Cathay General Bancorp Sees Slowing Loan Growth Amid Economic Uncertainty
Cathay General Bancorp's Q1 2025 earnings report has revealed a slowdown in loan growth for the company, amidst growing economic uncertainty. According to President and Chief Executive Officer Chang Liu, total gross loans decreased by $23 million or 0.5% annualized during the quarter, driven primarily by decreases in commercial and residential loans.
However, despite this slowdown, the company's fixed rate loan portfolio continues to offer support for its loan yields, with market rates expected to decline. As of March 31, 2025, fixed rate loans comprised 30% of total loans, while hybrid and fixed rate period loans made up 32%. This stability is likely to be a key factor in the company's future performance.
Mr. Liu also highlighted the impact of tariffs on the US-China trade relationship, noting that customers have moved their sourcing away from China since 2018, with borrowers able to pass importing costs or move their sourcing to other countries. The company estimates that about 1.4% of total loans could be adversely impacted by proposed tariffs.
Other notable highlights from the Q1 2025 report include a decrease in net income of $69.5 million for the quarter, compared to $80.2 million for Q4 2024, and a diluted earnings per share of $0.98 for Q1 '25 as compared to $1.12 in Q4 2024. The company also completed its May 2024 stock repurchase program, purchasing 876,906 shares at an average cost of $46.83 per share.
Notably, the company has widened its loan growth guidance for 2025 to 1% to 4%, from the previous guidance of 3% to 4%. This reflects the ongoing economic uncertainty and suggests that the company is taking a cautious approach in its projections.
Overall, Cathay General Bancorp's Q1 2025 earnings report highlights the challenges faced by businesses operating in uncertain economic conditions. Despite these challenges, the company's fixed rate loan portfolio remains a key strength, providing support for future performance.
