• Net Income: $66.8 million for Q2 2024, a 6.4% decrease from $71.4 million in Q1.

• Diluted Earnings Per Share: $0.92 for Q2 2024, down 6.1% from $0.98 in Q1.

• Stock Repurchase: 689,470 shares repurchased at an average cost of $36.37, totaling $25.1 million.

• Total Gross Loans: Decreased by $72 million or 1.5% annualized in Q2 2024.

• Net Charge-Offs: $8 million in Q2 2024, compared to $1.1 million in Q1.

• Non-Accrual Loans: 0.55% of total loans as of June 30, 2024, increased by $9.2 million to $107.3 million.

• Provision for Credit Loss: $6.6 million in Q2 2024, up from $1.9 million in Q1.

• Total Deposits: Decreased by $73 million or 1.5% annualized in Q2 2024.

• Net Interest Margin: 3.01% for Q2 2024, compared to 3.05% in Q1.

• Non-Interest Income: Increased by $6.6 million to $13.2 million in Q2 2024.

• Non-Interest Expense: Increased by $6.1 million or 6.5% to $99.3 million in Q2 2024.

• Effective Tax Rate: 7.9% for Q2 2024, compared to 10.8% in Q1.

• Tier One Leverage Capital Ratio: Increased to 10.83% as of June 30, 2024, from 10.71% as of March 31, 2024.

• Warning! GuruFocus has detected 3 Warning Sign with KOF.

Release Date: July 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cathay General Bancorp (NASDAQ:CATY) reported net income of $66.8 million for Q2 2024, despite a decrease from the previous quarter.

• The company repurchased 689,470 shares of its common stock, demonstrating a commitment to returning value to shareholders.

• The loan portfolio consists of 64% fixed rate and hybrid loans, providing stability in interest income.

• Cathay General Bancorp (NASDAQ:CATY) has a strong liquidity position, with available liquidity sources covering over 100% of uninsured and uncollateralized deposits.

• The effective tax rate for Q2 2024 was reduced to 7.9%, down from 10.8% in Q1, indicating improved tax efficiency.

Negative Points

• Net income decreased by 6.4% compared to Q1 2024, primarily due to increased provisions for credit losses.

• Total gross loans decreased by $72 million, reflecting slower than expected loan growth.

• Non-accrual loans increased to 0.55% of total loans, with significant contributions from office and retail condo CRE loans.

• Total deposits decreased by $73 million, driven by a runoff of brokered deposits.

• Non-interest expense increased by 6.5% due to higher amortization of tax credit investments and other expenses.

Q & A Highlights

Q: What was the spot rate on deposits at the end of June? A: Heng Chen, CFO, stated that the spot rate of total interest-bearing deposits was 3.92%.