Cathay General Bancorp(US:CATY)2025-10-21 23:00Financial 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]