Cathay General Bancorp

Good afternoon, ladies and gentlemen, and welcome to Catherine General Bancorp's fourth quarter and full year 2025 earnings conference call. My name is Asha, and I'll be your coordinator for today. At this time, all participants are in listen-only mode. Following the prepared remarks, there will be a question and answer session. If you wish to participate in this portion of the call, please press star followed by one at any time during the conference. If assistance is needed any time during the call, please press star followed by zero, and our coordinators will be happy to assist you. Today's call is being recorded and will be available for replay at www.kathygeneralbankrup.com. Now, I'd like to turn the call over to Georgia Lowe, Investor Relations of Cathay General Bancorp.

Thank you, Ashya, and good afternoon. Here to discuss the financial results today are Mr. Chang Liu, our President and Chief Executive Officer, and Mr. Hang Chen, our Executive Vice President and Chief Financial Officer. Before we begin, we wish to remind you that the speakers on this call may make forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 concerning future results and events, and that these statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are further described in the company's annual report on Form 10-K for the year ended December 31, 2024, at Item 1A in particular, and in other reports and filings with the Securities Exchange Commission from time to time. As such, we caution you not to place any new reliance on such forward-looking statements. Any forward-looking statement speaks only as of the date of which it is made, and except as required by law, we undertake no obligation to update or review any forward-looking statements to reflect future circumstances, developments, or events, or the occurrence of unanticipated events. This afternoon, Cathay Journal Bancorp issued an earnings release outlining its fourth quarter and full year 2025 results. To obtain a copy of our earnings release as well as our earnings presentation, please visit our website at CathayJournalBancorp.com. After comments by management today, we will open up this call for questions. I will now turn the call over to our President and Chief Executive Officer, Mr. Cheng Liu.

Thank you, Georgia, and good afternoon. This afternoon, we reported a net income of $90.5 million for the fourth quarter of 2025, a 16.5% increase from $77.7 million in Q3. The looted earnings per share increased by 18.3% to $1.33 in Q4, up from $1.13 in Q3. For the full year of 2025, our net income was $315.1 million, a 10.1% increase from net income of $286 million in 2024. In Q4, we repurchased 1.1 million shares of common stocks for $51.9 million at an average cost of $47.15 per share. Under our June 2025 $150 million stock buyback quote, program. There is $12 million remaining under our June 2025 $150 million buyback program, which we expect to complete in early February. We plan to announce a new buyback program after approvals are received. Total gross loans grew by $42 million, driven primarily by increases of $80 million in CRE loans and $17 million in residential loans. We expect loan growth in 2026 to be between 3.5% and 4.5%. Slide seven of our earnings presentation shows the percentage of loans in each major loan portfolio that are either at a fixed rate or hybrid. Hybrid loans account for 60% of the portfolio, excluding fixed to flow interest rate swaps, which represent 3.1% of total loans. Fixed rate loans make up 30% of total loans and hybrid and fixed rate period account for 30% of total loans. We expect these fixed rate loans to support our loan yields as market rates are expected to decline. We continue to monitor our CRE portfolio. Turning to slide nine, the average loan to value of our CRE loans remains steady at 49%. Our retail property loan portfolio represents 24% of our total CRE loan portfolio, or 12% of total loans. As shown on slide 10 of the 2.5 billion in retail property loans, 90% are secured by retail store, neighborhood, mixed use, or strip centers. Only 9% are secured by shopping centers. Turning to slide 11, office private loans represent 13% of our total CRE loan portfolio or 7% of our total loans. Of the 1.4 billion in office loans, 30% are secured by pure office. Only 3% are in central business districts. Another 42% are collateralized by office retail stores, office mixed use, and medical office properties. with the remainder 28% secured by office condos. For Q4, we reported net charge-offs of 5.4 million as compared to 15.6 million the prior quarter. Non-accrual loans were 0.6% of total loans as of December 31st, 2025, down 53.3 million to 112.4 million compared to the prior quarter. The decrease in non-accrual loans during the fourth quarter of 2025 included the sale of a 15.8 million CRE loan at par and a 10.8 million CRE loan brought current and restored to accrual status. Depending on slide 13, classified loans decreased from 420 million to 391 million for Q4. Special mention loans increased from 455 million to 535 million in Q4. The bank downgraded five loan relationships, totaling 92 million to special mention that have not met certain debt covenants and have exhibited short-term financial issues for closer tracking. The bank believes that these credits will resolve within the next 12 months by either credit upgrades or partial or full payoff. We recorded $17.2 million in provisions for credit losses in Q4, compared to $28.7 million in Q3. The ARLL to gross loan ratio increased to 0.97% from 0.93%. In excluding our residential loan portfolio, the total reserve to loan ratio would be 1.22%. Total deposits increased by 373 million or 7.6% on an annualized basis during Q4, driven primarily by 366 million increases in core deposits and 7 million in time deposits. The growth in core deposits reflected seasonal factors and targeted marketing activities. For 2026, we expect deposit growth to range between 4% and 5%. As of December 31st, 2025, Total uninsured deposits were $9.3 billion, net of $0.9 billion in collateralized deposits, representing 44.6% of total deposits. The bank has $7.5 billion of unused borrowing capacity from Federal Homeowners Bank, $1.3 billion from Federal Reserve Bank, and $1.6 billion in unplugged securities. Altogether, these available liquidity sources provide more than 100% of the uninsured and uncollateralized deposits as of December 31, 2025. I will now turn the floor over to our Executive Vice President and Chief Financial Officer, Mr. Heng Cheng, to discuss the quarterly financial results in more detail.