Cathay General ((CATY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the recent earnings call for Cathay General Bancorp, a mixed sentiment was expressed as the company reported strong net income growth and active stock buyback activities. However, these positives were countered by challenges such as a decline in total deposits, an increase in nonaccrual loans, and a surge in net charge-offs.
Significant Increase in Net Income
Cathay General Bancorp showcased a robust financial performance with a net income of $80.2 million for Q4 2024, marking an 18.8% increase from the previous quarter. This growth was primarily driven by an increase in net interest income, a decrease in noninterest expense, and a reduction in income tax expense.
Stock Buyback Program
The company continued its commitment to returning value to shareholders by repurchasing 506,651 shares of common stock at an average cost of $47.10 per share, totaling $23.9 million under its $125 million stock buyback program.
Growth in Core Deposits
Cathay General Bancorp experienced a notable increase in total core deposits by $417 million or 16.7% annualized in Q4 2024. This growth was attributed to seasonal factors and effective marketing activities.
Strong Capital Ratios
The bank’s capital position remained strong, with the Tier 1 leverage capital ratio reaching 10.97%, the Tier 1 risk-based capital ratio at 13.55%, and the total risk-based capital ratio at 15.09% as of December 31, 2024.
Decrease in Total Deposits
Despite the growth in core deposits, Cathay General Bancorp faced a decrease in total deposits by $258 million or 5.3% annualized in Q4 2024, largely due to a $449 million reduction in broker deposits.
Increase in Nonaccrual Loans
The earnings call highlighted an increase in nonaccrual loans to $169.2 million, primarily due to a $16 million CRE loan reclassified as nonaccrual after the borrower filed for bankruptcy.
Net Charge-Offs Surge
Net charge-offs saw a significant rise to $16.3 million in Q4 2024, compared to $4.2 million in the previous quarter. This surge was mainly related to a $12.2 million syndicated commercial loan in the recycling business.
Decrease in Noninterest Income
Noninterest income for the fourth quarter of 2024 decreased by $4.9 million to $15.5 million, largely due to a $5.6 million change in mark-to-market unrealized gains.
Forward-Looking Guidance
In its forward-looking guidance, Cathay General Bancorp anticipates stable growth with loan and deposit increases ranging between 3% and 4% in 2025. The net interest margin is expected to be in the range of 3.10% to 3.20%, supported by a diversified loan portfolio. The bank’s capital ratios are projected to remain strong, ensuring financial stability.
In conclusion, Cathay General Bancorp’s earnings call presented a mixed picture, with robust net income growth and strategic stock buybacks being overshadowed by challenges such as a decrease in total deposits and an increase in nonaccrual loans. The company’s forward guidance suggests cautious optimism with expectations for moderate growth in the upcoming year.
