Cathay General Bancorp Q4 2024: Earnings Surge Amidst Loan Growth and Strategic Deposit Shifts

Earnings and Revenue Growth:
- Cathay General Bancorp reported net income of $80.2 million for Q4 2024, an 18.8% increase compared to Q3, and diluted earnings per share increased to $1.12.
- The growth was driven by an increase in net interest income, a decrease in non-interest expense, and a decrease in income tax expense.

Loan Portfolio Dynamics:
- Total gross loans increased by $2.4 million, or 0.05% annualized, primarily due to increases in commercial real estate (CRE) loans and construction loans.
- The increase in fixed rate and hybrid loans, now comprising 63% of the total loans, is expected to support loan yield as market rates decline.

Deposit Trends and Strategic Adjustments:
- Total deposits decreased by $258 million, or 5.3% annualized, mainly due to a decrease in broker deposits.
- However, total core deposits increased by $417 million, or 16.7% annualized, due to seasonal factors and marketing activities, indicating a strategic focus on core deposit growth.

Regulatory and Risk Management:
- The company announced its intention to not invest in solar tax credit investment funds in 2025, contributing to a projected effective tax rate between 19.5% and 20.5%.
- Cathay General Bancorp has been focused on beefing up its risk management side, which has led to an increase in headcount and investment in regulatory compliance.