Cathay General Bancorp Announces Fourth Quarter and Full Year 2024 Results

Cathay General Bancorp (the "Company," "we," "us," or "our") (NASDAQ:CATY), the holding company for Cathay Bank, today announced its unaudited financial results for the quarter and year ended December 31, 2024. The Company reported net income of $286.0 million, or $3.95 per diluted share, for the year ended December 31, 2024 and net income of $80.2 million, or $1.12 per diluted share, for the fourth quarter of 2024.

FINANCIAL PERFORMANCE

HIGHLIGHTS

• Net interest margin increased to 3.07% during the fourth quarter from 3.04% in the third quarter.
• Total loans, excluding loans held for sale, decreased to $19.38 billion, or 0.9%, from $19.55 billion in 2023.
• Total deposits increased $360.8 million, or 1.9%, to $19.69 billion in 2024.

"We are pleased by the increase in the net interest margin compared to the third quarter of 2024. During the quarter, we repurchased 506,651 shares at an average cost of $47.10 per share for a total of $23.9 million," commented Chang M. Liu, President and Chief Executive Officer of the Company.

INCOME STATEMENT REVIEW

FOURTH QUARTER 2024 COMPARED TO THE THIRD QUARTER 2024

Net income for the quarter ended December 31, 2024, was $80.2 million, an increase of $12.7 million, or 18.8%, compared to net income of $67.5 million for the third quarter of 2024. Diluted earnings per share for the fourth quarter of 2024 was $1.12 per share compared to $0.94 per share for the third quarter of 2024.

Return on average stockholders' equity was 11.18% and return on average assets was 1.37% for the quarter ended December 31, 2024, compared to a return on average stockholders' equity of 9.50% and a return on average assets of 1.15% in the third quarter of 2024.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $1.8 million, or 1.1%, to $171.0 million during the fourth quarter of 2024, compared to $169.2 million in the third quarter of 2024. The increase was due primarily to a decrease in interest deposit expense, partially offset by a decrease in interest income from loans and securities.

The net interest margin was 3.07% for the fourth quarter of 2024 compared to 3.04% for the third quarter of 2024.

For the fourth quarter of 2024, the yield on average interest-earning assets was 5.92%, the cost of funds on average interest-bearing liabilities was 3.75%, and the cost of average interest-bearing deposits was 3.72%. In comparison, for the third quarter of 2024, the yield on average interest-earning assets was 6.10%, the cost of funds on average interest-bearing liabilities was 3.99%, and the cost of average interest-bearing deposits was 3.95%. The decrease in the yield on average interest-bearing liabilities resulted mainly from lower interest rates on deposits driven by the lower repricing of maturing time deposits in the fourth quarter. The decrease in the yield on average interest-earning assets resulted mainly from lower interest rates on loans due to the decreasing rate environment. The net interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, was 2.17% for the fourth quarter of 2024, compared to 2.11% for the third quarter of 2024.

Provision for credit losses

The Company recorded a provision for credit losses of $14.5 million in the fourth quarter of 2024 compared to $14.5 million in the third quarter of 2024. As of December 31, 2024, the allowance for credit losses decreased by $1.9 million to $171.4 million, or 0.88% of gross loans, compared to $173.2 million, or 0.89% of gross loans as of September 30, 2024.

The following table sets forth the charge-offs and recoveries for the periods indicated:

Non-interest income

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wealth management fees, and other sources of fee income, was $15.5 million for the fourth quarter of 2024, a decrease of $4.9 million, or 23.9%, compared to $20.4 million for the third quarter of 2024. The decrease was primarily due to a decrease of $5.6 million in gain on equity securities, when compared to the third quarter of 2024.

Non-interest expense

Non-interest expense decreased $11.7 million, or 12.0%, to $85.2 million in the fourth quarter of 2024 compared to $96.9 million in the third quarter of 2024. The decrease in non-interest expense in the fourth quarter of 2024 was primarily due to a decrease of $13.3 million, in amortization expense of investments in low-income housing and alternative energy partnerships, a decrease of $2.1 million in FDIC and State assessments offset, in part, by an increase $1.7 million in professional services expense and an increase of $1.7 million in salaries and employee benefits, when compared to the third quarter of 2024. The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, was 45.70% in the fourth quarter of 2024 compared to 51.11% for the third quarter of 2024.

Income taxes

The effective tax rate for the fourth quarter of 2024 was 7.57% compared to 13.61% for the third quarter of 2024. The effective tax rate includes the impact of alternative energy investments and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans were $19.38 billion as of December 31, 2024, a decrease of $172.2 million, or 0.9%, from $19.55 billion as of December 31, 2023. The decrease was primarily due to decreases of $207.0 million, or 6.3%, in commercial loans, $149.7 million, or 2.6%, in residential mortgage loans, $103.0 million, or 24.4%, in construction loans and $15.9 million, or 6.5%, in home equity loans offset by an increase of $304.3 million, or 3.1%, in commercial real estate loans. For the fourth quarter of 2024, gross loans increased by $2.4 million, or 0.05% annualized.

The loan balances and composition as of December 31, 2024, compared to September 30, 2024, and December 31, 2023, are presented below:

Total deposits were $19.69 billion as of December 31, 2024, an increase of $360.8 million, or 1.9%, from $19.33 billion as of December 31, 2023.

The deposit balances and composition as of December 31, 2024, compared to September 30, 2024, and December 31, 2023, are presented below:

ASSET QUALITY REVIEW

As of December 31, 2024, total non-accrual loans were $169.2 million, an increase of $102.5 million, or 153.7%, from $66.7 million as of December 31, 2023, and an increase of $6.4 million, or 3.9%, from $162.8 million as of September 30, 2024.

The allowance for loan losses was $161.8 million and the allowance for off-balance sheet unfunded credit commitments was $9.7 million as of December 31, 2024. The allowances represent the amount estimated by management to be appropriate to absorb expected credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for loan losses represented 0.83% of period-end gross loans, and 93.39% of non-performing loans as of December 31, 2024. The comparable ratios were 0.79% of period-end gross loans, and 209.33% of non-performing loans as of December 31, 2023.

The changes in non-performing assets and loan modifications to borrowers experiencing financial difficulty as of December 31, 2024, compared to December 31, 2023, and September 30, 2024, are presented below:

The ratio of non-performing assets to total assets was 0.85% as of December 31, 2024, compared to 0.40% as of December 31, 2023. Total non-performing assets increased $103.0 million, or 110.4%, to $196.3 million as of December 31, 2024, compared to $93.3 million as of December 31, 2023, primarily due to an increase of $102.5 million, or 153.7%, in non-accrual loans, and $3.6 million, or 18.7%, in other real estate owned, offset, by a decrease of $3.1 million, or 43.4%, in accruing loans past due 90 days or more.

CAPITAL ADEQUACY REVIEW

As of December 31, 2024, the Company's Tier 1 risk-based capital ratio of 13.55%, total risk-based capital ratio of 15.09%, and Tier 1 leverage capital ratio of 10.97%, calculated under the Basel III capital rules, continue to place the Company in the "well capitalized" category for regulatory purposes, which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 8%, a total risk-based capital ratio equal to or greater than 10%, and a Tier 1 leverage capital ratio equal to or greater than 5%. As of December 31, 2023, the Company's Tier 1 risk-based capital ratio was 12.84%, total risk-based capital ratio was 14.31%, and Tier 1 leverage capital ratio was 10.55%.

FULL YEAR REVIEW

Net income for the year ended December 31, 2024, was $286.0 million, a decrease of $68.1 million, or 19.2%, compared to net income of $354.1 million for the year ended December 31, 2023. Diluted earnings per share for the year ended December 31, 2024, was $3.95 compared to $4.86 per share for the year ended December 31, 2023. The net interest margin for the year ended December 31, 2024, was 3.04% compared to 3.45% for the year ended December 31, 2023.

Return on average stockholders' equity was 10.18% and return on average assets was 1.22% for the year ended December 31, 2024, compared to a return on average stockholders' equity of 13.56% and a return on average assets of 1.56% for the year ended December 31, 2023. The efficiency ratio for the year ended December 31, 2024, was 51.35% compared to 46.97% for the year ended December 31, 2023.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its fourth quarter and year-end 2024 financial results this afternoon, Wednesday, January 22, 2025, at 3:00 p.m., Pacific Time. Analysts and investors may dial in and participate in the question-and-answer session. To access the call, please dial 1-833-816-1377 and enter Conference ID 10195683. The presentation accompanying this call and access to the live webcast is available on our site at www.cathaygeneralbancorp.com and a replay of the webcast will be archived for one year within 24 hours after the event.

ABOUT CATHAY GENERAL BANCORP

Cathay General Bancorp is a publicly traded company (NASDAQ:CATY) and is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services and currently operate over 60 branches across the United States in California, New York, Washington, Texas, Illinois, Massachusetts, Maryland, Nevada, and New Jersey. Overseas, it has a branch outlet in Hong Kong, and representative offices in Beijing, Shanghai, and Taipei. To learn more about Cathay Bank, please visit www.cathaybank.com. Cathay General Bancorp's website is at www.cathaygeneralbancorp.com. Information set forth on such websites is not incorporated into this press release.

FORWARD-LOOKING STATEMENTS

Statements made in this press release, other than statements of historical fact, are forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management's beliefs, projections, and assumptions concerning future results and events. These forward-looking statements may include, but are not limited to, such words as "aims," "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "predicts," "potential," "possible," "optimistic," "seeks," "shall," "should," "will," and variations of these words and similar expressions. Forward-looking statements are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from local, regional, national and international business, market and economic conditions and events and the impact they may have on us, our customers and our operations, assets and liabilities; possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to including potential future supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation; higher capital requirements from the implementation of the Basel III capital standards; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; our ability to generate anticipated returns on our investments and financings, including in tax-advantaged projects; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; natural disasters, public health crises and geopolitical events; general economic or business conditions in Asia, and other regions where Cathay Bank has operations; failures, interruptions, or security breaches of our information systems; our ability to adapt our systems to technological changes; risk management processes and strategies; adverse results in legal proceedings; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in accounting standards or tax laws and regulations; market disruption and volatility; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuance of preferred stock; successfully raising additional capital, if needed, and the resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; and general competitive, economic political, and market conditions and fluctuations.

These and other factors are further described in Cathay General Bancorp's Annual Report on Form 10-K for the year ended December 31, 2023 (Item 1A in particular), other reports filed with the Securities and Exchange Commission ("SEC"), and other filings Cathay General Bancorp makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this press release. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we undertake no obligation to update or review any forward-looking statement to reflect circumstances, developments or events occurring after the date on which the statement is made or to reflect the occurrence of unanticipated events.

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Heng W. Chen

(626) 279-3652