CATHAY GENERAL BANCORP Q3 FY2024 earnings call

• Net income increase was due to net interest income up $3.8M, non-interest income up $7.1M, non-interest expense down $2.5M, offset by provision for credit losses up $7.9M and income tax up $4.9M. - Net interest margin was 3.04% in Q3 vs 3.01% in Q2, expected to increase with rate cuts. - Repurchased 832,460 shares at $42 avg, with $35M under the May 2024 $125M stock buyback program, anticipating $35M per quarter in Q4 2024 and Q1 2025. - Loan portfolio has 63% fixed rate and hybrid loans. CRE loans had an average LTV of 49% as of Sept 30, 2024. - Total deposits: core deposits up, time deposits down; uninsured deposits were $8.4B, with unused borrowing capacity covering uninsured/uncollateralized deposits.

In Q3 2024, net income was $67.5 million, a 1% increase from $66.8 million in Q2. Diluted earnings per share was $0.94, up 2.2% from $0.92 in Q2. Total gross loans increased $16 million or 0.3% annualized, with CRE loans up $89 million or 4% and C&I loans up $16 million or 2%, offset by decreases in residential mortgages/HELOC and construction loans. Net charge offs were $4.2 million in Q3 vs $8 million in Q2. Non-accrual loans were 0.84% of total loans, increasing to $162.8 million from Q2. Total deposits increased $171 million or 3.5% annualized, with core deposits up $195 million or 7.8% and time deposits down $24 million or 1%.

• Net income for Q3 2024 was $67.5M, up 1% from Q2. - Anticipate repurchasing ~$35M in stock per quarter in Q4 2024 and Q1 2025. - Net interest margin expected to range 3.05%-3.10% in 2024. - Effective tax rate expected 10.5%-11.5% for 2024. - Board may consider increasing stock buyback authorization from $125M to $150M.

• Risks related to forward-looking statements with actual results potentially differing. - Risks in loan portfolio, including commercial real estate loans and non-accrual loans. - Deposit rate declines affecting time deposit costs.

Q: Was the increase in the loan loss reserve related to the $38 million loan relationship?

A: That's a $30 million loan, mainly added general reserves to bolster reserves, net of charge offs.

Q: How much is maturing CDs in the fourth quarter and their yields?

A: In the fourth quarter, maturing CDs is about $3.49 billion with an average yield of about 4.82%; $600 million maturing in Jan/Feb at 4.85% rolling to low 4s; $800 million 6-month CDs from Chinese New Year promotion repriced down, will reprice further in Jan/Feb.

Q: Expense guidance for 4Q?

A: Core expenses to moderate similar to Q3, with deposit process improvement finished in Q3 saving costs.

Q: Low-income housing tax credit amortization for 4Q?

A: $10 million run rate for 4Q.

Q: Buyback authorization?

A: Board may consider increasing from $125M to $150M.

Q: Spot rates on loans and deposits?

A: Residential mortgage ~5.6%, CRE mid-6s, C&I ~8.4%; deposits: now account 1.2%, savings 1.83%, money market 3.58%, CDs 4.58%, total interest bearing 3.82%; Sept NIM 3.17%.

Q: Non-performers migration?

A: Including $12.7 million loan in Hong Kong secured by retail center collaterals.