Cathay General Bancorp Q4 FY2025 earnings call

• Net income for Q4 2025 was $90.5 million, up 16.5% from Q3; full year 2025 net income was $315.1 million, up 10.1% from 2024.
• Repurchased 1.1 million shares of common stock in Q4 under the $150 million stock buyback program, with $12 million remaining.
• Total gross loans grew by $42 million in Q4, with CRE and residential loans contributing significantly.
• Expect loan growth in 2026 to be between 3.5% and 4.5%.
• CRE loan average loan-to-value remained steady at 49%, with details on retail property and office private loans.
• Provisions for credit losses in Q4 were $17.2 million.
• Net interest margin increased to 3.36% in Q4, projected 3.4%-3.5% for 2026.
• Noninterest income increased in Q4, noninterest expense up due to higher bonus accrual.
• Tier 1 leverage, risk-based capital ratios increased as of December 31, 2025.

For the fourth quarter of 2025, net income was $90.5 million, a 16.5% increase from $77.7 million in Q3. Diluted earnings per share increased by 18.3% to $1.33 in Q4. For the full year 2025, net income was $315.1 million, a 10.1% increase from 2024. Total gross loans grew by $42 million, driven by $18 million in CRE loans and $17 million in residential loans. Net charge-offs in Q4 were $5.4 million compared to $15.6 million in the prior quarter. Nonaccrual loans were 0.6% of total loans as of December 31, 2025, down from the prior quarter. Classified loans decreased from $420 million to $391 million for Q4, while special mention loans increased from $455 million to $535 million. The ALLL to gross loan ratio increased to 0.97% from 0.93%. Total deposits increased by $373 million or 7.6% on an annualized basis during Q4.

• Loan growth in 2026 expected to be between 3.5% and 4.5%.
• Net interest margin for 2026 projected to range between 3.4% and 3.5%.
• Core noninterest expense expected to increase between 3.5% and 4.5% in 2026.
• Effective tax rate expected to be between 20.5% and 21.5% in 2026.
• Remaining $12 million under the June 2025 $150 million stock buyback program to complete in early February, with a new program to be announced after approvals.

• Risks associated with forward-looking statements and uncertainties in actual results differing from projections as outlined in the company's annual report.
• Credit risks related to special mention loans and potential migration into criticized categories.
• Competition in deposit pricing and lending markets impacting financial performance.

Q: About deposit betas and market competition, what's the outlook?

A: Deposit betas are assumed in the 60% range for interest-bearing deposits, and the market is competitive with rational pricing in Q4.

Q: What are the credit trends and how did NPA improve?

A: Special mention loans have varied reasons for migration, with some projects and businesses having specific challenges but expected resolutions.

Q: How is lending competition and loan yield interest recovery?

A: Competition varies by segment; residential mortgage had strong growth, CRE had competition for assets, C&I had steeper rate declines, and interest recovery added 5 basis points to NIM in Q4 compared to 4 basis points in Q3.

Q: What's the expected amortization in 2026?

A: For low income housing, it's projected to be $11 million per quarter.