Cathay General Bancorp (CATY) 22 Apr 242024 Q1 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Cathay General Bancorp's First Quarter of 2024 Earnings Conference Call. My name is Gary, 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.

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

call not will Mr. undue or made, no our President we Officer, the and To or as update earnings now Bancorp I will required you on as any first the please to is copy presentation, this a obtain of over afternoon, it call caution only to results. review by we Executive law, and unanticipated our future statements to our we which Chief reflect outlining by management to of Liu. of After issued for release website XXXX open forward-looking the comments speaks today, release well or such earnings an such, quarter reliance at forward-looking except our developments turn visit Any statements Chang earnings events. This place as obligation its As questions. up date forward-looking statements. www.cathaygeneralbancorp.com. circumstances, undertake on occurrence as events Cathay General

quarter. first to net afternoon. quarter quarter of $XX.X our Georgia, XXXX we for reported earnings million $XX.X you, XX.X% compared million decrease income This as call. Welcome the afternoon, and to first XXXX, previous good a Thank conference in

Slide between offset annualized XX.X% range commercial loans overall rate to for included per first assessment. Diluted share to portfolio are of compared to increases or percentage per and XXXX, to Our $XX of million of annualized XXXX real rate or $X.X for by show X.X% special or to XX.X% first per mark-to-market loans. Due share the this in have XXXX $X.XX We've revised fixed FDIC per XXXX, X%. $X previous equity million increase quarter securities annualized guidance their total $X.XX either slower-than-expected driven in loan growth commercial primarily share growth $X.XX XX.X% major construction million loans, in $XXX in added estate X.X% gross loan loss diluted loans of the $XXX quarter loan quarter. or decreased or an per net X the first million in earnings million the loans and as our quarter that quarter and we $X.XX accrual loans by a X% in share annualized, in or a decrease hybrid in period. In income or million fixed for which share $XX by decreased a diluted from

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

We monitor loans. to our estate commercial continue real

deck. earnings Slide X of our to Turning

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

the only centers, by building, store, property $X.X secured our in loans portfolio. loan collateralized buildings. or loan XX% in districts. total of loan of office property billion total commercial X% are stores. neighborhood, billion of collateralized portfolio office loan real collateralized of loan of XX% is retail Slide real our in office mixed estate portfolio. remainder retail estate central strip commercial office XX% $X.X of are Slide of and by XX, of as our XX, As XX% shopping XX% XXXX, on by property portfolio condos. pure March X% business secured the retail mixed our X% shown represent property offices Office Only XX% or and loans XX% centers. On the loan Only office or total office by comprised are loans use medical portfolio, by our retail are property total X, of use

as $X.X in $X.X we XXXX, previous million For reported charge-offs quarter million quarter. net the to first compared of

X compared loans loan loans increase of a million. nonaccrual quarter totaling the The which $XX million maturity XX, theater $XX.X XXXX, by as XXXX Our to were and due in as to the construction in came million during quarter. loans first loans from X.X% March loan-to-value nonaccrual past $XX total previous is York, of increased mainly which million $XX.X of New

XX. Slide to Turning

of our of XXXX, XX, As XXXX. increased our as million mention decreased of XX, and from loans million $XXX to $XXX million XX, December March from $XXX of to as special loans $XXX XXXX, cost December million

for credit first New classified increased increased for in the or $XXX.X the our XX.X% total increased of deposits losses XXXX, the CD or was X.X% $XXX.X by loss and quarter deposits the mention XXXX campaign. XXXX. to or of first $X.X XX.X% during annualized, quarter due a $XXX.X Total of first small million special there million to time quarter previous deposits million compared decrease total Lunar core provision and loans. Year during quarter of mainly in for We XXXX, a credit provision first quarter. Total $X.X million recorded So in as for million annualized

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

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

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

Chang, everyone. good afternoon, you, and Thank

XXXX, the compared XXXX loss rate margin QX for $XX.X decreased income million quarter, equity XX.X% securities primarily due to between million first QX of previous annualized quarter. in cuts the in to by prepayment basis million $XX.X margin a to and previous XXXX million $XX.X or December. net expectation interest the to an unrealized For September, in recoveries the to the million did in second and net the assessment. QX X.XX% XXXX versus the $X $X.X for XXXX, as not equity rate XXXX interest based on special rate the XXXX QX XXXX and of X margin FDIC additional compared was million a in for in gain versus with quarter. securities in on increase accrual for $X QX We X.XX% for QX net cut X.XX% for estimate be penalties change previous cut X X.XX% point Interest net an to interest our

prior or Noninterest as professional to bonuses loans salary lower a payroll with decrease net period. June, previous the X our interest million million decreased rate fixed quarters. Noninterest $X.X net the previous $X.X million XXXX primarily to unrealized a compared first true-up decreased an cut when to and XXXX of XXXX FDIC tax net by million investments; million the higher by rate decrease quarter. The due to cuts cuts, that of $X.X XX.X% million in of number being to into loss the offset $XX.X a XXXX million given QX QX interest The margin rate primarily rate during million tax income or Our the The in decrease expense million seasonally to in first rate million quarter. of when solar loans, $XX.X in included our guidance XX% quarter $XX.X negatively $X an hybrid million based between lower $X.X rate increase in was margin on due QX XXXX compared compared increase $XX.X special amortization fixed guidance. on and as X million impacted quarter. equity quarter. their XX.XX% expense to $XX which in securities XX.XX% of in of acceleration effective million for and credit compared was was $XXX.X contributions of the previous to by and benefits, from for $XX.X $X the million an expense, assessment; $X.X lower of was in This the prior

of now solar tax effective in of rate tax With between in XXXX tax XXXX. expect credit QX we with of XX% for XXXX $XX.X XX% in and amortizations new expect an million, and a the million $X million XXXX, QX and total credit QX $X investment closing of solar each investment We fund QX.

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

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

Thank you, Heng.

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

question first from is Matthew The with Sandler. Piper today Instructions] [Operator Clark

the deposits March? at the month margin and Just or in of around March on average total then of first one the the give spot you the Could us margin. rate the interest-bearing end

was Yes. end The spot month the the X.XX%. rate at then for March was And the of deposits NIM for March interest-bearing of X.X%.

it. Got Okay.

$X.X low-income expected million housing for still amortization, the next credit the just then X? be was in And the first quarter. million tax to that it I $XX.X think per quarter Is Okay.

it closer $XX to might It be million, around. jumps but

Yes.

Okay.

has at all? consistent reserve Okay. with And your the it portfolio. just then CRE changed Or office it Is overall the reserve? on

new as Matthew, the it's reserve. a any since still we general didn't have nonaccruals, same office

with question is King The next Truist. Brandon from

So the how range? the what as end far thinking think puts NIM things? kind you of the you just Could and lower give of takes the takes on as to you us guidance, from do range of higher end about the you're the

Year we One, except the CDs Brandon. less Chinese for the rates higher New in X-month promotion, pressure. deposit the paid think we pricing we're getting Yes,

pricing on, treasury. on goes X-month for is the quarter X-year be CD the as So to based going the

now. So where that's going it to to decrease is compared

then So we'll get market meanwhile, are loans new at our less deposit rates. pressure. And

residential our Xs. are mortgage, new For example, loans low

So repricing. average CRE are we loans. to And repricing, our production during that are have is loans the new pull it's going -- going some then that the loan on loans rate all up our

rate So loan. the the on that also will improve

in maybe QX, and lower bit little a then better. much QX, NIM the flat see be and QX to QX we would So

right, the rate Got of the it. of because impact rate And that's cuts, cut? the

Yes.

on Okay. CD then And us update CD makes could the or sense. the year? rest repricing That for you the of the maturities

Yes.

have CDs the the we QX, $X.X X.XX%, yield and is -- CDs have of year this on are billion, $X.X -- the -- maturing so in repricing billion X.XX%. CDs. those me in we The second Let while quarter, the yield

X-month the the there, then have CDs QX, for -- So promotion is at Yield in is XXXX, yield $X QX billion maturing. term. our and X.XX%. of the Chinese lower it's Chinese maturing, some And promotion. that of billion X.XX%. And reflects reflects our fact yield the that Year New Year are there we New $X.X

X-month X.XX%, the Our so X-year was rate. rate that than lower was at

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

A portfolio deposit loan growth, given question. follow-up you as mean, little in outside on bit like, is maybe you can a where deposit need looks pricing to the don't going the have what and over year deposit CD the I outlook NIM massive on a growth anyway? a how of that aggressive be just roll for

seeing the Cathay, and Well, at concessions we're staff Gary, final for much rate less. I'm

expect to less we raise So slower. loan when new growth our deposits to so we pressure because -- be facing we're

some the treasury be the the And the help more is a fact X-year mindset, aggressive that the declining, treasury's little us. the in so we're that in And is later year, point, particularly down bit on rates. going start at to again, -- pushing -- so to will

deposit Fed push push that? think on you down guess what cut? of CD I Or ahead little enough, ask the a not to to do ability the be have I you -- the is nibble you even well do to the think, it Right. kind ask, do ability, outside trying do have didn't I it to of of perhaps or pricing to you was lower book, bit

-- -- money tied proportion good a to Fed big a our No, book funds. is we market effectively of

we're by on for money depositors, basis So XX basis soon the those rate those by depositors, plan And to XX as Fed on we market cut maybe or as there's a other cut we'll reduce -- points. XX rate points. then going

also CDs are and -- the So accounts Fed that It's just some have be funds. we then that NOW tied to able we'll reprice, not to right?

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

Just on a margin. quick follow-up the

and of then sounded Fed it is just discussion curious, in XQ and off the Just first of reported do is the commensurate March to commentary, year, margin into XQ, the or the you around in your assumptions. cadence is you XQ referenced X.XX% of Or flattish lift -- margin throughout on with think flat the like the spot the XQ margin flattish that I'm the the quarter? cut kind X.XX%?

of will couple residential it months, so XX-day us, have be a so basis points. because there's down No, mortgages. that QX, many we helps X

Okay.

basis a then So of in quarter, couple points and maybe down then and lift. just flattish XQ to the in starts second

Yes. Yes.

implies. Okay. tracking And at where you're of kind than quarter maybe and few looking expecting. I expense year in And operating full dollars then of I was lift what math was right, core first expense I guidance do was the ahead more if a million the it little a growth the

XQ how was move throughout curious are to see core expense in X% you OpEx question is the where reductions to to guess going And lift of year, seasonality in I we So more in then driven. kind X.X% guidance? much just of land expenses the core growth operating the as my quarterly just that

my to fact we that contributions FICA cover charitable In tried catch-up, from accelerated I to the Yes. our April hit, bonus the March. some comments, the

loan our capitalized. had was because we also -- cost less origination also negative, growth We loan

upper So at based on we'll that be think to the kind of range. flow we X.X% of our close looking expenses,

The KBW. with next from question Chris is McGratty

the revised was, Last again in talked guide? noninterest-bearing, back the have the for quarter, in your key think, that guide fell assumption half quarter. your you of stability year What's about -- to for margin you this which I

spend We DDA seasonal some of time we of lot it, by And think Chris, the payment New Chinese because looking a the taxes. at branch. is of the Year, of

so in DDA in and terms So it's Chang, later -- up to And tends think then the of March the in year. in far I April the stable build -- balance.

of continues, customers' the the flow of kind should balance some volume pick the up. business As back and DDA

Okay.

like Okay. two-part. and I bit QX then the net it little dollars then One, is in Great. have on make seem would And income QX, in then just to guess, heard a amortization. in pressure downward the follow-up, Matt's would I question I growth interest sure more And QX. want stability

right, like million $X $XX $XX solar plus So somewhere QX should be million income, million? combined and low

Yes. Yes. Yes.

basis? Got you agree the it. net income logic And a with interest on my then on cadence quarterly

in deposits. QX. QX. in September, the be a the bit of little half our from happen that XX-day QX, from a Chinese We X have we down in Fed cut month It'll benefit and repricing Yes. will New months more And then Year in hopefully, some

So yes.

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

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

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

You may day. now disconnect. Good