CATY - Earnings call transcript Q3 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to Cathay General Bancorp's Third Quarter 2024 Earnings Conference Call. My name is Rocco, and I will be your coordinator for today. [Operator Instructions] Today's call is being recorded and will be available for replay at www.cathaygeneralbancorp.com.

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

Georgia Lo

Thank you, Rocco, and good afternoon.

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

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

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

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

release obtain This copy its third this for After comments To release we open afternoon, of today, issued will outlining please General XXXX questions. our up results. call our website Cathay earnings quarter earnings as at www.cathaygeneralbancorp.com. Bancorp an as earnings presentation, our well a visit by management

President Officer, and I will Chang Executive our the Chief to turn now over call Liu. Mr.

Chang Liu

compared quarter in in earnings XXXX, increased a QX. to share This share you, million QX of we increase $X.XX income our per to third share third as as reported $XX.X the Thank XXXX quarter earnings afternoon. good $X.XX afternoon, per to conference QX. call. Georgia, for and X.X% to million compared Welcome for per Diluted $XX.X X% net

buyback million During our an in depending repurchased with XXXX, QX $XX and market cost in around the quarter $XXX million XXXX, our quarter to continuing at under $XX XXXX, We of May stock anticipate QX per program. average XXX,XXX repurchase conditions. $XX the stock we million of common per shares of share, on stock third

million annualized million QX gross by X% and loans, $XX loans In total X.X% and in or increases in increased of annualized, X% driven annualized XX% in annualized CRE loans. $XX offset mortgages of or annualized in and million residential $XX $XX loans or primarily decreases or by million HELOC million or C&I X% construction XXXX, $XX

in be the minus We expect based XXXX to XXXX. X%, and loan growth X% so trends between for far on loan

in that rate shows X rate each loans portfolio percentage in fixed major are loans the loan of fixed Slide either hybrid or period. their

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

expect We market yields loan our these support as fixed to expected rates to decline. rate loans are

continue We our estate loans. real monitor commercial to

of to our earnings X presentation. Slide Turning

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

total XX% of of portfolio, XXXX, total loan property X, of XX% our or on September our XX, of loan Slide loan As CRE comprised our retail portfolio shown portfolio.

$X.X centers, the strip by only by or X% of neighborhood building, XX% mixed-use centers. shopping in loans retail retail property store billion secured secured

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

charge-offs of million $X in QX. to million XXXX, QX $X.X reported compared For we net as

to XX $XXX.X compared than days loan XX, relationship September of loans. Our in million primarily loans $XX.X on to million $XX The total nonaccrual those a on interest loans that of QX. XXXX, placed QX of came which X.XX% million from during $XX nonaccrual of more XXXX as million as was were increased nonaccrual loans delinquency to increase and due

relationship, where is The million new a another Of seeking this this financing repay real $XX.X the loan looking borrowers loan loans in to estate commercial also borrowers for lender. relationship.

We to next resolved in expect delinquency months. the loan the be few

is real large million Kong a in rental projected are These by loss. new nonaccrual with secured X Hong loan $XX.X estate no properties loan

we also recovered million $XX a quarter, construction During loan, the nonaccrual of million $X.X loan largest interest. saw and third back our

Turning to Slide XX.

QX, placement $XXX As million $XXX discussed in accrual, million $XXX the in of to loans from the mainly classified above million from million XX, $XX to mention to an million relationship $XXX our increased of QX. to September increased due special loans XXXX, loan

X.XX% provision recorded XXXX credit QX. for million for This $XX.X We a increased million compared of a for the in loss for to to QX QX. to credit as provision for losses ratio X.XX% loan from QX $X.X reserve

have X.X% mortgage historically low Total increased to annualized and marketing total QX in our X.XX%. reserve has would or loan by increased annualized or time QX very million the million residential excluding activities $XXX content, deposits million factors core total which or during $XXX However, deposits to XXXX. portfolio, decreased X% be ratio loss Total deposits seasonal during due XXXX. X.X% $XX annualized

as decline. to deposits allow lower us average of time cost is are of rates months, number deposits X of time expected which deposit The will the months to

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

of September liquidity available from as of an $XXX unpledged have Loan the XXXX. of Federal and uninsured as XX, deposits more uncollateralized XXXX. of and XX, of borrowing securities Bank We and of of unused These the $X.X Reserve billion billion XXX% than covers sources September Home capacity $X.X Bank million Federal

Financial in discuss turn our Vice results Chen, Officer, the financial I will Chief now detail. Mr. floor to Heng Executive to President quarterly more and over

Heng Chen

and Chang, you, everyone. Thank afternoon, good

income for in noninterest in QX to primarily for due offset $X.X and $X.X million $X.X million interest credit For $XX.X $XX.X losses and $X.X income expense. increased million million QX $X.X million provision million and of expense, noninterest XXXX, net or to $X.X income to increase increase X% decreases a income tax million in in increases in net by million compared

for reduced from per for income for XXXX. was QX XXXX interest share Net was recorded X.XX% QX. or million true-up $X.XX QX credits margin the compared loan-composing X.XX% net by XXXX tax of to as $X.X

starting increase. the Fed appears out margin and the our have With begun rate net bottomed interest cycle, cutting to to

XXXX between interest that basis the points basis X.XX% to points as XXXX margin income to interest We annualized adding X.XX%. net added $X.X the anticipate million for X and and million compared $XX.X QX XXXX. X primarily margin interest in to million The QX a [indiscernible] equity to was $XX.X when interest to compared on range increase securities. for recoveries income QX, increased gain In mark-to-market due net for QX. in net and $X.X million to Noninterest increase

decreased QX and X.X% lower operating million million lower in in $XX.X or $X.X million decrease operating due compared This to QX. expenses $X.X million expenses $XX.X professional $X.X to to Noninterest expenses. XXXX -- million other expense in in by was primarily lower

for for compared The to effective X.X% QX. rate QX, was XX.X% XXXX as tax

million $X.X be long-term in million QX. tax tax tax XXXX and $XX.X credit an rate solar $X.X tax in of expect XX.X% third credits to income amortization A quarter and The XXXX. with effective expected is expense. million investment true-up XXXX for in added housing XXXX XX.X% between We for

June to capital risk-based ratio of leverage as total XXXX, As XX, June our of risk-based from XXXX, Tier compared XXXX. to September X to of as XX, our as as capital Tier from capital to XX, increased decreased and XX, June of XX.XX% XX.XX% XXXX, XX.XX% X ratio increased XX.XX% ratio XX.XX% XX.XX%

Chang Liu

Thank you, Heng.

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

Operator

Instructions] Tenner D.A. Davidson. Your today from comes [Operator at question first Gary

Gary Tenner

any quarter, reserve $XX related loan million loan increase to increase. I on Was the $XX nonaccrual in relationship the model in any made that quarter? wanted to about to the the in changes inputs other first ask you the or the that there? went million the loss Or that

Heng Chen

this Gary, have loan. million specific That's $XX that. Heng. reserves any against Yes, is did We a not

charge mainly extra net our reserves. $XX reserves. added general So just the to we bolster It's million of offs

Gary Tenner

us XXXX, fixed then fixed out that enter loans of next a much fixed maturity as period schedule loans hybrid looking then we're give And the of then and hybrid how fixed idea of year? Okay. become to you those an the And loans loans, loans? can the the of

Heng Chen

get hav that don't I to you. are couple I'll of of back Give Most residential those handy. hybrid loans and days me a mortgage.

Operator

And with our next Terrell Stephen. from Andrew question comes today

Andrew Terrell

to the third If I the could deposit leveled quarter. just CD on in time out repricing the cost start interesting see

are what's at book And today? rolling relative then Just your And you the where cost for the up average right now, off of you what's much maturity? the look in curious, fourth CDs fourth quarter? coming where kind pricing is how new cost if to back at of -- quarter,

Chang Liu

quarter, the that. those the choose on to going about months, Depending maturing are can those CDs is to of be fourth yield maturing about whether kind what is I In low rates average or where X.XX%. So -- X CDs tenure, it's with start billion. XX clients going months be upon The the $X.XX mid-Xs. to in

Heng Chen

Chinese about we promotion, Xs, X-year $XXX in from roll X.XX%, to and X.XX% then New low And maybe January CDs. those that the have that's Year X.XX%. they'll And million at is were down early February and our hopefully maturing

X-month Chinese and matured $XXX early so that we And a another August. July lastly, then have million or promotion in CDs

maybe XX renewal But in -- be basis XX-point they for repriced up so January or So on by when another points. February, in some down come and those. there will we they reduction

Andrew Terrell

of sure the to guidance more full right? the it. the Okay. dollars on growth appreciate a expect I to moderation Very X run expense step just stated good. bucks I kind XQ? few side, it or XQ in we a year looks have in making could to again move this down side, so correctly. I core range implies what few by core quarter. on ask expense by Does we a get that the the million to Should rate. It just similar expense sound expenses a If million 'XX, the core saw off like

Heng Chen

-- be opening project, we QX. process and which our that I think Improve deposit the have there'll finished is close QX. in But this should largest to -- be our

something a we'll them from guidance. for there just save So office. our couple Andrew It's of

Operator

KBW. comes question Chris from next McGratty, Our

Nicholas Moutafakis

good quarter? Chris. million Moutafakis This start for a just run for Is Maybe amortization housing. rate low-income the the $XX still for quick is fourth on on on Nick real

Heng Chen

Yes. Yes.

Nicholas Moutafakis

And you any next. just just the Okay. into looked reason as buyback, capital quarter this on in re-up deviate for said you then XXXX to know for $XX authorization I million the levels? and But the given

Heng Chen

we're probably the but Xx, Well, that [indiscernible] increase do this with the Board But it $XXX consider signs million . increase when maybe same one. with done million will we'll we $XXX our will to

Operator

And Piper Sandler. Adam with our next Butler question today comes from

Unknown Analyst

spot NIM end end more. guide, the from assume your low have This quarter is and/or Adam basis X deposits at be loans, at end a would Clark. and point If the of quarter Do would even the guys this for increase for on of Matthew prior you to upside the September? rate look high on month NIM I the the happen about the

Chang Liu

Yes.

spot So for is is the about to and our compared X% about the portfolio quarter, residential rates on mid-Xs. mortgage X.X%

mid-Xs be Our is real about portfolio estate at mid for spot portfolio in X.X%. the basically that and our our compared is to yield yield rate loans, the average rates commercial spot C&I mark. should And the right at the X% for the prime -- -- around

Unknown Analyst

you the I then also was NIM and deposits the curious have And about that.

Heng Chen

Yes.

to we're get the So you by -- it's going category. deposits, mean, I

interest now end that X.XX%, has it is total September is money NIM for account September is and at the X.XX%. and then was market period X.XX%. now X.X%, bearing X.XX% So recovery is a is is quite X.XX%, interest CDs And rate of on X.XX%, bit NIM savings

Unknown Analyst

And like That's looks question. but migrated ask due to nonperformers a bit well. relationship, just that increased if very the Okay. $XX.X looks helpful. more little I more X in could as million like primarily It it

migration You guys the haven't color during -- quarter? any provide can the guys on you remaining

Chang Liu

Yes.

that Hong One million. collaterals retail secured of by them $XX.X was center was Kong X about about in that and talking we has were the X

Operator

for call. the will back everybody Thank thank now Bancorp's Instructions] on for you us I for remarks. turn Again, [Operator management closing I to to Cathay your participation. our joining want General over call

Chang Liu

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

Operator

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

and now good You disconnect, may day.

Cathay General Bancorp (CATY) 21 Oct 242024 Q3 Earnings call transcript