Cathay General Bancorp (CATY) Q3 2024 Earnings Call Highlights: Steady Income Growth Amidst ...

GuruFocus News
4 min read

In This Article:

  • Net Income: $67.5 million for Q3 2024, a 1% increase from $66.8 million in Q2.

  • Diluted Earnings Per Share: Increased 2.2% to $0.94 per share in Q3 from $0.92 in Q2.

  • Stock Repurchase: 832,460 shares repurchased at an average cost of $42 per share, totaling $35 million.

  • Loan Growth: Total growth loans increased by $16 million or 0.3% annualized.

  • Net Charge Offs: $4.2 million in Q3 compared to $8 million in Q2.

  • Non-Accrual Loans: 0.84% of total loans, increased to $162.8 million from Q2.

  • Provision for Credit Losses: $14.5 million in Q3, up from $6.6 million in Q2.

  • Total Deposits: Increased by $171 million or 3.5% annualized in Q3.

  • Net Interest Margin: 3.04% in Q3, up from 3.01% in Q2.

  • Non-Interest Income: Increased by $7.2 million to $20.4 million in Q3.

  • Non-Interest Expenses: Decreased by $2.5 million to $96.9 million in Q3.

  • Effective Tax Rate: 13.6% in Q3, compared to 7.9% in Q2.

  • Tier One Leverage Capital Ratio: 10.82% as of September 30, 2024.

  • Total Risk-Based Capital Ratio: Increased to 14.88% from 14.74% as of June 30, 2024.

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 (NASDAQ:CATY) 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 (NASDAQ: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

Recommended Stories