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- **Stable Earnings Growth**: Q3 net income $77.7M, EPS $1.13, with modest loan and deposit expansion.
- **Credit Resilience**: Despite higher provision ($28.7M), credit metrics remain solid (0.8% nonaccrual loans, 49% CRE LTV).
- **Cost Management**: Expense control ($88.1M) and lower deposit costs (3.16%) support NIM expansion.
- **Strategic Focus**: Emphasizes organic growth, with cautious M&A approach.

**【CEO Summary Section】**
- **Q3 2025 Financial Highlights**: Net income of $77.7 million (0.3% increase vs. Q2), EPS of $1.13 (2.7% increase). Repurchased $50.1 million in shares under a $150 million buyback program.
- **Loan Growth**: Total loans increased $320 million (6.6% annualized), driven by $122M CRE and $123M residential loans. Updated guidance: 3.5%-5% growth for loans and deposits.
- **Credit Portfolio**: 60% of loans are fixed-rate (30% fixed, 30% hybrid). CRE loans have 49% LTV, with 24% in retail properties (90% in strip centers) and 14% in office properties (40% mixed-use).
- **Credit Quality**: Net charge-offs $15.6M (vs. $12.7M Q2). Nonaccrual loans decreased to $165.6M (0.8% of total loans). Provision for credit losses rose to $28.7M due to $9.1M in movie theater loans and CECL model changes.
- **Deposit Growth**: Core deposits increased $508M (10.5% annualized). Uninsured deposits $9.1B, with $7.2B FHLB borrowing capacity covering 100% of uninsured deposits.

**【CFO Financial Commentary】**
- **Net Interest Margin (NIM)**: 3.31% (vs. 3.27% Q2), driven by lower cost of funds. September NIM reached 3.38%.
- **Income Components**: Noninterest income up $5.6M to $21M (mark-to-market gains on equity securities). Noninterest expense decreased $1M to $88.1M due to lower professional and data processing costs.
- **Capital Ratios**: Tier 1 leverage ratio 10.88%, Tier 1 risk-based 13.15%, total risk-based 14.76% (all down slightly vs. Q2).

**【Q&A Key Highlights】**
- **Credit Concerns**: 6 loan relationships ($145M) downgraded to special mention due to covenant issues. Largest was a printing company ($50M) with Q2 weakness but improving momentum.
- **Expense Guidance**: Q3 core expenses stable at $88.1M. Low-income housing tax credit amortization $11.5M (one-time adjustment). Expect no significant changes in Q4.
- **M&A Strategy**: Open to acquisitions if strategically aligned, but focused on organic growth. No immediate M&A plans.
- **Rate Sensitivity**: NIM expected to rise 6-7bps per 25bps rate cut. September deposit cost 3.16% (down from 3.31% Q2).

Cathay General Bancorp (CATY) Q3 2025 Earnings Call Transcript

Revenue

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CATY

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