On July 22, 2024, Cathay General Bancorp (CATY, Financial) released its 8-K filing announcing its unaudited financial results for the second quarter ended June 30, 2024. The company reported net income of $66.8 million, or $0.92 per share, missing the analyst estimate of $0.94 per share. Revenue for the quarter was $179.18 million, aligning with analyst expectations.
Company Overview
Cathay General Bancorp is a regional bank predominantly serving the Chinese-American community. The company actively offers services to low-to-moderate income groups in its branch service areas. It provides a range of services including checking and deposit accounts, lines of credit, commercial and real estate loans, merchant services, payment processing, treasury management, international banking, and wealth management services.
Performance and Challenges
For the second quarter of 2024, Cathay General Bancorp reported a net income of $66.8 million, a decrease from $71.4 million in the first quarter of 2024 and $93.2 million in the second quarter of 2023. The decline in net income was primarily due to increased non-interest expenses and a higher provision for credit losses.
President and CEO Chang M. Liu commented,
“We are seeing signs that our net interest margin has begun to stabilize. During the second quarter, we repurchased 0.7 million shares at an average cost of $36.41 per share, for a total of $25.1 million.”
Financial Achievements
Despite the challenges, Cathay General Bancorp achieved several financial milestones. The company's net interest income before provision for credit losses was $165.3 million, a slight decrease from $168.6 million in the first quarter of 2024. The net interest margin was 3.01%, down from 3.05% in the previous quarter.
Non-interest income saw a significant increase to $13.2 million, up from $6.6 million in the first quarter of 2024, primarily due to a decrease in unrealized losses on equity securities.
Income Statement Review
Net income for the second quarter of 2024 was $66.8 million, or $0.92 per diluted share, compared to $71.4 million, or $0.98 per diluted share, in the first quarter of 2024. The second quarter net income included $4.1 million from accelerated amortization of solar tax credit investments and a $1.4 million mark-to-market loss from equity securities.
Return on average stockholders’ equity was 9.63%, and return on average assets was 1.15% for the quarter ended June 30, 2024, compared to 10.40% and 1.23%, respectively, in the first quarter of 2024.
Balance Sheet Review
Gross loans, excluding loans held for sale, were $19.36 billion as of June 30, 2024, a slight decrease from $19.43 billion as of March 31, 2024. Total deposits were $19.77 billion, down from $19.85 billion in the previous quarter.
The allowance for loan losses was $153.4 million, representing 0.79% of period-end gross loans, and 138.56% of non-performing loans as of June 30, 2024.
Asset Quality Review
Total non-accrual loans were $107.3 million, an increase from $98.1 million as of March 31, 2024. The ratio of non-performing assets to total assets was 0.56% as of June 30, 2024, compared to 0.53% in the previous quarter.
Capital Adequacy Review
As of June 30, 2024, Cathay General Bancorp's Tier 1 risk-based capital ratio was 13.26%, total risk-based capital ratio was 14.74%, and Tier 1 leverage capital ratio was 10.83%, maintaining its "well capitalized" status for regulatory purposes.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Cathay General Bancorp for further details.
