Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Data and Key Metrics Changes - The company reported a net income of $77.7 million for Q3 2025, a 0.3% increase compared to $77.5 million for Q2 2025 [6] - Diluted earnings per share increased by 2.7% to $1.13 for Q3 2025 from $1.10 in Q2 2025 [6] - Net interest margin increased to 3.31% for Q3 2025 from 3.27% for Q2 2025, attributed to lower cost of funds [15] - Total deposits increased by $515 million or 10.5% annualized during Q3 2025 [12] Business Line Data and Key Metrics Changes - Total gross loans increased by $320 million or 6.6% annualized, driven by increases in commercial real estate (CRE) loans and residential loans [6] - The average loan-to-value ratio of CRE loans remained at 49% [8] - Noninterest income for Q3 2025 increased by $5.6 million to $21 million compared to $15.4 million in Q2 2025, primarily due to a change in unrealized gains on equity securities [15] Market Data and Key Metrics Changes - The company has increased its loan and deposit guidance from 3% to 4% to 3.5% to 5% for both loans and deposits [7] - Total uninsured deposits were $9.1 billion, net of $900 million in collateralized deposits, representing 44.3% of total deposits [13] Company Strategy and Development Direction - The company remains focused on organic growth and executing its business plan, while being open to strategic M&A opportunities if they align with its goals [35] - The management is actively monitoring the commercial real estate market and adjusting strategies based on market conditions [10][41] Management's Comments on Operating Environment and Future Outlook - Management noted that the pipeline for commercial mortgages is slowing down as potential borrowers await further rate cuts [40] - The competitive landscape for deposits remains fierce, particularly in California and the East Coast, with mainstream players offering substantial rates [46] Other Important Information - The company recorded a provision for credit losses of $28.7 million in Q3 2025, up from $11.2 million in Q2 2025 [12] - The ALLL to gross loan ratio increased from 0.88% in Q2 2025 to 0.93% in Q3 2025 [12] Q&A Session Summary Question: Increase in classified loans - The increase was driven by six relationships, with the largest being a $50 million loan to a national business printing company that has regained momentum [21][22] Question: Increase in CRE reserves - The increase in reserves was attributed to additional reserves on two movie theater loans acquired from the acquisition of Far East National Bank [24] Question: Core expenses guidance for Q4 - The company expects core expenses to remain stable around $11.5 million, with a decrease in consulting expenses noted [30][33] Question: Loan growth in commercial mortgage segment - The company experienced strong CRE portfolio pipeline in the previous quarters, but the pipeline is currently slowing down as borrowers await potential rate cuts [40] Question: Competition on deposits - The competition for deposits is intense, with the company adjusting rates quickly in response to market conditions [46]

Financial Earnings Results Third Quarter 2025 October 21, 2025 Forward Looking Statements This presentation contains forward-looking statements about Cathay General Bancorp and its subsidiaries (collectively referred to herein as the "Company," "we," "us," or "our") within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements in these provisions. Sta ...

[Company Announcement](index=1&type=section&id=Company%20Announcement) Cathay General Bancorp announced its unaudited third quarter 2025 financial results, showing growth in net income and diluted earnings per share [Third Quarter 2025 Results Overview](index=1&type=section&id=Third%20Quarter%202025%20Results%20Overview) Cathay General Bancorp reported unaudited third quarter 2025 financial results, with increases in net income and diluted earnings per share | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | September 30, 2024 (Q3) | | :--------------------------------- | :------------------- | :------------------- | :------------------- | | Net Income (million USD) | $77.7 | $77.5 | $67.5 | | Basic Earnings per Common Share (USD) | $1.13 | $1.11 | $0.94 | | Diluted Earnings per Common Share (USD) | $1.13 | $1.10 | $0.94 | | Return on Average Assets | 1.29% | 1.33% | 1.15% | | Return on Average Total Shareholders' Equity | 10.60% | 10.72% | 9.50% | | Efficiency Ratio | 41.84% | 45.34% | 51.11% | [Third Quarter Highlights](index=1&type=section&id=Third%20Quarter%20Highlights) The CEO highlighted continued growth in net interest margin and significant common stock repurchases during the third quarter - Net interest margin continued to grow compared to the second quarter of 2025[5](index=5&type=chunk) - Repurchased **1,070,000 shares** of common stock at an average cost of **$46.81 per share**, totaling **$50.1 million** in the third quarter[5](index=5&type=chunk) [Income Statement Review](index=1&type=section&id=Income%20Statement%20Review) This section reviews the company's income statement performance, highlighting key revenue, expense, and profitability metrics [Q3 2025 vs Q2 2025 Performance](index=1&type=section&id=Q3%202025%20vs%20Q2%202025%20Performance) Third quarter 2025 saw growth in net income and diluted EPS, a slight decrease in average asset and equity returns, and a significant improvement in efficiency ratio Comparison of Key Financial Metrics: Q3 2025 vs Q2 2025 | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | :--------- | | Net Income (million USD) | $77.7 | $77.5 | +$0.2 (0.3%) | | Diluted Earnings per Common Share (USD) | $1.13 | $1.10 | +$0.03 | | Return on Average Assets | 1.29% | 1.33% | -0.04% | | Return on Average Total Shareholders' Equity | 10.60% | 10.72% | -0.12% | | Efficiency Ratio | 41.84% | 45.34% | -3.50% | - Net interest margin increased from **3.27%** in Q2 to **3.31%** in Q3[8](index=8&type=chunk) - Gross loans (excluding loans held for sale) increased by **1.6%** from **$19.78 billion** in Q2 to **$20.10 billion** in Q3[8](index=8&type=chunk) - Total deposits increased by **$514.8 million**, or **2.6%**, in Q3, reaching **$20.52 billion**[8](index=8&type=chunk) [Net Interest Income Before Provision for Credit Losses](index=2&type=section&id=Net%20Interest%20Income%20Before%20Provision%20for%20Credit%20Losses) Net interest income before provision for credit losses and net interest margin both increased, driven by higher loan and securities interest income, partially offset by increased deposit expenses Net Interest Income and Margin Analysis | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | :--------- | | Net Interest Income Before Provision for Credit Losses (million USD) | $189.6 | $181.2 | +$8.4 (4.6%) | | Net Interest Margin | 3.31% | 3.27% | +0.04% | | Yield on Average Interest-Earning Assets | 5.84% | 5.83% | +0.01% | | Cost of Average Interest-Bearing Liabilities | 3.32% | 3.37% | -0.05% | | Cost of Average Interest-Bearing Deposits | 3.28% | 3.35% | -0.07% | | Net Interest Spread | 2.52% | 2.46% | +0.06% | - The decrease in the cost of average interest-bearing liabilities was primarily due to lower re-pricing rates on maturing time deposits in Q3[10](index=10&type=chunk) - The increase in the yield on average interest-earning assets was mainly due to higher loan interest rates[10](index=10&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) Provision for credit losses significantly increased in Q3 due to additional provisions for two cinema loans and CECL model changes, leading to higher allowance for credit losses and its ratio to total loans Provision for Credit Losses and Net Charge-offs | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | :--------- | | Provision for Credit Losses (million USD) | $28.7 | $11.2 | +$17.5 | | Allowance for Credit Losses (million USD) | $196.5 | $183.4 | +$13.1 | | Allowance for Credit Losses to Total Loans | 0.98% | 0.93% | +0.05% | | Net Charge-offs (million USD) | $15.646 | $12.741 | +$2.905 | - Q3 provision for credit losses included **$9.1 million** in additional provisions for two cinema loans and **$3.8 million** from CECL model changes[11](index=11&type=chunk) - Commercial loan charge-offs increased from **$9.117 million** in Q2 to **$16.173 million** in Q3[12](index=12&type=chunk) [Non-interest Income](index=3&type=section&id=Non-interest%20Income) Non-interest income grew significantly in Q3, primarily driven by increased gains on equity securities and wealth management fees Non-interest Income Composition | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | :--------- | | Total Non-interest Income (million USD) | $21.0 | $15.4 | +$5.6 (36.4%) | | Increase in Equity Securities Gains (million USD) | - | - | +$4.7 | | Increase in Wealth Management Fees (million USD) | - | - | +$1.3 | [Non-interest Expense](index=3&type=section&id=Non-interest%20Expense) Non-interest expense slightly decreased in Q3, mainly due to reduced professional service fees, contributing to an improved efficiency ratio Non-interest Expense and Efficiency Ratio | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | :--------- | | Total Non-interest Expense (million USD) | $88.1 | $89.1 | -$1.0 (1.2%) | | Decrease in Professional Service Fees (million USD) | - | - | -$1.5 | | Efficiency Ratio | 41.84% | 45.34% | -3.50% | - An increase of **$1.0 million** in amortization of low-income housing and alternative energy partnership investments partially offset the decrease in professional service fees[15](index=15&type=chunk) [Income Taxes](index=3&type=section&id=Income%20Taxes) The effective tax rate decreased in Q3, primarily influenced by low-income housing tax credits Effective Tax Rate | Metric | September 30, 2025 (Q3) | June 30, 2025 (Q2) | Change (QoQ) | | :--------------------------------- | :------------------- | :------------------- | :--------- | | Effective Tax Rate | 17.18% | 19.56% | -2.38% | - The effective tax rates for both Q2 and Q3 2025 included the impact of low-income housing tax credits[16](index=16&type=chunk) [Balance Sheet Review](index=3&type=section&id=Balance%20Sheet%20Review) This section provides an overview of the company's balance sheet, focusing on changes in assets, liabilities, and equity [Gross Loans and Composition](index=3&type=section&id=Gross%20Loans%20and%20Composition) Gross loans (excluding loans held for sale) increased as of September 30, 2025, driven by growth in residential mortgage, commercial real estate, and construction loans Gross Loans and Composition (million USD) | Loan Type | September 30, 2025 | June 30, 2025 | Change (QoQ) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Gross Loans (excluding loans held for sale) | $20,104.7 | $19,784.7 | +$320.0 (1.62%) | | Residential Mortgage Loans | $5,815.1 | $5,692.1 | +$123.0 (2.2%) | | Commercial Real Estate Loans | $10,484.9 | $10,363.1 | +$121.8 (1.2%) | | Construction Loans | $356.2 | $301.1 | +$55.1 (18.3%) | | Commercial Loans | $3,212.9 | $3,194.7 | +$18.2 (0.6%) | [Deposits and Composition](index=4&type=section&id=Deposits%20and%20Composition) Total deposits increased as of September 30, 2025, with growth across non-interest bearing demand, NOW, money market, and savings deposits, while time deposits remained relatively stable Deposits Composition (million USD) | Deposit Type | September 30, 2025 | June 30, 2025 | Change (QoQ) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Total Deposits | $20,521.1 | $20,006.3 | +$514.8 (2.6%) | | Non-interest Bearing Demand Deposits | $3,574.6 | $3,381.4 | +$193.2 | | NOW Deposits | $2,226.2 | $2,174.1 | +$52.1 | | Money Market Deposits | $3,586.3 | $3,431.1 | +$155.2 | | Savings Deposits | $1,424.2 | $1,317.1 | +$107.1 | | Time Deposits | $9,709.9 | $9,702.7 | +$7.2 | [Asset Quality Review](index=4&type=section&id=Asset%20Quality%20Review) This section reviews the company's asset quality, including non-accrual loans, allowance for loan losses, and non-performing assets [Non-accrual Loans and Allowance for Loan Losses](index=4&type=section&id=Non-accrual%20Loans%20and%20Allowance%20for%20Loan%20Losses) Total non-accrual loans decreased as of September 30, 2025, while the allowance for loan losses balance and coverage ratio both improved, reflecting stronger coverage for potential credit risks Non-accrual Loans and Allowance for Loan Losses | Metric | September 30, 2025 | June 30, 2025 | Change (QoQ) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Total Non-accrual Loans (million USD) | $165.6 | $174.2 | -$8.6 (4.9%) | | Allowance for Loan Losses (million USD) | $186.6 | $173.5 | +$13.1 | | Allowance for Loan Losses to Period-End Total Loans | 0.93% | 0.88% | +0.05% | | Allowance for Loan Losses to Non-performing Loans | 112.61% | 96.12% | +16.49% | [Non-performing Assets and Loan Modifications](index=4&type=section&id=Non-performing%20Assets%20and%20Loan%20Modifications) Total non-performing assets slightly decreased as of September 30, 2025, but Other Real Estate Owned (OREO) significantly increased, alongside a substantial rise in accruing loan modifications for financially distressed borrowers Non-performing Assets and Loan Modifications (million USD) | Metric | September 30, 2025 | June 30, 2025 | Change (QoQ) | | :--------------------------------- | :-------------- | :-------------- | :--------- | | Total Non-performing Assets | $198.7 | $199.5 | -$0.8 (0.4%) | | Accruing Loans 90 Days or More Past Due | $0.110 | $6.389 | -$6.279 (98%) | | Total Non-accrual Loans | $165.632 | $174.153 | -$8.521 (5%) | | Other Real Estate Owned (OREO) | $32.983 | $18.990 | +$13.993 (74%) | | Accruing Loan Modifications to Borrowers Experiencing Financial Difficulty | $63.355 | $10.485 | +$52.870 (504%) | - Non-performing assets as a percentage of total assets were **0.83%**, slightly lower than **0.84%** in the previous quarter[22](index=22&type=chunk) [Capital Adequacy Review](index=5&type=section&id=Capital%20Adequacy%20Review) As of September 30, 2025, the company's capital adequacy ratios, calculated under Basel III capital rules, exceeded regulatory requirements, maintaining its 'well capitalized' status Capital Adequacy Ratios | Metric | September 30, 2025 | June 30, 2025 | Regulatory Requirement (Well Capitalized) | | :--------------------------------- | :-------------- | :-------------- | :------------------ | | Tier 1 Risk-Based Capital Ratio | 13.15% | 13.35% | ≥ 8% | | Total Risk-Based Capital Ratio | 14.76% | 14.92% | ≥ 10% | | Tier 1 Leverage Ratio | 10.88% | 11.09% | ≥ 5% | [Year-to-Date Review](index=5&type=section&id=Year-to-Date%20Review) For the nine months ended September 30, 2025, the company reported year-over-year growth in net income, diluted EPS, net interest margin, return on average assets, and return on average equity, with a significant improvement in efficiency ratio Year-to-Date Key Financial Metrics Comparison | Metric | September 30, 2025 (YTD) | September 30, 2024 (YTD) | Change (YoY) | | :--------------------------------- | :-------------------- | :-------------------- | :--------- | | Net Income (million USD) | $224.6 | $205.8 | +$18.8 (9.1%) | | Diluted Earnings per Common Share (USD) | $3.21 | $2.83 | +$0.38 | | Net Interest Margin | 3.28% | 3.03% | +0.25% | | Return on Average Assets | 1.28% | 1.18% | +0.10% | | Return on Average Total Shareholders' Equity | 10.39% | 9.84% | +0.55% | | Efficiency Ratio | 44.18% | 53.28% | -9.10% | [Additional Information](index=6&type=section&id=Additional%20Information) This section provides details on the upcoming conference call, an overview of Cathay General Bancorp, and important forward-looking statements [Conference Call](index=6&type=section&id=Conference%20Call) Cathay General Bancorp will host a conference call on October 21, 2025, at 3:00 PM PT to discuss its Q3 2025 financial results - Conference call scheduled for **Tuesday, October 21, 2025, at 3:00 PM Pacific Time**[27](index=27&type=chunk) - Dial-in number: **1-833-816-1377**, Conference ID: **10203604**[27](index=27&type=chunk) - Presentation and webcast available on the company's website www.cathaygeneralbancorp.com, with a replay archived for one year within 24 hours[27](index=27&type=chunk) [About Cathay General Bancorp](index=6&type=section&id=About%20Cathay%20General%20Bancorp) Cathay General Bancorp is the holding company for Cathay Bank, established in 1962, offering a wide range of financial services with branches and representative offices in the US and overseas - Cathay General Bancorp (Nasdaq: CATY) is the holding company for Cathay Bank, a California-chartered bank[28](index=28&type=chunk) - Cathay Bank, founded in 1962, operates over **60 branches** across California, New York, Washington, Texas, Illinois, Massachusetts, Maryland, Nevada, and New Jersey in the United States[28](index=28&type=chunk) - Overseas operations include a branch in Hong Kong and representative offices in Beijing, Shanghai, and Taipei[28](index=28&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements regarding beliefs, forecasts, and assumptions about future results and events, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations - Forward-looking statements are based on management's estimates, beliefs, forecasts, and assumptions, and are not guarantees of future performance[29](index=29&type=chunk) - Risks and uncertainties include, but are not limited to: macroeconomic conditions, credit risk, regulatory changes, interest rate fluctuations, real estate market conditions, natural disasters, and cybersecurity risks[29](index=29&type=chunk) - The company undertakes no obligation to update or review any forward-looking statements to reflect subsequent circumstances or events, except as required by law[30](index=30&type=chunk) [Consolidated Financial Highlights](index=7&type=section&id=Consolidated%20Financial%20Highlights) This section presents Cathay General Bancorp's unaudited consolidated financial highlights, covering income statement, earnings per share, key ratios, and capital ratios across various reporting periods Consolidated Financial Highlights (thousand USD, except per share data) | Metric | September 30, 2025 (Q3) | September 30, 2025 (Q2) | September 30, 2024 (Q3) | September 30, 2025 (YTD) | September 30, 2024 (YTD) | | :--------------------------------- | :------------------- | :------------------- | :------------------- | :-------------------- | :-------------------- | | Net Interest Income Before Provision for Credit Losses | $189,587 | $181,221 | $169,155 | $547,447 | $503,043 | | Provision for Credit Losses | $28,731 | $11,200 | $14,500 | $55,431 | $23,000 | | Net Income | $77,651 | $77,450 | $67,514 | $224,607 | $205,778 | | Diluted Earnings per Share | $1.13 | $1.10 | $0.94 | $3.21 | $2.83 | | Return on Average Assets | 1.29% | 1.33% | 1.15% | 1.28% | 1.18% | | Net Interest Margin | 3.31% | 3.27% | 3.04% | 3.28% | 3.03% | | Tier 1 Risk-Based Capital Ratio | 13.15% | 13.35% | 13.32% | - | - | | Total Risk-Based Capital Ratio | 14.76% | 14.92% | 14.87% | - | - | | Tier 1 Leverage Ratio | 10.88% | 11.09% | 10.82% | - | - | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides Cathay General Bancorp's unaudited condensed consolidated balance sheets, detailing the composition of assets, liabilities, and shareholders' equity across different reporting periods Condensed Consolidated Balance Sheets (thousand USD) | Item | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :--------------------------------- | :-------------- | :-------------- | :-------------- | | **Assets** | | | | | Cash and Due from Banks | $166,167 | $190,011 | $182,542 | | Net Loans | $19,903,082 | $19,597,337 | $19,199,355 | | Total Assets | $24,075,644 | $23,723,847 | $23,274,443 | | **Liabilities and Shareholders' Equity** | | | | | Total Deposits | $20,521,149 | $20,006,330 | $19,943,941 | | Federal Home Loan Bank Borrowings | $190,000 | $412,000 | $60,000 | | Total Liabilities | $21,173,368 | $20,837,552 | $20,444,130 | | Shareholders' Equity | $2,902,276 | $2,886,295 | $2,830,313 | | Book Value per Common Share | $42.50 | $41.62 | $39.66 | | Common Shares Outstanding | 68,286,591 | 69,343,395 | 71,355,869 | [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents Cathay General Bancorp's unaudited condensed consolidated statements of operations, detailing interest and dividend income, interest expense, non-interest income and expense, and net income across various reporting periods Condensed Consolidated Statements of Operations (thousand USD, except per share data) | Item | September 30, 2025 (Q3) | September 30, 2025 (Q2) | September 30, 2024 (Q3) | September 30, 2025 (YTD) | September 30, 2024 (YTD) | | :--------------------------------- | :------------------- | :------------------- | :------------------- | :-------------------- | :-------------------- | | **Interest and Dividend Income** | | | | | | | Loans Receivable | $308,945 | $296,857 | $310,311 | $899,786 | $916,175 | | Total Interest and Dividend Income | $334,195 | $322,918 | $339,491 | $976,508 | $1,004,993 | | **Interest Expense** | | | | | | | Time Deposits | $93,087 | $94,364 | $119,786 | $283,517 | $347,408 | | Total Interest Expense | $144,608 | $141,697 | $170,336 | $429,061 | $501,950 | | Net Interest Income Before Provision for Credit Losses | $189,587 | $181,221 | $169,155 | $547,447 | $503,043 | | Provision for Credit Losses | $28,731 | $11,200 | $14,500 | $55,431 | $23,000 | | **Non-interest Income** | | | | | | | Net Gains/(Losses) on Equity Securities | $3,263 | ($1,390) | $4,253 | ($2,318) | ($6,204) | | Total Non-interest Income | $21,021 | $15,391 | $20,365 | $47,616 | $40,191 | | **Non-interest Expense** | | | | | | | Salaries and Employee Benefits | $43,462 | $43,123 | $40,859 | $129,012 | $124,850 | | Total Non-interest Expense | $88,117 | $89,134 | $96,867 | $262,907 | $289,458 | | Net Income | $77,651 | $77,450 | $67,514 | $224,607 | $205,778 | | Diluted Earnings per Share | $1.13 | $1.10 | $0.94 | $3.21 | $2.83 | [Average Balances – Selected Consolidated Financial Information](index=11&type=section&id=Average%20Balances%20%E2%80%93%20Selected%20Consolidated%20Financial%20Information) This section provides Cathay General Bancorp's unaudited average balance information, including interest-earning assets, interest-bearing liabilities, their corresponding yields/costs, and average total assets and equity Average Balances – Selected Consolidated Financial Information (thousand USD) | Item | September 30, 2025 (Q3) Average Balance | September 30, 2025 (Q3) Average Yield/Cost | June 30, 2025 (Q2) Average Balance | June 30, 2025 (Q2) Average Yield/Cost | | :--------------------------------- | :-------------------- | :----------------------- | :-------------------- | :----------------------- | | **Interest-Earning Assets** | | | | | | Loans | $19,951,853 | 6.14% | $19,489,400 | 6.11% | | Total Interest-Earning Assets | $22,716,625 | 5.84% | $22,231,538 | 5.83% | | **Interest-Bearing Liabilities** | | | | | | Total Interest-Bearing Deposits | $16,864,447 | 3.28% | $16,633,658 | 3.35% | | Total Interest-Bearing Liabilities | $17,279,475 | 3.32% | $16,855,853 | 3.37% | | Total Average Assets | $23,843,380 | - | $23,349,928 | - | | Total Average Equity | $2,907,596 | - | $2,898,960 | - | Average Balances – Selected Consolidated Financial Information (thousand USD) - Year-to-Date | Item | September 30, 2025 (YTD) Average Balance | September 30, 2025 (YTD) Average Yield/Cost | September 30, 2024 (YTD) Average Balance | September 30, 2024 (YTD) Average Yield/Cost | | :--------------------------------- | :-------------------- | :----------------------- | :-------------------- | :----------------------- | | **Interest-Earning Assets** | | | | | | Loans | $19,593,553 | 6.14% | $19,464,496 | 6.29% | | Total Interest-Earning Assets | $22,321,937 | 5.85% | $22,174,039 | 6.05% | | **Interest-Bearing Liabilities** | | | | | | Total Interest-Bearing Deposits | $16,633,409 | 3.35% | $16,492,441 | 3.89% | | Total Interest-Bearing Liabilities | $16,957,498 | 3.38% | $16,995,140 | 3.95% | | Total Average Assets | $23,462,799 | - | $23,380,360 | - | | Total Average Equity | $2,890,581 | - | $2,794,384 | - | [GAAP to Non-GAAP Reconciliation](index=13&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This section provides a reconciliation of GAAP to non-GAAP financial measures, including tangible equity, tangible assets, tangible book value per share, and return on average tangible common equity, offering supplementary information consistent with industry practice - The company uses non-GAAP financial measures such as tangible equity and tangible assets ratios, which are commonly used in the banking industry and by bank regulators and analysts[42](index=42&type=chunk) GAAP to Non-GAAP Reconciliation (thousand USD) | Metric | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :--------------------------------- | :-------------- | :-------------- | :-------------- | | Shareholders' Equity | $2,902,276 | $2,886,295 | $2,830,313 | | Less: Goodwill | ($375,696) | ($375,696) | ($375,696) | | Less: Other Intangible Assets | ($2,667) | ($2,888) | ($3,590) | | Tangible Equity | $2,523,913 | $2,507,711 | $2,451,027 | | Total Assets | $24,075,644 | $23,723,847 | $23,274,443 | | Less: Goodwill | ($375,696) | ($375,696) | ($375,696) | | Less: Other Intangible Assets | ($2,667) | ($2,888) | ($3,590) | | Tangible Assets | $23,697,281 | $23,345,263 | $22,895,157 | | Tangible Book Value per Common Share | $36.96 | $36.16 | $34.35 | | Tangible Equity to Tangible Assets Ratio | 10.65% | 10.74% | 10.71% | | Return on Average Tangible Common Equity (Q3) | 12.33% | 12.39% | 11.05% | | Return on Average Tangible Common Equity (YTD) | 11.90% | - | 11.23% |

Market Overview - The week began with strong earnings from major banks but ended with regional lenders writing off bad loans, leading to investor concerns about market stability [1] - Rising U.S.-China tensions and credit quality issues are impacting market sentiment, alongside the ongoing federal government shutdown which could dampen consumer and business confidence [1] Earnings Season Insights - The fall earnings season is gaining momentum, with five Club names and approximately 80 S&P 500 companies set to report results this week [1] - Danaher is projected to earn $1.72 per share on revenues of $6.01 billion, with a focus on its China business and bioprocessing orders [1] - Capital One is expected to report EPS of $4.37 on $15.08 billion in revenue, with management likely to address consumer spending and credit-loss provisions [1] - GE Vernova anticipates earnings of $1.62 per share on sales of $9.16 billion, with attention on margins and AI data center deals [1] - Honeywell is expected to report revenues of $10.15 billion and EPS of $2.57, with a focus on its Aerospace segment and upcoming spin-off of its Solstice business [1] - Dover is projected to report EPS of $2.51 on revenues of $2.11 billion, with bookings being a key metric for future growth [1][2] Economic Data and Government Shutdown - The government shutdown has resulted in a lack of official economic data, with the September jobs report still pending [2] - The Bureau of Labor Statistics is expected to release the September existing home sales report, which will provide insights into the housing market amid inflationary pressures [2] - Home Depot is relying on increased housing activity to drive sales, highlighting the importance of housing market trends [2]

Core Viewpoint - Cathay General Bancorp has appointed Mr. Albert J. Wang as Executive Vice President and Deputy Chief Financial Officer to enhance financial collaboration and profitability within the company [1] Company Summary - Mr. Albert J. Wang will report directly to the Chief Financial Officer [1] - His role will involve providing expertise and counsel on fiscal matters and establishing financial goals across various functional areas [1]

Core Viewpoint - Cathay General (CATY) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, with institutional investors playing a role in this relationship [4]. - Rising earnings estimates for Cathay suggest an improvement in the company's underlying business, likely leading to an increase in stock price [5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of Cathay to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Earnings Estimate Revisions for Cathay - For the fiscal year ending December 2025, Cathay is expected to earn $4.51 per share, with a 1% increase in the Zacks Consensus Estimate over the past three months [8].

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) This section presents Cathay General Bancorp's unaudited consolidated financial statements, including balance sheets, income statements, equity changes, and cash flows, with notes on accounting policies [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $23.72 billion from $23.05 billion at year-end 2024, driven by growth in loans, with total liabilities rising to $20.84 billion and total stockholders' equity increasing to $2.89 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$23,723,847** | **$23,054,681** | | Loans held for investment, net | $19,597,337 | $19,203,649 | | Securities available-for-sale | $1,648,433 | $1,547,128 | | **Total Liabilities** | **$20,837,552** | **$20,208,977** | | Total deposits | $20,006,330 | $19,686,199 | | Advances from FHLB | $412,000 | $60,000 | | **Total Stockholders' Equity** | **$2,886,295** | **$2,845,704** | [Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net income for Q2 2025 rose to $77.5 million ($1.10 diluted EPS) from $66.8 million in Q2 2024, driven by higher net interest income and lower non-interest expense, with six-month net income reaching $147.0 million Q2 2025 vs Q2 2024 Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $181,221 | $165,316 | | Provision for Credit Losses | $11,200 | $6,600 | | Non-Interest Income | $15,391 | $13,215 | | Non-Interest Expense | $89,134 | $99,352 | | **Net Income** | **$77,450** | **$66,829** | | **Diluted EPS** | **$1.10** | **$0.92** | Six Months 2025 vs 2024 Performance (in thousands, except per share data) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net Interest Income | $357,860 | $333,888 | | Provision for Credit Losses | $26,700 | $8,500 | | Non-Interest Income | $26,595 | $19,826 | | Non-Interest Expense | $174,790 | $192,591 | | **Net Income** | **$146,956** | **$138,264** | | **Diluted EPS** | **$2.09** | **$1.90** | [Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to $2.89 billion by June 30, 2025, from $2.85 billion at year-end 2024, primarily due to net income and other comprehensive income, partially offset by treasury stock purchases and cash dividends Reconciliation of Stockholders' Equity (Six Months Ended June 30, 2025, in thousands) | Description | Amount | | :--- | :--- | | Balance at Dec 31, 2024 | $2,845,704 | | Net Income | $146,956 | | Other Comprehensive Income | $16,385 | | Purchases of Treasury Stock | $(77,338) | | Cash Dividends | $(47,701) | | Other (Stock Comp, DRIP, etc.) | $(2,001) | | **Balance at June 30, 2025** | **$2,886,295** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was $162.9 million for the first half of 2025, while investing activities used $501.1 million and financing activities provided $545.6 million, resulting in a $207.5 million net increase in cash and cash equivalents Cash Flow Summary (Six Months Ended June 30, 2025, in thousands) | Activity | Amount | | :--- | :--- | | Net Cash from Operating Activities | $162,911 | | Net Cash from Investing Activities | $(501,088) | | Net Cash from Financing Activities | $545,632 | | **Net Increase in Cash** | **$207,455** | [Notes to Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed disclosures supporting the primary financial statements, covering business operations, accounting policies, investment securities, loan portfolio, credit losses, borrowed funds, fair value, derivatives, and equity activities [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=50&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial condition and results for Q2 and H1 2025, analyzing net interest income, credit losses, non-interest items, and balance sheet components including loans, non-performing assets, deposits, capital, and liquidity, alongside critical accounting policies like CECL [Highlights](index=51&type=section&id=Highlights) The company reported strong Q2 2025 performance with net income of $77.5 million ($1.10 diluted EPS), a 16.0% increase year-over-year, alongside an improved net interest margin, and growth in total loans and deposits Q2 2025 Key Performance Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (millions) | $77.5 | $66.8 | | Diluted EPS | $1.10 | $0.92 | | Return on Average Assets | 1.33% | 1.15% | | Return on Average Equity | 10.72% | 9.63% | | Efficiency Ratio | 45.34% | 55.65% | - Net interest margin expanded to **3.27%** in Q2 2025 from 3.01% in Q2 2024[171](index=171&type=chunk) - Total loans grew **2.11%** to **$19.78 billion** and total deposits grew **1.6%** to **$20.01 billion** since December 31, 2024[171](index=171&type=chunk) [Quarterly Statement of Operations Review](index=51&type=section&id=Quarterly%20Statement%20of%20Operations%20Review) Q2 2025 net interest income increased 9.6% year-over-year to $181.2 million due to lower cost of funds, while provision for credit losses rose, non-interest income increased, and non-interest expense decreased primarily from reduced amortization of tax credit investments - The increase in net interest income was primarily due to a decrease in interest expense from deposits, which more than offset a decrease in interest income from loans and securities[168](index=168&type=chunk) - The provision for credit losses increased to **$11.2 million** in Q2 2025 from $6.6 million in Q2 2024[175](index=175&type=chunk) - Non-interest expense decreased mainly due to a **$12.2 million** reduction in amortization expense from investments in low-income housing and alternative energy partnerships[179](index=179&type=chunk) [Balance Sheet Review](index=57&type=section&id=Balance%20Sheet%20Review) The balance sheet review details changes from year-end 2024 to June 30, 2025, showing total asset growth to $23.72 billion driven by a 2.1% increase in gross loans to $19.78 billion, stable non-performing assets, 1.6% deposit growth, and an increased allowance for credit losses [Loans](index=59&type=section&id=Loans) Gross loans held for investment increased by **$408.7 million** (2.1%) to **$19.78 billion** by June 30, 2025, primarily driven by commercial real estate and commercial loans, with commercial real estate comprising **52.4%** of the portfolio Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Commercial loans | $3,194,724 | $3,098,004 | 3.1% | | Construction loans | $301,125 | $319,649 | (5.8)% | | Commercial real estate loans | $10,363,109 | $10,033,830 | 3.3% | | Residential mortgage & equity lines | $5,922,143 | $5,919,092 | 0.1% | | **Gross loans held for investment** | **$19,784,702** | **$19,375,955** | **2.1%** | [Non-performing Assets](index=59&type=section&id=Non-performing%20Assets) Total non-performing assets increased slightly to **$199.5 million** by June 30, 2025, maintaining a stable 0.84% ratio to total assets, with non-accrual loans rising to **$174.2 million** primarily due to commercial real estate Non-Performing Assets (in thousands) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Accruing loans past due 90+ days | $6,389 | $4,050 | | Non-accrual loans | $174,153 | $169,161 | | Other real estate owned (OREO) | $18,990 | $23,071 | | **Total Non-Performing Assets** | **$199,532** | **$196,282** | | **NPA / Total Assets** | **0.84%** | **0.85%** | [Allowance for Credit Losses](index=66&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses increased to **$183.4 million** by June 30, 2025, representing **0.93%** of gross loans, driven by a **$26.7 million** provision, with the CECL methodology incorporating an 8-quarter forecast period sensitive to macroeconomic factors like unemployment Allowance for Credit Losses Ratios | Ratio | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | ACL to Gross Loans | 0.93% | 0.88% | | ACL to Non-Performing Loans | 101.60% | 98.98% | - The CECL model uses a blended scenario approach with an 8-quarter reasonable and supportable forecast period and a 4-quarter reversion period. The baseline scenario projects unemployment peaking at **4.8%** in Q4 2026, while the downside scenario contemplates a recession with unemployment peaking at **8.3%**[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - A sensitivity analysis indicates that applying a 100% weighting to the downside scenario would have increased the ACL by approximately **$111.9 million** as of June 30, 2025[235](index=235&type=chunk) [Deposits](index=72&type=section&id=Deposits) Total deposits increased by **$320.1 million** (1.6%) to **$20.01 billion** by June 30, 2025, maintaining a stable mix with time deposits at **48.5%**, and available liquidity sources exceeding the **$9.48 billion** in uninsured deposits Deposit Composition (in thousands) | Deposit Type | June 30, 2025 | % of Total | | :--- | :--- | :--- | | Non-interest-bearing | $3,381,407 | 16.9% | | Interest-bearing | $16,624,923 | 83.1% | | *Time deposits* | *$9,702,651* | *48.5%* | | **Total Deposits** | **$20,006,330** | **100.0%** | - Total uninsured deposits were **$9.48 billion**. Excluding **$824.0 million** in collateralized deposits, uninsured and uncollateralized deposits were **$8.66 billion**, representing **43.3%** of total deposits[244](index=244&type=chunk) - The company has recognized **$13.3 million** cumulatively as of June 30, 2025, related to the FDIC special assessment to recover losses from the Deposit Insurance Fund (DIF)[246](index=246&type=chunk) [Capital Resources](index=74&type=section&id=Capital%20Resources) Total equity increased to **$2.89 billion** in H1 2025, with the company remaining well-capitalized as evidenced by a **13.35%** CET1 ratio and **14.92%** Total Capital ratio, while maintaining a **$0.34** quarterly cash dividend per share Bancorp Capital Ratios | Ratio | June 30, 2025 | Required (incl. buffer) | | :--- | :--- | :--- | | CET1 Capital Ratio | 13.35% | 7.00% | | Tier 1 Capital Ratio | 13.35% | 8.50% | | Total Capital Ratio | 14.92% | 10.50% | | Leverage Ratio | 11.09% | 4.00% | - The company declared a cash dividend of **$0.34** per share in Q2 2025, continuing the rate set in Q4 2021[256](index=256&type=chunk)[258](index=258&type=chunk) [Liquidity](index=78&type=section&id=Liquidity) The company maintains a strong liquidity position, with principal sources including deposit growth, securities cash flows, and FHLB advances, holding an **$8.12 billion** approved FHLB credit line with **$7.00 billion** unused capacity, deemed adequate for the next twelve months - The average monthly liquidity ratio was **13.9%** as of June 30, 2025[259](index=259&type=chunk) - At June 30, 2025, the Bank had an approved FHLB credit line of **$8.12 billion**, with **$412.0 million** in advances outstanding and **$930.0 million** in standby letters of credit issued[260](index=260&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages interest rate risk using a net interest income simulation model, projecting that a +200 basis point shock would increase NII by **13.0%** and decrease market value of equity by **8.4%**, while a -200 basis point shock would decrease NII by **4.2%** and increase market value of equity by **5.2%** Interest Rate Sensitivity Analysis (as of June 30, 2025) | Change in Interest Rate (bps) | % Change in Net Interest Income (12 mo.) | % Change in Market Value of Equity | | :--- | :--- | :--- | | +200 | 13.0% | -8.4% | | +100 | 6.5% | -3.7% | | -100 | -2.3% | 3.2% | | -200 | -4.2% | 5.2% | - The company has established policy tolerance levels to limit NII volatility to **+/- 5%** and the loss in net economic value to zero for a **+/- 200 basis point** rate shock[266](index=266&type=chunk) [Controls and Procedures](index=80&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of Q2 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures are effective as of the end of the period covered by the report[270](index=270&type=chunk) - No changes in internal control over financial reporting occurred during Q2 2025 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[271](index=271&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=80&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary course litigation, but management believes any resulting liability would not materially adversely impact its financial condition, results of operations, or liquidity - Management believes that the outcomes of current legal proceedings are not expected to have a material adverse impact on the Company's consolidated financial condition[273](index=273&type=chunk) [Risk Factors](index=80&type=section&id=Item%201A.%20RISK%20FACTORS) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors disclosed in the Company's 2024 Form 10-K[274](index=274&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased **804,179** shares in June 2025 at an average price of **$44.22** as part of a new **$150.0 million** stock repurchase program, with approximately **$114.4 million** remaining available as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining in Program | | :--- | :--- | :--- | :--- | | April 2025 | 0 | $0.00 | - | | May 2025 | 0 | $0.00 | - | | June 2025 | 804,179 | $44.22 | $114,438,105 | - A new stock repurchase program of up to **$150.0 million** was announced on June 4, 2025, after the completion of the previous **$125.0 million** program[159](index=159&type=chunk) [Other Information](index=81&type=section&id=Item%205.%20OTHER%20INFORMATION) President and CEO Chang M. Liu entered into a Rule 10b5-1 trading agreement on May 1, 2025, for the sale of vested net shares to cover estimated tax liabilities from equity compensation - President and CEO Chang M. Liu entered into a Rule 10b5-1 trading agreement on May 1, 2025, to sell shares to cover tax liabilities associated with equity awards[280](index=280&type=chunk) [Exhibits](index=81&type=section&id=Item%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act and Inline XBRL data files - Exhibits filed include CEO and CFO certifications (Rule 302 and 906) and Inline XBRL documents[281](index=281&type=chunk)[282](index=282&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net income of $77.4 million for Q2 2025, an 11.4% increase compared to $69.5 million for Q1 2025 [6][14] - Diluted earnings per share increased by 12.2% to $1.10 for Q2 2025 from $0.98 in Q1 2025 [6] - Net interest margin increased from 2.25% in Q1 2025 to 3.27% in Q2 2025, attributed to a lower cost of funds [14][17] - Total deposits increased by $189 million or 3.8% annualized during Q2 2025 [12] Business Line Data and Key Metrics Changes - Total gross loans increased by $432 million or 8.9% annualized, driven by increases in commercial loans, commercial real estate loans, and residential loans [6][12] - Noninterest income for Q2 2025 increased by $4.2 million to $15.4 million compared to $11.2 million in Q1 2025 [15] - Noninterest expense increased by 4% to $89.1 million in Q2 2025 from $85.7 million in Q1 2025 [16] Market Data and Key Metrics Changes - The average loan-to-value ratio for commercial real estate loans remained at 49% as of June 30, 2025 [9] - Nonaccrual loans were 0.9% of total loans as of June 30, 2025, increasing by $19.6 million compared to Q1 2025 [11] Company Strategy and Development Direction - The company revised its 2025 loan growth guidance to 3% to 4% from a previous range of 1% to 4% due to strong Q2 loan growth [7] - The management emphasized a balanced growth in both commercial and industrial (C&I) loans and commercial real estate [29] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic landscape, noting potential impacts from external factors such as terrorism and CPI adjustments [29] - The company is optimistic about maintaining a strong pipeline for the second half of the year [29] Other Important Information - The effective tax rate for Q2 2025 was 19.56%, with guidance updated to between 18.5% to 19% due to recent California tax legislation [17] - The company has an unused borrowing capacity from the Federal Home Loan Bank of $7 billion and the Federal Reserve Bank of $1.5 billion as of June 30, 2025 [13] Q&A Session Summary Question: Impact of California state tax change on income tax rate - The CFO confirmed a direct impact of $3.4 million due to writing off a portion of the deferred tax asset [20] Question: Allowance for Credit Losses (ACL) refill drivers - The CFO explained that the refill was primarily driven by economic factors in Moody's model rather than specific portfolio issues [21][23] Question: Loan growth guidance and pipeline outlook - Management indicated a strong pipeline for the second half of the year but maintained caution regarding potential loan demand drops [29][30] Question: Federal Home Loan Bank borrowing details - The CFO clarified that the recent borrowings were mainly two-week borrowings at a rate of approximately 4.6% [32] Question: Increase in classified loans - The CFO noted that the increase was due to one commercial relationship experiencing cash flow issues, but they are expected to catch up [37][39]

Financial Data and Key Metrics Changes - The company reported a net income of $77.4 million for Q2 2025, an 11.4% increase compared to $69.5 million for Q1 2025 [6][14] - Diluted earnings per share increased 12.2% to $1.10 for Q2 2025 from $0.98 in Q1 2025 [6] - Net interest margin increased from 2.25% in Q1 2025 to 3.27% in Q2 2025, attributed to a lower cost of funds [14][16] - Total gross loans increased by $432 million or 8.9% annualized during Q2 2025 [6][12] Business Line Data and Key Metrics Changes - Commercial loans increased by $196 million, commercial real estate loans by $202 million, and residential loans by $69 million, while construction loans decreased by $32 million [6] - Noninterest income for Q2 2025 increased by $4.2 million to $15.4 million compared to $11.2 million in Q1 2025, driven by changes in unrealized losses on equity securities and higher foreign exchange income [15] - Noninterest expense increased by 4% to $89.1 million in Q2 2025 from $85.7 million in Q1 2025 [15] Market Data and Key Metrics Changes - Total deposits increased by $189 million or 3.8% annualized during Q2 2025, primarily due to increases in core deposits and time deposits [12] - As of June 30, 2025, total uninsured deposits were $8.7 billion, representing 43.3% of total deposits [12] Company Strategy and Development Direction - The company revised its 2025 loan growth guidance to 3% to 4% from a previous range of 1% to 4% due to strong loan growth in Q2 2025 [7] - The company continues to monitor its commercial real estate loans, with an average loan-to-value ratio of 49% as of June 30, 2025 [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the loan pipeline for the second half of the year, citing balanced growth in both commercial and industrial sectors [27] - The company is cautious about potential economic factors that could impact loan demand, including inflation and geopolitical issues [27] Other Important Information - The effective tax rate for Q2 2025 was 19.56%, with guidance updated to between 18.5% to 19% due to recent California tax legislation [16] - The company has an unused borrowing capacity from the Federal Home Loan Bank of $7 billion and the Federal Reserve Bank of $1.5 billion as of June 30, 2025 [13] Q&A Session Summary Question: Impact of California state tax change on income tax rate - Management confirmed a direct impact of $3.4 million from writing off a portion of the deferred tax asset due to lower state apportionment [19] Question: Allowance for Credit Losses (ACL) refill drivers - The refill was primarily driven by economic factors in Moody's model, with an increase in unemployment and loan growth contributing to the adjustment [20][22] Question: Loan growth guidance and pipeline outlook - Management indicated a strong pipeline for the second half of the year but maintained caution regarding economic conditions that could affect loan demand [27][28] Question: Increase in classified loans - The increase was attributed to one commercial relationship facing cash flow issues, with expectations for the borrower to become current by the end of Q3 [34][35]