2,020

2,194

1,721

332

371

699

142,756

158,970

164,070

176,639

171,012

168,572

15,500

14,500

1,900

161,139

156,512

166,672

(4,191)

(1,312)

(9,027)

1,107

2,091

2,063

1,717

1,752

1,674

1,550

6,169

6,194

5,638

5,383

6,854

5,626

11,204

15,473

6,611

42,427

42,526

43,552

5,737

5,724

5,967

6,054

4,923

5,068

7,448

8,761

6,992

4,406

4,234

3,929

3,399

1,198

6,089

1,878

1,518

1,914

244

368

253

9,054

10,728

14,432

250

339

4,759

4,989

4,704

85,656

85,219

93,239

86,687

86,766

80,044

17,181

6,565

8,609

69,506

80,201

71,435

0.99

1.13

0.98

1.12

0.98

0.34

70,379,835

71,168,983

72,673,974

70,679,640

71,491,518

72,971,157

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CATHAY GENERAL BANCORP

AVERAGE BALANCES - SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

Three months ended

(In thousands)(Unaudited)

March 31, 2025

December 31, 2024

March 31, 2024

Average Balance

Average

Average Balance

Average

Average Balance

Average

Interest-earning assets:

Yield/Rate (1)

Loans (1)

19,332,602

6.17%

19,345,616

6.19%

19,498,954

6.24%

Taxable investment securities

1,457,724

3.37%

1,542,577

3.50%

1,638,317

3.67%

FHLB stock

17,250

8.92%

17,250

8.75%

23,006

7.53%

Deposits with banks

1,202,304

4.36%

1,265,496

4.72%

1,093,972

5.42%

Total interest-earning assets

22,009,880

5.89%

22,170,939

5.92%

22,254,249

6.01%

Interest-bearing liabilities:

Interest-bearing demand deposits

2,142,241

1.68%

2,131,978

1.85%

2,312,246

2.19%

Money market deposits

3,382,292

3.43%

3,259,771

3.52%

3,114,298

3.53%

Savings deposits

1,289,628

1.57%

1,306,584

1.76%

1,046,103

1.10%

Time deposits

9,582,826

4.07%

9,932,776

4.45%

9,720,917

4.53%

Total interest-bearing deposits

16,396,987

3.43%

16,631,109

3.72%

16,193,564

3.78%

Other borrowed funds

215,021

4.22%

111,142

4.07%

730,779

5.51%

Long-term debt

119,136

6.88%

119,136

7.33%

119,136

5.81%

Total interest-bearing liabilities

16,731,144

3.46%

16,861,387

3.75%

17,043,479

3.87%

Non-interest-bearing demand deposits

3,305,149

3,318,350

3,338,551

Total deposits and other borrowed funds

20,036,293

20,179,737

20,382,030

Total average assets

23,187,863

23,332,869

23,451,901

Total average equity

2,864,709

2,854,994

2,761,843

(1) Yields and interest earned include net loan fees. Non-accrual loans are included in the average balance.

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Disclaimer

Cathay General Bancorp published this content on April 21, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 21, 2025 at 22:19 UTC.