Cathay General Bancorp (CATY) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $66.8 million, or $0.92 per diluted share, down 6.4% from Q1 2024 and 28.3% year-over-year, with EPS down from $0.98 in Q1 and $1.28 in Q2 2023.

• Total revenue for Q2 2024 was $178.5 million; total assets reached $23.24 billion as of June 30, 2024.

• Return on average assets was 1.15% and return on average equity was 9.63% for Q2 2024, both down from prior periods.

• Net interest margin declined to 3.01% in Q2 2024 from 3.05% in Q1 and 3.44% in Q2 2023.

• A new $125 million stock repurchase program was announced in May 2024, with $25.1 million repurchased in Q2 and 0.7 million shares bought at an average price of $36.41.

Financial highlights

• Net interest income for Q2 2024 was $165.3 million, down 1.9% sequentially and 8.9% year-over-year; net interest margin was 3.01%.

• Non-interest income rose to $13.2 million, nearly doubling sequentially but down 42.9% year-over-year, mainly due to changes in unrealized losses on equity securities.

• Non-interest expense increased to $99.4 million, up 6.6% sequentially and 7.1% year-over-year, driven by higher amortization, salaries, and professional expenses.

• Provision for credit losses was $6.6 million, up from $1.9 million in Q1 but down from $9.2 million in Q2 2023.

• Efficiency ratio increased to 55.65% in Q2 2024 from 53.22% in Q1 and 45.36% a year ago.

Outlook and guidance

• Loan growth guidance for 2024 was revised to 0%–2% due to slower growth in H1; deposit growth expected at 3%–4%.

• Net interest margin projected between 3.05% and 3.15% for 2024.

• Core non-interest expense guidance raised to 4%–5% growth; effective tax rate expected between 10.5% and 11.5% for H2 2024.

• Management expects the first Fed rate cut in September and a second in December.

• Allowance for credit losses is sensitive to economic scenarios; a 100% downside scenario would increase the allowance by $52.9 million.