Cathay General Bancorp(CATY) - 2025 Q2 - Quarterly Results

Financial Performance and Highlights The company reported strong Q2 2025 net income growth, an improved net interest margin, and a new stock repurchase program Overall Financial Performance Cathay General Bancorp reported strong Q2 2025 net income of $77.5 million with improved profitability and efficiency ratios Q2 2025 Financial Performance Summary | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (millions) | $77.5 | $69.5 | $66.8 | | Diluted EPS | $1.10 | $0.98 | $0.92 | | Return on Average Assets | 1.33% | 1.22% | 1.15% | | Return on Average Equity | 10.72% | 9.84% | 9.63% | | Efficiency Ratio | 45.34% | 45.60% | 55.65% | Second Quarter Highlights Key highlights include a rising net interest margin, a new $150.0 million stock repurchase program, and growth in total loans and deposits - The net interest margin increased to 3.27% in Q2 2025 from 3.25% in Q1 2025[8] - A new stock repurchase program of up to $150.0 million was announced; in Q2 2025, the company repurchased 804,179 shares for a total of $35.6 million[5] - Total loans grew by 2.23% to $19.78 billion, and total deposits increased by 0.95% to $20.01 billion during the second quarter[8] Detailed Financial Analysis (Q2 2025 vs. Q1 2025) This chapter provides a detailed comparison of the company's income statement and balance sheet between Q2 and Q1 2025 Income Statement Review Net income grew 11.5% quarter-over-quarter, driven by higher net interest and non-interest income and a lower credit provision - Net income increased by 11.5% to $77.5 million, and diluted EPS rose to $1.10 from $0.98 in the prior quarter[6] - Return on average stockholders' equity improved to 10.72% from 9.84%, and return on average assets increased to 1.33% from 1.22% in Q1 2025[7] Net Interest Income Net interest income rose 2.6% to $181.2 million, supported by an expanded net interest margin of 3.27% - Net interest income increased by $4.6 million (2.6%) to $181.2 million compared to Q1 2025[9] Key Interest Rate Metrics (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Interest Margin | 3.27% | 3.25% | | Yield on Avg. Interest-Earning Assets | 5.83% | 5.89% | | Cost of Funds on Avg. Interest-Bearing Liabilities | 3.37% | 3.46% | | Net Interest Spread | 2.46% | 2.43% | Provision for Credit Losses The provision for credit losses decreased to $11.2 million, though net charge-offs increased significantly to $12.7 million - Provision for credit losses was $11.2 million in Q2 2025, down from $15.5 million in Q1 2025[11] Net Charge-offs (in thousands) | Period | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total Charge-offs | $13,030 | $2,344 | $8,257 | | Total Recoveries | $289 | $367 | $260 | | Net Charge-offs | $12,741 | $1,977 | $7,997 | - The allowance for credit losses decreased to $183.4 million (0.93% of gross loans) from $185.0 million (0.96% of gross loans) at the end of Q1 2025[11] Non-interest Income Non-interest income grew 37.5% to $15.4 million, mainly from lower equity security losses and higher swap fees - Non-interest income rose $4.2 million (37.5%) to $15.4 million in Q2 2025[13] - Key drivers for the increase were a lower loss on equity securities (by $2.8 million) and higher fees from interest rate swaps (by $1.8 million)[13] Non-interest Expense Non-interest expense increased 4.0% to $89.1 million, yet the efficiency ratio improved to 45.34% - Non-interest expense increased by $3.4 million (4.0%) to $89.1 million in Q2 2025[14] - The efficiency ratio improved to 45.34% in Q2 2025 from 45.60% in Q1 2025[14] Income Taxes The effective tax rate for Q2 2025 was 19.56%, slightly down from the previous quarter - The effective tax rate was 19.56% for Q2 2025, compared to 19.82% for Q1 2025[15] Balance Sheet Review The balance sheet expanded with gross loans growing 2.23% to $19.78 billion and total deposits up 1.0% to $20.01 billion Loan Composition (in thousands) | Loan Type | June 30, 2025 | March 31, 2025 | % Change | | :--- | :--- | :--- | :--- | | Commercial loans | $3,194,724 | $2,998,423 | 6.5% | | Construction loans | $301,125 | $332,729 | -9.5% | | Commercial real estate | $10,363,109 | $10,160,934 | 2.0% | | Residential mortgage | $5,692,142 | $5,623,564 | 1.2% | | Gross loans | $19,784,702 | $19,353,003 | 2.2% | Deposit Composition (in thousands) | Deposit Type | June 30, 2025 | March 31, 2025 | % Change | | :--- | :--- | :--- | :--- | | Non-interest-bearing | $3,381,407 | $3,361,245 | 0.6% | | NOW deposits | $2,174,108 | $2,131,445 | 2.0% | | Money market deposits | $3,431,060 | $3,423,953 | 0.2% | | Savings deposits | $1,317,104 | $1,266,561 | 4.0% | | Time deposits | $9,702,651 | $9,634,324 | 0.7% | | Total deposits | $20,006,330 | $19,817,528 | 1.0% | Asset Quality and Capital Adequacy This chapter reviews the company's asset quality metrics and strong capital position as of Q2 2025 Asset Quality Review Asset quality weakened slightly with non-performing assets increasing 14.9% to $199.5 million Non-Performing Assets (in thousands) | Category | June 30, 2025 | March 31, 2025 | % Change | | :--- | :--- | :--- | :--- | | Total non-accrual loans | $174,153 | $154,626 | 12.6% | | Total non-performing loans | $180,542 | $155,221 | 16.3% | | Other real estate owned | $18,990 | $18,484 | 2.7% | | Total non-performing assets | $199,532 | $173,705 | 14.9% | Key Asset Quality Ratios | Ratio | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Allowance for loan losses to gross loans | 0.88% | 0.90% | | Allowance for loan losses to non-performing loans | 96.12% | 112.06% | | Non-performing assets to total assets | 0.84% | 0.75% | Capital Adequacy Review The company maintained a robust capital position, exceeding all "well capitalized" regulatory requirements - The company continues to be classified as "well capitalized" for regulatory purposes[22] Capital Ratios | Ratio | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Tier 1 risk-based capital ratio | 13.35% | 13.58% | | Total risk-based capital ratio | 14.92% | 15.19% | | Tier 1 leverage capital ratio | 11.09% | 11.06% | Year-to-Date Performance Review This chapter summarizes the company's financial performance for the first six months of 2025 compared to the prior year Six-Month Performance Summary (YTD 2025 vs. YTD 2024) Year-to-date net income grew 6.3% to $147.0 million, driven by margin expansion and improved efficiency Year-to-Date Financial Performance | Metric | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net Income (millions) | $147.0 | $138.3 | | Diluted EPS | $2.09 | $1.90 | | Net Interest Margin | 3.26% | 3.03% | | Return on Average Assets | 1.27% | 1.19% | | Return on Average Equity | 10.28% | 10.01% | | Efficiency Ratio | 45.46% | 54.45% | Consolidated Financial Statements This section presents the detailed consolidated financial statements and supplementary financial data for the period Consolidated Financial Highlights This section provides a detailed tabular summary of key financial performance metrics and ratios for comparative periods - The table presents key financial data including net interest income, net income, earnings per share, profitability ratios (ROA, ROE), efficiency ratio, and yield analysis for comparative quarterly and six-month periods[31] Condensed Consolidated Balance Sheets The company's financial position shows total assets grew to $23.72 billion as of June 30, 2025 - The balance sheet details assets such as loans and securities, and liabilities including deposits and borrowings, providing a snapshot of the company's financial health at the end of the period[33] Condensed Consolidated Statements of Operations This statement details the components of revenue and expenses that resulted in the company's quarterly net income - This statement shows the components of revenue and expenses, illustrating how the company arrived at its net income of $77.5 million for Q2 2025[35] Average Balances and Yields This analysis of average balances, yields, and costs explains the key drivers of the net interest margin - The tables show average balances for interest-earning assets and interest-bearing liabilities, along with the calculated yields and rates, which are used to determine net interest spread and margin[37][38] GAAP to Non-GAAP Reconciliation This section reconciles GAAP measures to non-GAAP metrics like tangible book value per share, which was $36.16 - The company provides a reconciliation for tangible equity and tangible assets, which are considered supplemental measures of performance[41] Key Non-GAAP Metrics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Tangible equity to tangible assets ratio | 10.74% | | Tangible book value per share | $36.16 | | Return on tangible common equity (annualized) | 12.39% | Other Information This section provides details on the upcoming conference call, company background, and forward-looking statements Conference Call Information A conference call to discuss Q2 2025 financial results is scheduled for July 22, 2025 - A conference call is scheduled for July 22, 2025, at 3:00 p.m. PT to discuss the quarterly results[26] About Cathay General Bancorp Cathay General Bancorp is the holding company for Cathay Bank, which operates branches across the U.S. and Asia - Cathay General Bancorp is the holding company for Cathay Bank, which was founded in 1962 and operates over 60 branches in the U.S. and has an international presence in Asia[27] Forward-Looking Statements This section contains a legal disclaimer regarding forward-looking statements and associated risks and uncertainties - The press release includes forward-looking statements that are subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them[28][29]