- Cathay General Bancorp (CATY, Financial) reported a 13.3% decrease in Q1 2025 net income to $69.5 million, compared to $80.2 million in Q4 2024.
- Net interest margin improved to 3.25% from 3.07% in the previous quarter.
- The company's efficiency ratio improved to 45.60% from 53.22% year-over-year.
Cathay General Bancorp (CATY) has announced its financial results for the first quarter of 2025, revealing a mixed financial performance. The company's net income declined by 13.3% to $69.5 million, or $0.98 per diluted share, down from $80.2 million, or $1.12 per share, in the fourth quarter of 2024. Despite this decrease in earnings, Cathay saw an improvement in its net interest margin, which rose to 3.25% from 3.07% in the previous quarter.
The enhancement in net interest margin was primarily driven by a decrease in deposit costs, which outpaced the decline in asset yields, widening the net interest spread to 2.43% from 2.17%. However, the company's profitability faced pressure from increased provision for credit losses, which rose to $15.5 million from $14.5 million in Q4 2024, a significant drop in non-interest income by 27.6%, and a higher effective tax rate of 19.82% compared to 7.57%.
Asset quality showed improvement as non-performing assets decreased by 11.5% to $173.7 million, representing 0.75% of total assets, down from 0.85%. Despite this improvement, management increased the allowance for loan losses to 0.90% of gross loans, up from 0.83%, reflecting a cautious stance towards future credit performance.
On the balance sheet, total deposits increased by 0.7% to $19.82 billion while total loans saw a slight contraction of 0.12% to $19.35 billion. The loan portfolio showed a shift towards commercial real estate loans, which increased by 1.3%, while commercial loans and residential mortgages decreased by 3.2% and 1.2%, respectively.
Cathay General Bancorp successfully completed a $125 million share repurchase program during the quarter, buying back 876,906 shares at an average cost of $46.83 per share. The company's capital ratios remained strong, with a Tier 1 risk-based capital ratio of 13.57%, total risk-based capital ratio of 15.19%, and a Tier 1 leverage ratio of 11.06%, all above regulatory requirements.
