• Net Income: $69.5 million for Q1 2025, a 13.3% decrease from $80.2 million in Q4 2024.
• Diluted Earnings Per Share: $0.98 for Q1 2025, down 12.5% from $1.12 in Q4 2024.
• Stock Repurchase: 876,906 shares repurchased at an average cost of $46.83 per share, totaling $41.1 million.
• Total Gross Loans: Decreased by $23 million or 0.5% annualized in Q1 2025.
• Net Charge Offs: $2 million for Q1 2025, compared to $16.3 million in Q4 2024.
• Non-Accrual Loans: 0.8% of total loans as of March 31, 2025, decreased by $14.5 million to $154.6 million from Q4 2024.
• Provision for Credit Loss: $15.5 million in Q1 2025, up from $14.5 million in Q4 2024.
• Total Deposits: Increased by $131 million or 2.7% annualized during Q1 2025.
• Net Interest Margin: Increased to 3.25% for Q1 2025 from 3.07% in Q4 2024.
• Non-Interest Income: Decreased by $4.3 million to $11.2 million in Q1 2025 from $15.5 million in Q4 2024.
• Non-Interest Expenses: Increased by $0.5 million to $85.7 million in Q1 2025 from $85.2 million in Q4 2024.
• Effective Tax Rate: 19.82% for Q1 2025, up from 7.57% in Q4 2024.
• Tier 1 Leverage Capital Ratio: Increased to 11.06% as of March 31, 2025, from 10.97% as of December 31, 2024.
• Total Risk-Based Capital Ratio: Increased to 15.19% from 15.09% as of December 31, 2024.

Release Date: April 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cathay General Bancorp (NASDAQ:CATY) reported a net interest margin increase to 3.25% for Q1 2025 from 3.07% in Q4 2024.
• Total deposits increased by $131 million or 2.7% annualized during Q1 2025, driven by a net increase in core deposits and time deposits.
• The company completed its $125 million stock repurchase program, buying back 876,906 shares at an average cost of $46.83 per share.
• Cathay General Bancorp (NASDAQ:CATY) has a strong liquidity position with unused borrowing capacity from the Federal Home Loan Bank and the Federal Reserve Bank, covering more than 100% of uninsured and uncollateralized deposits.
• The Tier 1 leverage capital ratio increased to 11.06% as of March 31, 2025, indicating a strong capital position.

Negative Points

• Net income for Q1 2025 decreased by 13.3% to $69.5 million compared to Q4 2024.
• The diluted earnings per share decreased by 12.5% to $0.98 for Q1 2025 compared to $1.12 in Q4 2024.
• Total gross loans decreased by $23 million or 0.5% annualized, primarily due to decreases in commercial and residential loans.
• Non-interest income decreased by $4.3 million to $11.2 million in Q1 2025, primarily due to a mark-to-market unrealized loss on equity securities.
• The provision for credit loss increased to $15.5 million in Q1 2025, up from $14.5 million in Q4 2024, mainly to cover possible losses from one commercial client.

Q & A Highlights

Q: Can you provide the sensitivity to the margin guide and NII levels if there are more than one interest rate cut in July? A: Heng Chen, CFO, stated that on a full-year basis, it would be about 4 basis points for every rate cut. If it happens in July, it would be only 2 basis points.

Q: What were the spot deposit costs at the end of the quarter and the average margin for March? A: Heng Chen noted that the average margin for March was 3.39%, with the bulk of interest recoveries for the first quarter. Excluding interest recoveries, the net margin was 3.21%. The spot rate for total interest-bearing deposits as of March 31, 2025, was 3.36%.

Q: What drove the change in loan growth guidance from 3%-4% to 1%-4%? A: Chang Liu, CEO, explained that the pipeline for commercial real estate remains strong, but uncertainties, particularly tariffs affecting C&I clients, led to the revised guidance. Residential mortgage activity has seen a slight uptick, but overall uncertainty persists.

Q: Are C&I customers delaying projects or investments due to current conditions? A: Chang Liu mentioned that some growth or expansion plans are paused, with customers focusing on managing their balance sheets and P&L due to unpredictable inventory prices. Heng Chen added that some importers might stop importing until conditions improve.

Q: Regarding the allowance for credit losses, was the provision related to a borrower impacted by tariffs? A: Heng Chen clarified that the reserve was for a domestic company, not trade finance-related. The rest of the reserve buildup was tariff-related, and they are hopeful it covers most exposure. The allowance on the 1.4% of loans potentially impacted by tariffs is about 2%.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.