CATY — Cathay General Bancorp

Summary of Cathay General Bancorp (CATY) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $90.5 million for Q4 2025, up 16.5% from $77.7 million in Q3.
• Diluted Earnings Per Share: Increased by 18.3% to $1.33 in Q4 from $1.13 in Q3.
• Full Year Net Income: $315.1 million, a 10.1% increase from $286 million in 2024.
• Net Interest Margin: Improved to 3.36% in Q4 from 3.31% in Q3.
• Total Deposits: Increased by $373 million or 7.6% annualized in Q4, primarily due to core deposits.
• Loan Growth: Total gross loans grew by $42 million, with expectations for 2026 growth between 3.5% and 4.5%.

2. Strategic Updates and Business Highlights

• Stock Buyback Program: Repurchased 1.1 million shares for $51.9 million; $12 million remains under the current buyback program, with plans for a new program post-approval.
• Loan Portfolio Composition: 60% of loans are fixed or hybrid rate, expected to support loan yields as market rates decline.
• Credit Quality: Nonaccrual loans decreased to 0.6% of total loans, down from the previous quarter, and classified loans fell from $420 million to $391 million.

3. Forward Guidance and Outlook

• Net Interest Margin: Expected to range between 3.4% and 3.5% in 2026, benefiting from declining deposit costs.
• Deposit Growth: Anticipated to be between 4% and 5% in 2026.
• Provisions for Credit Losses: $17.2 million in Q4, down from $28.7 million in Q3, with an ALLL to gross loan ratio of 0.97%.

4. Bad News, Challenges, or Points of Concern

• Special Mention Loans: Increased from $455 million to $535 million, indicating potential credit quality issues.
• Competitive Pressures: The lending market remains competitive, particularly in the C&I sector, which has seen a decline in rates.
• Tax Rate Increase: The effective tax rate rose to 20.33% in Q4, with expectations for 2026 between 20.5% and 21.5%.

5. Notable Q&A Insights

• Deposit Betas: Management assumes deposit betas around 60%, indicating expectations for deposit costs to remain rational.
• Credit Migration: No significant trends observed in credit quality, although some loans were downgraded to special mention due to covenant issues.
• Loan Growth Competition: Strong competition noted in the C&I sector, with efforts to enhance relationships and find new lending opportunities.

Overall, Cathay General Bancorp reported solid financial performance in Q4 2025 with increased net income and improved margins, while also navigating challenges in credit quality and competitive pressures in the lending market.