CATY - Earnings call transcript Q2 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Cathay General Bancorp Second Quarter 2024 Earnings Conference Call. My name is Cole, and I'll be your coordinator for today. [Operator Instructions] Today's call is being recorded and will be available for replay at www.cathaygeneralbancorp.com. I would now like to turn the call over to Georgia Lo, Investor Relations of Cathay General Bancorp. Please go ahead.

Georgia Lo

good and Cole, you, afternoon. Thank

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

are future Before that Securities on call to meaning could Litigation of speakers subject of Reform we that applicable these provisions within concerning forward-looking this begin, Act remind may to wish and you results we risks of and the uncertainties statements actual the cause make statements differ and the events to the materially. certain XXXX Private that results

These other XX-K in for described and Securities the reports results in Commission XXXX, the Form ended year report XA December filings XX, time with on are and Exchange to the time. uncertainties and at in company's from and further Item annual particular,

to And you any as speak reliance As no made. is forward-looking date not unanticipated or such we update reflect circumstances, the events of law, by statements obligation statements developments of place events. such, forward-looking the to or statements. future review only we or forward-looking except occurrence required undue undertake as it Any which to caution on on

management Chief now by we open call Executive will comments Chang After today, earnings This as XXXX of afternoon, our please call our our website General Mr. well Liu. the turn will presentation, visit release www.cathaygeneralbancorp.com. Bancorp over earnings President as obtain a outlining an questions. Cathay its Officer, at I up quarter release To this second to issued results. copy for our earnings and

Chang Liu

$X.XX $X.XX to $XX.X [ earnings quarter as the of X.X% Diluted XXXX QX. share reported QX share income call. compared to per to per our prior million [ quarter. compared XXXX ] XXXX, This decrease of Welcome $XX.X you, ] share Thank afternoon, quarter second to the by for for afternoon. per earnings second good a as X.X% million Georgia, in decreased conference net we and in

of $XX.X ] stock we under or stock May $XX.XX our of During QX program. average our XXX,XXX million repurchased common [ million buyback XXXX, $XXX shares cost at an XXXX

we annualized depending XXXX, annualized estate $XX May $XX million stock annualized QX, $XX conditions. repurchase $XX or $XX by in repurchasing anticipate In on and per the X.X% XXXX gross of loans, loans. and in decreases market annualized in million quarter Under loans real decreased QX mortgages loans, increase annualized, QX stock driven X.X% million offset or HELOC, total X.X% commercial ] and primarily XX.X% [ by commercial in program, X.X% of in or an residential in $XX million million construction or million around or

X the growth loan growth we Due either ] the Slide [ to between guidance hybrid have loans first X% loan shows range and slower-than-expected revised of fixed X%. for loan of rate in percentage their period. XXXX, fixed-rate each in our are major to that loans XXXX in half overall portfolio or

loans fixed rate and comprised interest total consists portfolio and [ flow on X% rate total loans. rate XX% total excluding of and period loan of swaps rate XX% to [ hybrid loans, of Our fixed loans. combined ] ] fixed Fixed hybrid XX% of loans,

our monitor loans. to continue estate real We commercial

of presenting. our X Slide to earnings Turning

CRE loans As XXXX, of the of average June loan-to-value XX, our was XX%.

shopping building, by our June total of X secured total Slide property in billion portfolio. of XX% [ property retail of is secured or or strip $X.X use our loan shown retail mixed centers. comprised XX% As is retail XXXX, on or centers XX, ] as loan portfolio loan portfolio loan and neighborhood, by our XX% CRE of only XX%

offices, loans the of office real $X.X of by by mixed central our are remainder office condos. buildings. and Only in Only stores, X% by our real property are medical [ office total are portfolio. loans loans office collateralized property the office estate X% use collateralized On districts. loan XX% of Slide of pure and XX% business property office XX% loan office or represent are collateralized ] portfolio XX% commercial total billion in XX,

XXXX, reported net of we which million million compared of XXXX, March as million, $X.X of reserved QX to For charge-offs $X $X.X QX. in XX, was

from Our nonaccrual nonaccrual million CRE million increase X XXXX, of of CRE and loans X retail loan total came June no increased condo X.XX% during losses The appraisals. recent loan loans compared totaling based on XX, were QX $X.X QX. projected million in which as $XXX.X as to XXXX loans, to mainly $X.X with office

to XX. Turning Slide

increased $XXX due with QX time in for QX. the our XXXX of NOW and in a to credit We from As of shift $XXX for with decreased NOW QX for deposits decreased deposits compared decreased deposits XXXX XX% in total or Total [ deposits provision loans million and classified $XXX XXXX, or loss XX, a annualized losses million time increased due or deposit rates. from $XXX by QX million $X.X brokered Total QX, million decreased during X.X% $XX mention ] million annualized annualized to million core higher QX deposits. from million deposits runoff core to loans during to million recorded million X.X% $XXX special credit provisions to $XXX $X.X in of as to XXXX June million in QX. $XXX

We estimated to expect growth between continue X%. an range X% and overall deposit the

uninsured billion total XXXX, deposits of As of $X.X June deposits in XX, $X.X or of net XX.X% were collateralized deposits. billion, total

Chen, of financial of the XXXX. deposits floor President XXX% $X.X now ] and XX, June from liquidity Loan $X.X the securities and Bank [ sources We more to and unused Reserve of capacity Heng Executive discuss will cover billion Mr. of have Officer, These Chief of more to Bank turn the June Vice in available of XXXX. I $XXX uninsured the as Federal XX, than quarterly as results borrowing un-collateralized Federal over detail. Financial an employed our billion Home and of million

Heng Chen

Chang, Thank and everyone. afternoon, you, good

accelerated million decreased by net QX or to due $X.XX For credit forecasted credit million QX, investments, to XXXX. half be million diluted $XX.X to for for partially second amortization $XX.X of in the primarily or increase and $X.X X.X% million to XXXX, previously from losses income a tax the million share compared $X.X XXXX due for per amortized were which provision in solar $X.X to of QX

XXXX QX X.XX% net to X.XX% for interest margin was as QX. compared

bottom was help recoveries this of net We interest which repriced they margin high-cost our half including X signs -- added mature month QX. June in points in as net to Approximately and that were begun net the billion second margin are of seeing interest CDs, has and will cost NIM the of since $X.X [ for in I'm no And the reprice, interest the for margin basis penalties X.XX%. deposits XXXX. to lower of as basis prepayment net to income compared points the X sorry, ] interest interest out

decrease in XXXX was offset XXXX loss professional salaries Noninterest $X.X And in in XXXX Noninterest expense million compared offset in $X million was realized million QX. and to true-up million million decrease $XX.X and QX, tax million primarily to equity solar a ] expense to the in in expense, on million to million XXXX. long-term seasonally by of $X $X.X million a higher income decrease benefits X.X% million in million higher payroll a $X.X XXXX. credit increased securities in QX This million due $X.X and a lastly, QX higher due mark-to-market $X.X increase million to The investments, increase for $X to increased $X.X and of OREO for decrease securities, FDIC unrealized in XXXX. QX. of bonds [ million million investment in primarily $X.X of due housing $XX.X or in $XX.X gain by in compared $X.X expense in assessment to when in QX higher expense on QX amortization $X.X by sale QX

enterprise for OREO X% of tax increased previous build we was and excluding To amortization to control core to X% tax expense XXXX between as for guidance core and compared and X% to other functions, rate from the deposit up of to have risk QX. intangible XX.X% effective QX X.X%. expense, The guidance management infrastructure noninterest X.X% for credit our the

between total with We million investment rate and XXXX. million tax $XX $X XX.X% XX.X% and of the expect $XX.X half effective million solar of QX amortization in credit second expect amortization tax now XXXX We amortization for QX. in

capital As our leverage Tier of XX.XX% ratio XX.XX% June to as as X compared to increased XXXX. XXXX, XX, March XX, of

capital increased to X Our risk-based XX, XX.XX% to risk-based as from ratio XX, of of XX.XX% Tier XXXX. XXXX, ratio as March from our XX.X% and March capital increased total XX.X%

Chang Liu

the call. of We'll portion you, question-and-answer proceed Thank Heng. now to the

Operator

Piper [Operator Clark today Sandler. come Instructions] will first Our Matthew from with question

Matthew Clark

you if at Maybe end number, on either interest-bearing spot on June, just total. one deposits or the your had that rate of

Heng Chen

Yes, hold on.

here. it We have

interest-bearing, total deposits, of rate spot the So X.XX.

Matthew Clark

it. that your guide below, of basis, second guide. in get a implies run to core $XX Okay. half slightly the on the expense core drops Got of then just million to on $XX.X And rate midpoint million it the this quarter updated

get Just rate. core a to to drive in sense what's the expense that of reduction trying going

Heng Chen

or expenses have We higher like there, $X think in expenses here we that. will and consulting, some to million continue charitable half. we but quarter contributions onetime higher Well, second in marquee, QX, the a moderate higher could things off be

Matthew Clark

how guess, was you you marketing and guess, around do I can that -- consulting, And of unusual, contribution? I Okay. quantify, much charitable

Heng Chen

$X.X about Yes. million. it's I'd say

Matthew Clark

Low-income housing a amortization Okay. Got it. XQ? expected in just And and one. XQ then quick

Heng Chen

low-income for each housing. quarter a million $XX about It's

Operator

question our next Terrell Stephens. from will come And with Andrew

Andrew Terrell

those on CDs kind half cost out curious, And ask for? year. of your fairly are spread of in X talk you can to XQ? kind $X.X spread of quarter? XQ I billion, Or you're deposit just I there? the the I it the you aiming kind that of Wanted for reduction weighted the think mature pickup What is said, -- about overall, to back was between heavily and expectations more appreciate of then

Heng Chen

is so slightly than QX, Yes. $X.X about billion. higher QX is $X.X It's and QX, -- in QX billion it's

in in time. ] rates from [ far. I targeting Our think general, that so we X-month this renew haven't July, so good Chinese We've we're think rate runoff net I that is any started was And news the X%. to around And seen CDs promotion secured the X.X%.

So basis points. that would be XX

Andrew Terrell

appreciate factored already? would Okay. benefit I assume guidance there into margin Perfect. kind of it. of your And is any I that repricing the

Heng Chen

yes. Yes,

course, Of yes.

Andrew Terrell

stepped amount I quarter. the the through a was Looked up they decent on this looking like classified presentation loans.

$XXX the terms this of you step-up this Kind hoping color driving to seeing the the up classified in just a any little quarter, maybe million last [indiscernible] quarter. in from increase? Or on you're common could about classifieds what's any was threads I just of think talk quarter. I more increase?

Chang Liu

mostly They're and all secured. -- the all mostly estate they're real downgrades class, they're from EM

significant there's we any there. So think risk don't

Andrew Terrell

a of Okay. just currently? that on kind for I'd you maybe refresh strategy Got can like point. on quickly, it. any update -- And maybe interest then, M&A to just us Chang, your get

Chang Liu

Yes. we that's sense this. We our a you boards And to until that there candidate about for all talked or there's don't within viable now. niche out us space, a certainly company guys makes have anything right have on the out there

Operator

Instructions] Our Davidson. [Operator question Tenner with next Gary come D.A. from will

Gary Tenner

I guidance. growth through the to about Annualized year down loan half just X%. first updated of the loans are wanted ask the

second if So it. pretty not get above solid even, half to back to just

year come So full growth, how pipelines change to segments the and in various given that the kind the of about the you expect driver improvement in you look of where kind can talk of terms loan tone in from? of loan

Chang Liu

in it the estate growth come saw you from some of second the commercial Gary, -- results. the real probably in as most quarter will first of

as down is to any as increases any our down C&I And from the is liquidity to most application pay and as CRE our rates. they higher C&I their well, probably trying -- using also mortgage clients on deposit trying see up residential prior you'll of to rates, Our side soon the the down the of higher because side given deposit But are increase XX%-ish business. balances business part, outstanding our the for side can. the pick side. We're loan and more both the of year.

Gary Tenner

year this given positive down you've year? seasonality. fourth historically, some tempered that's lines, wanting is pay Do well? positive your do you a that Appreciate C&I, this quarter think on that. kind that to had of as then a customers that, comments you little bit about think those Or factor And more

Chang Liu

Probably this Gary. more year, tempered

the XX, September, given if on I is think, think flat lower the been Utilization, will are, cutting percentile. where the end. stay balances I a rate rates kind I still think the even relatively around has of potential that there XX

not fourth expecting looking positive we're quarter or that impact during So for period. a

Operator

And McGratty question our come next will with Chris from KBW.

Andrew Steven Leischner

how stabilize This on know trajectory Andrew here. . the Chris is should the starting bottom NII from you're But NIM out see for I be here? we to being about you McGratty. the mentioned thinking

Heng Chen

slightly, up asset the the so partly to to December. the that X Well, expected now second go up rate we're with number cut then September should keep in and flat going earning

Andrew Steven Leischner

is there? And greater then And points reserve CRE is more just basis can. [ I here? total RBC. if concentration X of your your comfortability ] and at XX% Okay. any CRE from reserve build thoughts on What's XX

Heng Chen

Well, I almost of are loans personal XX% we're the that all -- at about full think low look fact our guarantees. the which LTVs, have we and CRE

So can't -- usually, borrowers depending in X stay they the California or with early is they OREO. still we for just on if [ the happens loans the nonaccrual -- what quarters, ] or become and nonaccrual X pay, that

are sell close normally OREO book. to able So our to then, we

solid But still per to make want we a economy remain the okay. So reserved. adequately sure there's, loan we that loss ] we solid, we'll don't we would think with think have history, be quarterly to [ is Cathay's in being

Operator

I now General management you for to turn for the Bancorp's back Thank your participation. will over closing call remarks. Cathay any

Chang Liu

our I quarterly to and call, earnings look us release for you speaking at thank next want everyone forward we on our to with call. joining

Operator

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

You a disconnect, may good and now have day.

Cathay General Bancorp (CATY) 22 Jul 242024 Q2 Earnings call transcript