Cathay General Bancorp(US:CATY)2024-01-25 02:46Financial Data and Key Metrics Changes - The company reported net income of $82.5 million for Q4 2023, a slight increase of 0.1% compared to $82.4 million in Q3 2023 [8][26] - Diluted earnings per share remained stable at $1.13 for Q4 2023, unchanged from Q3 2023 [21] - Net interest margin decreased to 3.27% in Q4 2023 from 3.38% in Q3 2023 [13] - Non-interest expense increased by 17.6% to $110.5 million in Q4 2023, primarily due to FDIC special assessments and higher salaries [14][26] Business Line Data and Key Metrics Changes - Gross loans increased by $524 million, or 11.5% annualized, in Q4 2023, driven by increases in commercial real estate loans, residential mortgage loans, and commercial loans [21] - Net charge-offs were $4.1 million in Q4 2023, down from $6.6 million in Q3 2023 [10] - The average loan-to-value ratio for commercial real estate loans was 50% as of December 31, 2023 [9] Market Data and Key Metrics Changes - Total average deposits increased by $244.3 million, or 5.2% annualized, during Q4 2023 [11] - Total uninsured deposits were $8.7 billion, with uninsured and uncollateralized deposits at $7.9 billion, representing 40.9% of total deposits [24] Company Strategy and Development Direction - The company expects overall deposit growth for 2024 to range between 4% and 5% [11] - Loan growth for 2024 is anticipated to be between 4% and 5% [21] - The company plans to engage in discussions with the Federal Reserve regarding capital buybacks in Q1 2024 [41] Management's Comments on Operating Environment and Future Outlook - Management noted a provision for credit loss of $1.7 million in Q4 2023, down from $7 million in Q3 2023, indicating improved credit quality [23] - The effective tax rate for Q4 2023 was 11.28%, slightly up from 10.95% in Q3 2023 [28] - Management expects net interest margin for 2024 to be between 3.15% and 3.25%, based on anticipated Fed rate cuts [27][52] Other Important Information - The company recorded a $9 million unrealized gain on equity securities in Q4 2023, compared to a $6.2 million unrealized loss in Q3 2023 [26] - The company has unused borrowing capacity from the Federal Home Loan Bank of $6.6 billion as of December 31, 2023 [12] Q&A Session Summary Question: What are the updated thoughts on capital and buyback? - Management plans to discuss with the Fed in Q1 regarding buyback approvals, with potential activity in Q2 [41][42] Question: What is the outlook for net interest margin? - The company expects three Fed rate cuts in 2024, which will influence net interest margin [52] Question: What are the drivers of loan growth for 2024? - Management anticipates modest growth in commercial mortgages and increased activity if rate cuts occur [68]