CATY - Earnings call transcript Q1 2021

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Operator

Good afternoon ladies and gentlemen and welcome to the Cathay General Bancorp's First Quarter 2021 Earnings Conference Call. My name is Valerie and I'll be a coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] Today's call is being recorded and will be available for replay at www.cathaygeneralbancorp.com.

to of call Cathay like Lo, to would Relations Investor General I turn over the Georgia Now, Bancorp.

Georgia Lo

Thank you, afternoon. Valerie, and good

discuss Executive Vice today results and Chief President Officer, the Chang President Mr. to Officer. and our our Executive and are Chen, Heng Financial Liu, Chief Here Mr. financial

XXXX December could are remind Reform XXXX we in XA and to of further certain future meaning time-to-time. speakers of that Report are and at differ concerning applicable that provisions on Act in statements this and uncertainties the particular, reports and we begin, from Commission statements you all in Securities risks forward-looking the ended Before call Private risks within company's the Annual Litigation and Securities the of for wish to results events filings these and XX, the may actual make described Exchange uncertainties XX-K results with on and the Item materially. cause that Form other to These year the subject

statements now future to Web President such, obligation its or earnings law, the earnings except undertake Cathay as outlining for issued to quarter Bancorp we site Executive release by of which XXXX Mr. our To and afternoon, questions. we reliance General our is well Chang statements. our and such forward-looking date the required call release, will by please over at no earnings speaks I open place up forward-looking management of our unanticipated comments this an as it circumstances, today, www.cathaygeneralbancorp.com. of Liu. Officer, Chief not quarter we visit to events, occurrence statements call presentation, turn a will review to well results. After obtain first as copy first any or update or forward-looking caution on reflect developments events. Any This on only made undue as As as you the

Chang Liu

Georgia, Welcome conference to our first XXXX you, quarter good Thank and afternoon, everyone. call. earnings

XXXX, income of commitment and acknowledge team the the While as XX.X% year to we COVID-XX our quarter per first continuing XX.X for on share X.X% XX% Program $X.XX per same increase is to members gross first Diluted X.X support quarter billion. our net pandemic. The increased XX.X $X.XX clients, of of Paycheck a to of the was of $XX.X increased first of the increase during million increase by for loans of in XXXX million This reported ago. in today primarily to XXXX loans. compared a XX.X quarter focus communities income to the the earnings the and quarter million loans Protection In per quarter compared results, XXXX, first or by for quarter our operating afternoon we a net share quarter for fourth million first driven of for XXXX. share our an

million PPP During quarter and originated forgiven. the we of loans of million XX.X XXX.X of loans first PPP XXXX, were

for government PPP XX, million submitted the have XXXX, of March of review. forgiveness been As to XX.X loans

X.X As our of fees XXXX, loan March XX, were PPP deferred million.

monitor to loans. commercial our continue We real estate

Slide to to loan CRE value average of presentation, of the XXXX, as was weighted loans Turning of March our XX, seven XX%. our earnings

on on of provide CRE $XX XXXX, X.X% XX, March loan relief approximately of CRE or to an repayment our loan As loans modifications terms. of balance remaining with million aggregate portfolio

neighborhood, XXXX, loan portfolio. shopping by for our modifications as mixed strip all XXXX, XXXX, total still comprises no and retail of March categories loan March CRE XX% loan modifications or under our XX% is There As total XX, less XX, secured loan The loans. than retail only X% loan of total of of use were of XX% secured loan and commercial our now loans XX, the X.XX centers centers. of is XX% in majority estate real billion March total as was retail portfolio loans, portfolio of by

For X.X compared the offs million charge charge fourth net of the quarter of million of we of X.X XXXX, offs to reported first net XXXX. in quarter

quarter first totaling charge Hong included our Our Kong million X.X two from charge offs office. loan commercial offs

non-accrual and loans that XX.X that fell primarily the quarter when of in additional loans another placed non-accrual a being XXXX. Our the and increased non-accrual, or on real increase process was lender. in placed latter was the first XXXX. million XX.X on the during million compared quarter an financing to period due of fourth is million an of XX.X commercial of refinanced was XX.X California through secondary as The of loan Northern to of The by by end gas oil loan million XX.X% to estate end which

of and total XXXX, million see March XX.X our [ph] presentation. and this only Our was [rated] oil XXX gas million as XX portfolio substandard, please of loan earnings XX, was loan Page the

XXXX. first economic economic XXXX loan XX.X process. losses CECL X, in improvement on economic adopt CECL million by current reversal a as forecast for for X in XXXX. increased losses estimated forecasts the the for reserve Consolidated losses reversal January loan of by adoption and Act of for credit losses Act, the made under in recognized in compared XXXX, Securities losses has XX.X the the of fourth the our XXXX as of reflected of of commitments and quarter The January methodology for the We the unfunded in compared reversal the million allowance credit using XXXX, the March million to loan permitted Relief made The and by X, chosen million credit credit the quarter as forecaster of Act for loss X.X the CARES XXXX by provision XX.X company As December to million. to Coronavirus, the expected extended Appropriations the

Executive mainly by detail. the deposit million, deposits our time turn Financial Turning our to I'll the financial discuss and average and Chief of more million increased to X.X%, by of in the XXXX X.X% that, Vice decreased Chen Slide quarter With over Heng XXX first due during XX, total XXXX. results Officer XXX President to runoff floor the quarter CDs. first or broker Average or to

Heng Chen

you, good and everyone. Thank Chang afternoon,

For XXXX, million, million net by income fourth or net to to for increase higher X.X was of of credit the increased quarter XX.X The favorable XXXX. the quarter the compared provision losses, of X.X% and reversal first interest income. primarily to

the recoveries XXXX, as of of respectively. prepayment net interest in and during at XX, for compared CDs the first There billion a margin, renewing quarter Our X.X XXXX. points targeting and X.X and interest the X points basis range. of of billion of retail margin compared the March the to to XXXX second was the rate XXXX. X.X% XX of fourth XX added first net for third Approximately the were quarter as X.XX% X.X X.X% loans mature rates penalties of X.XX% will In to billion CDs [ph] as fourth [far] and to interest our in quarters XXXX quarter We're of four average quarter basis point with XXXX. basis the

first the XXXX sale primarily Non-interest X.XX increasing by to on the of when was X.X of of million, due margin XXXX. X Given our points you the million be XXXX, by the first first the XXXX to There to XX.X XXXX, first between Non-interest X.X% year same losses X.XX. XXXX net for increased first quarter of during our ago. to real we during million owned in of compared the to expectations XX.X million by of equity quarter basis income a X.X compare gain increased quarter quarter a of and wide results estate or securities. when XX of interest to to are the expense it a million quarter in million quarter other X.X

tax a tax Hate the for credit offset fourth loans XXXX gain, XXXX. expense the XXXX. only to million Campaign, decrease Excluding for owned on by million X.X and or effective quarter X.X was first X% solar increase million The The from higher to funds. due quarter quarter in of primarily Asian quarter to increased amortization XXXX, X rate non-interest of first marketing first higher other was X.X compared estate XX.X% in of benefit by Stop expense housing real and XX.X% salary a the donation of the and million and comparing expense the of

We effective XX.X%. [ph] full tax XXXX year and [XX% expect rate and the XX%] to be between

X was amortization in the second of credit quarter the of is expected XXXX in half tax the for and XXXX XXXX. X be million of and non-[indiscernible] Solar first second million to quarter

as capital ratio XX.XX% risk-based leverage XX of to In Tier-X million to XXXX, XX, December XX.XX% to XX.XX% December as program. to of our increased our Tier-X April repurchase XXXX, we XXXX. announced share XXXX, a XX, risk-based XX.XX% as XX, XX, XX.XX% our from XXXX, increased of capital from capital as total compared ratio March ratio December new of increased XX.XX% As

Chang Liu

you, Thank Heng.

portion We of call. will now the question-and-answer proceed to the

Operator

Instructions] Our with [Operator from comes Matthew Piper Sandler. question first Clark

Matthew Clark

Maybe the as the going just housing on guide first amortization forward. low well? on income Any amortization

Heng Chen

should constant. It be

I think about million quarter. we're per to guiding X.X

for rest year. of be the So should the the same it

Matthew Clark

interest then, And including from do this how great. PPP round Okay, quarter the contribution income guess much net you two? in left and have

Heng Chen

end the total of It's million X.X a March. at

Matthew Clark

XQ? you contribution And the in have Okay.

Heng Chen

think mentioned -- I I my in was… it

Matthew Clark

go you can that's, If I back. okay, did

Heng Chen

you call I'll with it.

Matthew Clark

No worries.

one I me, then, And if just Okay. may. more for

But you'll bank post-CECL the to On you of are kind the run how low I these at? mean, reserve, your to reserves. continue of grow that threshold kind what's of minimum you're assume willing the into to in level go I world? willing

Heng Chen

driven Matthew. It's very formula

I quantitative most what And reserves. don't so the know we the the under of portion CECL answer is think is,

of be So got for then, the are forecasting unemployment, March. Moody's rest incurred in could year better loss the the good already April the CECL their than the when that, And And forecasts. of it's forecasts for lower they're reserves than example, times very what model. we

a a there's lower lower tendency for reserve. So for

Operator

you. Thank

question from KBW. next of Our McGratty comes Chris

Chris McGratty

margin of about the you I'm excluding thinking on your over PPP. And interested an higher update based the the Thanks. for impact expectation here, year? growth and how guys interest are revised whether an outlook, of the balance income loan in from quarter

Chang Liu

have sort excluding paid first volumes of during all we growth the of loan as the and down far and a PPP, quarter. number As had borrowers pay

So believe increase and economy a loan as that the we demand consumer will increases, recovers accordingly. a demand

pay So off year to going believe to that rise. to we for between the will continue the slow start we that as rates as XXXX also, mortgage that it's growth expect the full of Part to X%. interest such, be loan X% still

Heng Chen

Chris, you think part Yes, me. the question? for that that was repeat second I can of

Chris McGratty

growth, run your continue I'm off securities you're you Yes. some trying to going what income to out is I to and cash just that interest contributes for higher, expect whether Thanks. be to deposits. guess how figure net to expectation retention non-core deposit and

Heng Chen

is, quarter. fourth broker per It's about amount the mature a the term that like the much CDs rates, limited Because the certainly XXX of in a pretty held it in There's off to will for of backed of the securities. much. year. up going buying one mortgage interest we were have longer the million couple go But XXX really things on We in way quarter. looked of million rest March,

quarter, we expect the we to And second in -- buying started so MBS. have

will our to securities portfolio of liquidity or will that to excess overview. million so our moderate quarter, so some MBS will XXX begin and from use that And buy climb each up continue so

Operator

Thank you.

Our comes Tenner Gary Davidson. of next D.A. question from

Gary Tenner

ask, on tax think the over investments with uncertainty any tax I the said outlook off the you to I to of were last solar due on just wanted quarter holding kind Biden you credits administration. additional

amortization invest not changes in you a in Where effective this point, your no at that were in at have assuming If XXXX, the would your to result for that year? corporate do year the all rate tax out you think rate? full tax and

Heng Chen

the that QX on impact. our $X.XX or $X.XX about back EPS more market is at in fourth look will funding. quarter But plan into a the It's go share. I to for

Gary Tenner

you question Can Thank you. for us loans PPP average outstanding the give one the then, quarter? more And Okay. just on PPP.

Heng Chen

was but Well, I you. the linear, Gary. have February on I'll in was you to to and back forgiveness that pretty get call And It March.

Operator

you. Thank

comes of Chiaverini Wedbush from question next Our Securities. David

David Chiaverini

quarter. per per a quarter. on the much you much to the million you portfolio net Starting purchases, Wondering expect? should securities how with was we securities back mentioned cash curious I how is growth coming in follow up XXX

Heng Chen

MBS, it's It's a about, quarter. say, just on million I XX about would

David Chiaverini

and sheet thoughts And the next perhaps averaging? want of accelerating a seem be and are you that? does are dollar you comments of excess Can standpoint Or balance case kind what it months you slow want to related in to an too don't move up from then of viewing of Okay. fast more go aggressive plenty interest the bit your interest that give rates like later? little to of rate kind kind It cost you purchases? in liquidity kind to any the early few has about it

Heng Chen

latter the fees. we're think I PPP category. Yes, of in We've on conservative the very that amortization been

amortizing it little contractually. XXX,XXX, months. round And over we're are fees So for XX over are or on that this we're two, amortizing ones the the under over we loans five years XXX,XXX, amortizing

think there's to year I more half So in forgiveness two second the PPP. from round going the be of

David Chiaverini

that. And are pretty timeframe to million about strong sort for capital here. your you about talk And $XX thanks And and ratios work? Can then, the buyback your that of authorization. you appetite of putting mentioned

Heng Chen

Yes.

back depending we're lot during volatility stock and [indiscernible] that's some, of back we going buy And buy the bank if to so periods forgive there's look stocks, a for price. First, then on reinvestment. issued weakness, to the would of for

Operator

comes question of from Clark next Our Instructions] Matthew Piper Sandler. [Operator

Matthew Clark

on fee but I wondering core the wealth not. that income increase, sustainable, if not $X a it that's million just Just other fee a think management piece, had other on or up basis, question income, was the

Heng Chen

It's a one have time gain, fund. investment a the in Matthew, CRA we

gain, wasn't first the in quarter income housing and in so realize income. were able it booked to we And anyways. that that other low We so that

Matthew Clark

thoughts updated year any expense just last year? any core fixed then noise to and outlook, relative this amortization And your on Okay. to excluding other

Heng Chen

Well, we manage actively that. continue to

we're in closing two We branches have that June.

a the be there'll certain loan higher budgeted replace income accruals the quarter for and the some of likelihood rest throughout And saves then, offices we we provision but amount and side, of then, the higher million for very negative had provision on staff is year. the there. low well, to continue not than have we're So to a because year, the year. for can this our expense given couple And QX of bonus we provisions loss of first going a

be to that's what going see. that's So we

Operator

showing for any closing questions at I'm no turn back call this I'll further Thank you. remarks. the time. to Management over

Chang Liu

everyone call with look thank you speaking for We normal want our slowly I quarterly release we on to return to earnings call. as to pandemic. our joining from the at us forward next

Operator

Ladies today's and gentlemen, in for This participating the concludes conference. you thank presentation.

Have disconnect. now day. a may great You

Cathay General Bancorp (CATY) 27 Apr 212021 Q1 Earnings call transcript