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; diluted EPS was $0.92, down from $0.98 in Q1 and $1.28 in Q2 2023.

• Total revenue reached $178.5 million for the quarter ending June 30, 2024.

• Return on average equity was 9.63% and return on average assets was 1.15% for Q2 2024, both lower than the prior year.

• Net interest margin declined to 3.01% in Q2 2024 from 3.05% in Q1 and 3.44% in Q2 2023, reflecting higher funding costs.

• A new $125 million stock repurchase program was announced in May 2024; $25.1 million in stock was repurchased in Q2.

Financial highlights

• Net interest income before provision for credit losses was $165.3 million in Q2 2024, down 1.9% sequentially and 8.9% year-over-year.

• Non-interest income rose to $13.2 million, mainly due to reduced unrealized losses on equity securities.

• Non-interest expense increased to $99.4 million, up 6.5% sequentially and 7.1% year-over-year, driven by higher amortization, salaries, and FDIC assessments.

• 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 revised to 0%-2% due to slower-than-expected growth in H1.

• Deposit growth expected in the 3%-4% range for 2024.

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

• Effective tax rate expected between 10.5%-11.5% for H2 2024.

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