Cathay General Bancorp(US:CATY)2024-04-22 23:50Financial Data and Key Metrics Changes - Net income for Q1 2024 decreased by $11.1 million or 13.4% to $71.4 million compared to $82.5 million in the previous quarter, primarily due to a $9 million unrealized loss on equity securities and a $2.9 million accrual for the FDIC special assessment [71] - Diluted earnings per share decreased by 13.5% to $0.98 per share for Q1 2024 compared to $1.13 per share in the previous quarter [23] - Total gross loans decreased by $119 million or 2.4% annualized, with commercial real estate loans increasing by $92 million or 3.8% annualized, while commercial loans decreased by $172 million or 20.9% annualized [23] Business Line Data and Key Metrics Changes - The loan portfolio consists of 64% fixed rate and hybrid loans, with fixed rate loans comprising 30% and hybrid loans in fixed rate period comprising 34% of total loans [7] - Office property loans represent 15% of the total commercial real estate loan portfolio, with only 34% of the $1.5 billion in office property loans collateralized by pure office buildings [8] - Classified loans increased to $244 million from $200 million as of December 31, 2023, while special mention loans decreased to $249 million from $308 million [9] Market Data and Key Metrics Changes - Total deposits increased by $520.8 million or 10.8% annualized during Q1 2024, with total core deposits increasing by $210.9 million or 8.4% annualized [10] - Total uninsured deposits were $8.1 billion, net of $0.7 billion in collateralized deposits, representing 40.7% of total deposits [27] Company Strategy and Development Direction - The company expects overall deposit growth to continue in an estimated range between 4% and 5% [10] - The net interest margin for Q1 2024 was 3.05%, down from 3.27% in the previous quarter, with an estimated range for 2024 between 3.05% to 3.15% based on expectations for two rate cuts [12][29] Management's Comments on Operating Environment and Future Outlook - Management revised overall loan growth guidance for 2024 to range between 3% and 4% due to slower than expected loan growth in Q1 2024 [23] - The effective tax rate for Q1 2024 was 10.76%, with expectations for an effective tax rate of between 12% and 13% for 2024 [14] Other Important Information - Non-interest income decreased by $16.5 million to $6.6 million compared to $23.1 million in the previous quarter, primarily due to an increase in unrealized loss on equity securities [13] - Non-accrual loans were 0.5% of total loans as of March 31, 2024, increasing by $31.4 million to $98.1 million compared to the previous quarter [25] Q&A Session Summary Question: Can you provide the average margin in March and the spot rate on interest-bearing deposits at the end of March? - The NIM for March was 2.99%, and the spot rate for interest-bearing deposits at the end of March was 3.8% [15] Question: What is the expected amortization for low-income housing tax credits in the upcoming quarters? - The expected amortization is $10.5 million per quarter for the next three quarters [16] Question: What factors could move the NIM from the lower end to the higher end of the guidance range? - The impact of rate cuts is a significant factor influencing the NIM guidance [41] Question: How do you view the stability of non-interest bearing deposits for the second half of the year? - Management believes some fluctuations are seasonal, with expectations for DDA balances to stabilize later in the year [54]