Cathay General Bancorp (CATY) Reports Full Year and Q4 2023 Earnings
Net Income: $354.1 million for the full year, a slight decrease from $360.6 million in the previous year.
Diluted Earnings Per Share (EPS): Increased to $4.86 for the full year, up from $4.83 in the previous year.
Total Loans: Grew by $1.3 billion, or 7.1%, reaching $19.55 billion in 2023.
Total Deposits: Increased by $820.2 million, or 4.4%, to $19.33 billion in 2023.
Net Interest Margin: Declined to 3.45% for the full year, compared to 3.63% in the previous year.
Efficiency Ratio: Worsened to 46.97% for the full year, up from 38.38% in the previous year.
Capital Ratios: Remained well-capitalized with a Tier 1 risk-based capital ratio of 12.82% as of December 31, 2023.
Cathay General Bancorp (NASDAQ:CATY) released its 8-K filing on January 24, 2024, announcing its financial results for the fourth quarter and full year ended December 31, 2023. The company, a regional bank primarily serving the Chinese-American community, reported a net income of $354.1 million, or $4.86 per share, for the year, and $82.5 million, or $1.13 per share, for the fourth quarter. The fourth quarter results included a one-time FDIC special assessment charge of $11.3 million, or $0.12 per diluted share.
Financial Performance and Challenges
The bank's financial performance showed resilience with a year-over-year increase in diluted EPS, despite a slight decrease in net income. The growth in the loan and deposit portfolios highlights the bank's expanding customer base and lending activities. However, the net interest margin experienced a decline, reflecting the challenges of a changing interest rate environment. The efficiency ratio also deteriorated, indicating higher costs relative to income, which could signal operational inefficiencies that need to be addressed.
Income Statement and Balance Sheet Highlights
Reviewing the income statement, Cathay General Bancorp's net interest income before provision for credit losses decreased by 1.9% in Q4 compared to the previous quarter, primarily due to increased interest deposit expenses. The provision for credit losses was lower at $1.7 million in Q4, compared to $7.0 million in the third quarter. Non-interest income saw a significant increase, largely due to gains on equity securities. Non-interest expenses rose, driven by FDIC assessments and other operational costs.
On the balance sheet, total gross loans increased by 7.1% year-over-year, with commercial real estate and residential mortgage loans showing substantial growth. Total deposits also saw a healthy increase. Asset quality remained stable with a slight decrease in non-accrual loans and a well-maintained allowance for loan losses.
Capital Adequacy and Full Year Review
Cathay General Bancorp maintained strong capital ratios, comfortably positioned in the "well capitalized" category. For the full year, the return on average assets and equity decreased, reflecting a challenging economic environment. The net interest margin for the full year was lower than the previous year, which could impact future profitability.
The company will host a conference call to discuss these results and provide further insights into its performance and strategies moving forward.
About Cathay General Bancorp
Cathay General Bancorp is the holding company for Cathay Bank, which provides a wide range of financial services through its extensive network of branches in the United States and representative offices in Asia. The bank's services cater to individuals and small to midsize businesses, offering traditional loan and deposit products, as well as international trade-related services.
For a detailed look at Cathay General Bancorp's financial results and to participate in the upcoming conference call, please visit the company's website.
Explore the complete 8-K earnings release (here) from Cathay General Bancorp for further details.
This article first appeared on GuruFocus.
