CATY - Earnings call transcript Q4 2024

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Operator

Good afternoon, ladies and gentlemen, and welcome to Cathay General Bancorp's Fourth Quarter and Full Year 2024 Earnings Conference Call. My name is Asha, 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.

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

Georgia Lo

good and Asha, 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

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

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

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

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

Chang Liu

afternoon. good and Georgia, you, Thank

along are The that the fourth that with I long-term is know community, person heavy of Angeles. to work and unimaginable, devastating Los our Los will the our have swept the bank, Angeles our a diligently of quarter the rest flames will Before the with process. destruction we communities are every our part. is towards continue. Recovery lives into that XXXX rebuilding fires The with of and affected. When thoughts go continue are across extinguished, work news earnings, hearts

This $XX.X share as QX. of per to income in in for Diluted XX.X% to share compared net for per compared we as $XX.X $X.XX QX XXXX, QX. million increase increased the earnings an share afternoon, reported to fourth quarter per $X.XX XX.X% million

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

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

in growth be XXXX X% loan expect X%. and We between to

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

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

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

commercial our to monitor real loans. estate continue We

of earnings to deck. Slide our X Turning

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

is strip the portfolio. retail shopping neighborhood, store Slide as or portfolio, billion secured XX% our buildings, shown of of December of $X.X centers. of total As loan retail secured and loan loan XX% and mixed retail our by X% property only on our comprise XX% is or in XXXX, CRE loan use by XX, property XX, of portfolio total centers

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

syndicated $XX.X net to $XX.X $XX.X XXXX, is million for net business. borrower in a the QX to charge-offs, recycling commercial million million QX. in we For reported Of related charge-offs compared $X.X the of a million loan as

million in increase $X.X were Our a reclassified came increased compared no loss $XX loans nonaccrual loan total XX, from is The to mixed-use property primarily was by to during of is $XXX.X as borrower QX. in by filed The bankruptcy. secured as New X.XX% The and December XXXX a the loans commercial and as after loan million loan million residential for York. in loans XXXX, collateral fully the which nonaccrual collateralized nonaccrual CRE of December QX projected.

XX. Slide to Turning

from XX, X.XX% December X.XX% in of QX. our of to $XXX million reserve-to-loan QX. QX. classified for $XX.X in as million $XXX for million XXXX, slightly $XXX XXXX, As in And million recorded loss The QX increased credit We same decreased loans QX $XXX million ratio decreased provision loans from for to for from QX. mention special to a

reserve-to-loan residential ratio would excluding However, total mortgage be portfolio, our the X.X%.

annualized X.X% decrease XX.X% factors or due seasonal decreased the broker million QX activities. or annualized due XXXX, million deposits, to $XXX excluding decreased Total $XXX XXXX. million deposits. deposits of by during primarily million and marketing deposits core to Total deposits, $XXX $XXX in time increased QX Total during broker

and to be deposit expect X%. We XXXX between X% for growth

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

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

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

Heng Chen

Thank everyone. good afternoon, Chang, you, and

primarily compared $XX.X to million tax to QX a $X.X $XX.X expense interest $XX.X offset expense, for noninterest to and income million increase by From decrease noninterest million or million income $X.X XXXX, QX, in due net of net in decrease million increased in $X.X decrease million income. million income, to $XX.X in XX.X%

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

net while the We anticipate support the based and net NIM have costs are that ability income of to NIM, on quarters next loans. out, to fixed our interest the over lower further to having our income, bottomed pleased interest we and few appeared deposit benefit the rate

added projects report, XXXX. July assessment the X.XX% XXXX strong cut futures margin the anticipate in Fed interest for basis fund points to income sorry, penalties margin net prepayment to and QX. X recoveries job rate basis interest with -- to points -- the net December and the for interest in With QX, We X that between interest to X the compared interest net December margin In as range X.XX%. net

decreased QX Noninterest $XX.X of unrealized income in on primarily for million in decrease equity $X.X XXXX $XX.X million compared to loss in QX QX of gain $X.X in was X.X% The million to to $X.X mark-to-market due XXXX. million million a unrealized QX securities. change to

or when tax for in lower $XX.X XX% million primarily compared decreased to funds decrease was $XX.X $XX.X million This million the amortization. QX QX. solar to to expenses due by Noninterest million $XX.X for XXXX in

between to credit tax from XXXX. to core noninterest and intangible X.X% deposit to core expect amortization, expense, X.X% We XXXX excluding increase

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

in investment We of any funds investing anticipate expect solar an rate We credit in for tax effective XXXX. tax and XX.X% XXXX. XX.X% between do not

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

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

Chang Liu

you, Thank Heng.

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

Operator

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

Matthew Clark

average the a give Could and in month the questions Just the the deposits December of on of the year? rate at around then few spot the margin you margin. end us

Heng Chen

Yes. other That points your part X X.XX% -- And X.XX%. December includes of recoveries. then sorry, interest month question? what of I'm was The for margin the was the average basis of the

Matthew Clark

spot rate either interest-bearing deposits, on The year-end. or at total

Heng Chen

So the rate year-end weighted spot was X.XX%. total at

Matthew Clark

That's interest-bearing. Okay.

of how maturing here and and the to due are you at renew can Okay. way coming have And they're you remind at? the rates expecting the you're quarter then us what first CDs in much in

Heng Chen

Yes. It's quite a bit.

we New CD on renewal the Lunar So Chinese yield average had of promotion Year our size X% the $X.X X.X%, from offering Year billion depending maturing. maturing, and CDs This is Chinese the that's the X.X%. New at between We're and of from deposit. is the

Matthew Clark

in And amortization and for this one, tax then I'll the low-income year dollars? in queue. -- just Okay. hop credit housing expectations last your the back The

Heng Chen

million $XX about quarter, a It's Matthew.

Matthew Clark

investments credit Or just solar, housing for not going rate you're Okay. we're are other And tax to I low-income in there but is any tax any do now? guidance? that it the assuming know embedded

Heng Chen

just It's low-income housing.

Operator

McGratty with The next question KBW. from comes Chris

Christopher McGratty

if expense investments wondering a roughly could or you out? in was if the of in we've core expense I'm there's X%, some little anything you'd catch-up been what higher bit I seeing. than a particular growth call -- unpack wondering the

Heng Chen

we've higher than year out in XXXX, for -- impact adding it's mostly lower bonus so target. of been It's to accruals paying we a staff bonuses because then were year, next we expect this And that. the full year that's

-- So there's significant. that's trying nothing, really flat, nothing but

Chang Liu

Yes.

the beef of given up the level So of regulatory side Chris, maturity to spring expected on business, higher had side risk that's since really of the 'XX, from side. we our our risk

side, I the our consistent the branch that's lending It's side. So some of where the the operational uptick other side been at in been head actually on looked than the count. we've adding pretty and bodies.

Christopher McGratty

Yes, Chang, Mr. Okay. talked Great. the you've past. about that, in

side. You're up regulatory beefing the

in, Okay. color sense. there $XX any That you increase special then that the can on guess, I provide? mention, And the makes million

Heng Chen

X just is it some of had Most that lower credit profitability.

with abundance special an there's mention. that of caution on loan So

Operator

comes from D.A. with Gary next The question Davidson. Tenner

Gary Tenner

had talk quarter. gone about be. exposure have know underlying nothing impact for wanted of terms businesses lot of these kind about areas for Obviously, of I ramification of might still access a to in how in areas? of kind you to about the you either ask to sort of you've of a some this operate kind of assessing been may you the I a that exposure They closed property-specific of period might or time. those wildfires. credit the Can

Chang Liu

Sure, Gary.

by kind me We you some at areas look give let the So codes. update. affected ZIP of

available LA based data at what on looked is County also inspections. additional We

have size loss the with portfolio, Palisades, the So far, verified have in of the the it's them as portfolio real of we portfolio. a the as There's estate the our in C&I HELOCs and -- assets through And the in we have X the that SBA small nothing collateral In nothing any total. items a well reported in portfolio. number business of compared a that banking have in portfolio no reported to have reports C&I in websites. and mortgages some commercial X of some it. of But we segment few of the mortgage we that we received

Gary Tenner

appreciate I rate in portfolio. terms there. being in then down the just the in much the of to a securities Can recall color variable way securities of you the quarters kind yield, didn't row. of expectations in I few And of it's yield a there forward? Okay. your come securities talk going

Heng Chen

most the replace -- we buying matured. financial mostly saw generally XXXX some called and not over were Those then X% X-month range, down We've have are it's of or all the Gary, come those been debt treasuries, that's has and XXXX. institutional that been will And and it. between in change. we rate Yes.

it. much expand So this -- amount not securities total -- the portfolio pretty at that's our looking time. but We're of that to

Operator

[Operator Andrew with Terrell The Stephens. is from next Instructions] question

Andrew Terrell

Chang, just capital. a question around

in position. I strong interest in maybe your I remarks, buyback, heard prepared still a the your continued think is really capital but in

thoughts. Just M&A Would to you avenues hear any deployment. thoughts wanted to of updated interest you get capital love in your other Is potential to on from of XXXX?

Chang Liu

eye much. had market. business. really There Sure, it the our a move you Yes. very are the the New York of backyard, sort There in and depends certainly as sub-$X operating Texas niche Andrew. an the base number of billion, side players know, on and in M&A We've But market. always we're that ones which is on certainly in our The the York, Texas doesn't of New in opportunity. some but always a

have certainly, and a if numbers. profiles we'll makes mix if It's then sense. opportunity there. sense we'll makes the them it's look not definitely that the us there, is something value But ours, and some lot it's to at. similar it it for at strategic sort very for of And accretive there's of a look enterprise us, If that's of to

available. to give certainly if a this even So become us they pause were

Andrew Terrell

this runoff just there the on remixing then margin, is that guess, the And broker Was Understood. then it was or that broker XXXX? fourth loaded? deposits spread any deposit And front-end expectations going quarter, more evenly back-end the specifically throughout foresee forward, I pretty throughout you quarter?

Heng Chen

portfolio. it November But an was of we'll left Andrew, of some core deposits. December, and in Yes. in which half core that's of second most loan the it's CD we come our probably the deposits less had where bit, quite deposits, maintain we'll growth it, It's maintain brokers just the we of just of But inflow a December, unless us. deposit book. for have incremental good than and source higher down

Operator

Sandler. comes question Next Piper Matthew from Clark with

Matthew Clark

you of remind net just large us how Can you your Shared SNC charge-offs think out National part called Credit is? as I portfolio your being related.

Heng Chen

total our loans. been X% XXXX shrinking We've about reduce It's that in to exposures. risk of

Matthew Clark

of guess, is that what criticized? I And Got it. portfolio percent

Heng Chen

criticized our -- of our is -- on nonaccrual. think It's the in most is I

lower it's those or sell credit we National QX in reduce X%. sold did Credits because Shared X% a $XX small exposures. than about we to average of So And discount, million at

Matthew Clark

it. Got

Okay. Risk Officer But week, the And looked departure? on on can retirement. last then departure, there the you more just just think some color a provide Chief I like late

Chang Liu

he Yes. of next retire it's mean we really But candidates risk that kind and it's really, to were to I on We just right? the the wanted that move chapter. to Sure. the of really of business. we meantime, in CRO of side has focused the on and timing, I off the are down mean, incumbent and search able more to think be kind And in to qualified post go step -- spring market 'XX, for I space. that need expressed

going And maturity the us. Diana, of right to and so we candidate and on the believe we risk elevate found side in level forward her we're the counting for

Operator

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

Chang Liu

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

Operator

Thank you the This concludes for conference. your participation today's in presentation.

You may day. disconnect. Good now

Cathay General Bancorp (CATY) 22 Jan 252024 Q4 Earnings call transcript