Release Date: October 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cathay General Bancorp (CATY, Financial) reported a net income of $67.5 million for Q3 2024, marking a 1% increase from Q2.
- Diluted earnings per share rose by 2.2% to $0.94 in Q3 2024 compared to $0.92 in Q2.
- The company repurchased 832,460 shares of common stock at an average cost of $42 per share, utilizing $35 million under its stock buyback program.
- Total deposits increased by $171 million or 3.5% annualized during Q3 2024, with core deposits rising by $195 million or 7.8% annualized.
- Cathay General Bancorp (CATY) has a strong liquidity position with unused borrowing capacity from the Federal Home Loan Bank and the Federal Reserve Bank, covering over 100% of uninsured and uncollateralized deposits.
Negative Points
- Loan growth for 2024 is expected to be between minus 1% and 0%, indicating a stagnant loan growth outlook.
- Non-accrual loans increased significantly to $162.8 million in Q3 2024, primarily due to a $38 million loan relationship placed on non-accrual.
- The provision for credit losses increased to $14.5 million in Q3 2024, up from $6.6 million in Q2.
- The effective tax rate for Q3 2024 was 13.6%, a significant increase from 7.9% in Q2.
- Classified loans rose to $382 million from $324 million in Q2, indicating a deterioration in loan quality.
Q & A Highlights
Q: Can you explain the $10 million increase in the loan loss reserve this quarter? Was it related to the $38 million loan relationship that went on non-accrual?
A: The $38 million loan did not have any specific reserves against it. The $10 million increase was mainly added out of charge-offs to bolster our general reserves. - Heng Chen, CFO
Q: Regarding fixed loans and hybrid loans, can you provide the maturity schedule and how many fixed loans enter a hybrid period next year?
A: I don't have the exact figures handy, but most of those hybrid loans are residential mortgages. I can provide more details in a couple of days. - Heng Chen, CFO
Q: With CD re-pricing, how much is coming up for maturity in Q4, and where are you pricing new CDs today?
A: In Q4, about $3.49 billion in CDs will mature with an average yield of 4.82%. New CDs are being priced in the low to mid-4% range, depending on the tenure. - Chang Liu, CEO
Q: Is $10 million still a good run rate for the amortization of low-income housing in Q4?
A: Yes, $10 million is a good estimate for the fourth quarter. - Chang Liu, CEO
Q: Can you provide any color on the remaining migration of non-performers during the quarter?
A: One significant migration was a $12.7 million loan in Hong Kong secured by three retail center collaterals. - Chang Liu, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
