Q1 2026 Cathay General Bancorp Earnings Call

April 22, 2026

Speaker #1: Good afternoon , ladies and gentlemen , and welcome to CATHAY GENERAL BANCORP . S first Quarter 2026 Earnings Conference Call . My name is Ashia and I'll be your coordinator for today .

Operator: Good afternoon, ladies and gentlemen, and welcome to Cathay General Bancorp's Q1 2026 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 would like to participate in this portion of the call, please press star followed by one at any time during the conference. If assistance is needed at any time during the call, please press star followed by zero, and a coordinator will be happy to assist you. Today's call is being recorded and will be available for replay at www.cathaygeneralbancorp.com.

Speaker #1: At this time , all participants are in listen only mode Following the prepared remarks , there will be a question and answer session .

Speaker #1: If you would like to participate in this portion of the call, please press star followed by one at any time during the conference.

Speaker #1: If assistance is needed at any time during the call , please press star followed by zero and a coordinator will be happy to assist you Today's call is being recorded and will be available for replay at WW dot CATHAY GENERAL BANCORP dot com .

Speaker #1: Now I would like to turn the call over to Georgia Lo, Investor Relations of Cathay General Bancorp. Please go ahead.

Operator: Now, I would like to turn the call over to Georgia Lo, Investor Relations of Cathay General Bancorp. Please go ahead.

Speaker #2: Thank you . Asha , and good afternoon . Here to discuss the financial results today are . Mr. Chang Liu , our President and Chief Executive Officer , and Mr. Al Wang , 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 .

Georgia Lo: Thank you, Asha, and good afternoon. Here to discuss the financial results today are Mr. Chang Liu, our President and Chief Executive Officer, and Mr. Al Wang, 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 31 December 2025 at Item 1A in particular, and in other reports and filings with the Securities and Exchange Commission from time to time. As such, we caution you not to place undue reliance on such forward-looking statements.

Speaker #2: Concerning future results and events , and that these statements are subject to certain risks and uncertainties that could cause actual results to differ materially .

Speaker #2: These results and uncertainties are further described in the company's annual report on Form 10-K for the year ended December 31, 2025, at Item 1A in particular, and in other reports and filings with the Securities and Exchange Commission from time to time.

Speaker #2: As such , we caution you not to place undue reliance on such forward looking statements . Any forward looking statements speak only as of the date on which it is made and except as required by law , we undertake no obligation to update or revise any forward looking statements to reflect future circumstances , developments or events , or the occurrence of unanticipated events .

Georgia Lo: Any forward-looking statement speaks only as of the date on 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 General Bancorp issued an earnings release outlining its Q1 2026 results. To obtain a copy of our earnings release as well as our earnings presentation, please visit our website at cathaygeneralbancorp.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. Chang Liu.

Speaker #2: This afternoon, Cathay General Bancorp issued an earnings release outlining its first quarter 2026 results. To obtain a copy of our earnings release, as well as our earnings presentation, please visit our website at Cathay General Bancorp.

Speaker #2: Dot 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. Chang Liu .

Speaker #3: Thank you , Georgia Good afternoon , and thank you for joining us today . I will begin on slide three . We delivered solid financial performance in the first quarter , reporting net income of $86.9 million and diluted earnings per share of $1.29 .

Chang M. Liu: Thank you, Georgia. Good afternoon, and thank you for joining us today. I will begin on slide 3. We delivered solid financial performance in Q1, reporting net income of $86.9 million and diluted earnings per share of $1.29. We also deliver another quarter of net interest margin expansion driven by disciplined deposit cost management in a competitive environment. Our results reflected two noteworthy items that largely offset each other. The first was a $17.3 million valuation gain on equity securities, and the other was a $15.7 million impairment on AFS debt securities from balance sheet repositioning. We sold lower yielding securities and reinvested at current market rates, a move that supports margin expansion and accelerates tangible book value recovery. Excluding these items, diluted EPS would have been 2 cents lower. Credit quality was stable overall this quarter.

Chang Liu: Thank you, Georgia. Good afternoon, and thank you for joining us today. I will begin on slide three. We delivered solid financial performance in Q1, reporting net income of $86.9 million and diluted earnings per share of $1.29. We also deliver another quarter of net interest margin expansion driven by disciplined deposit cost management in a competitive environment. Our results reflected two noteworthy items that largely offset each other. The first was a $17.3 million valuation gain on equity securities, and the other was a $15.7 million impairment on AFS debt securities from balance sheet repositioning. We sold lower yielding securities and reinvested at current market rates, a move that supports margin expansion and accelerates tangible book value recovery. Excluding these items, diluted EPS would have been $0.02 lower. Credit quality was stable overall this quarter.

Speaker #3: We also delivered another quarter of net interest margin expansion, driven by disciplined deposit cost management in a competitive environment. Our results reflected two noteworthy items that largely offset each other.

Speaker #3: The first was a $17.3 million valuation gain on equity securities, and the other was a $15.7 million impairment on AFS debt securities.

Speaker #3: From balance sheet repositioning . We sold lower yielding securities and reinvested at current market rates , a move that supports margin expansion and accelerates tangible book value recovery .

Speaker #3: Excluding these , I . Excluding these items , diluted EPS would have been $0.02 lower credit quality was stable overall . This quarter .

Speaker #3: We saw improvement in non-performing loans and net charge offs . While criticized and classified levels remain steady , reflecting continued credit discipline across the portfolio We remain focused on maintaining a prudent risk profile given the broader economic and geopolitical backdrop .

Chang M. Liu: We saw improvement in non-performing loans and net charge-offs, while criticized and classified levels remain steady, reflecting continued credit discipline across the portfolio. We remain focused on maintaining a prudent risk profile given the broader economic and geopolitical backdrop. We continue to generate positive operating leverage. Our efficiency ratio improved to 40.4%, down 100 basis points from the prior quarter, supported by ongoing expense management and steady core performance. On an adjusted basis, our efficiency ratio decreased by 1.5% to 36.9% from last quarter. Capital management remains a priority. During the quarter, we increased our quarterly cash dividend to $0.38 per share, reflecting an 11.8% increase. We also completed the $150 million share repurchase program announced in June 2025 by repurchasing 244,000 shares at an average cost of $51.31.

Chang Liu: We saw improvement in non-performing loans and net charge-offs, while criticized and classified levels remain steady, reflecting continued credit discipline across the portfolio. We remain focused on maintaining a prudent risk profile given the broader economic and geopolitical backdrop. We continue to generate positive operating leverage. Our efficiency ratio improved to 40.4%, down 100 basis points from the prior quarter, supported by ongoing expense management and steady core performance. On an adjusted basis, our efficiency ratio decreased by 1.5% to 36.9% from last quarter. Capital management remains a priority. During the quarter, we increased our quarterly cash dividend to $0.38 per share, reflecting an 11.8% increase. We also completed the $150 million share repurchase program announced in June 2025 by repurchasing 244,000 shares at an average cost of $51.31.

Speaker #3: We continue to generate positive operating leverage. Our efficiency ratio improved to 40.4%, down 100 basis points from the prior quarter, supported by ongoing expense management and steady core performance.

Speaker #3: On an adjusted basis , our efficiency ratio decreased by 1.5% to 36.9% from last quarter Capital Capital Management remains a priority . During the quarter , we increased our quarterly cash dividend to $0.38 per share , reflecting an 11.8% increase .

Speaker #3: We also completed 150 million share repurchase program , announced in June 2025 . By repurchasing 244,000 shares at an average cost of $51.31 .

Speaker #3: In addition , our board approved a new 150 million share repurchase program subject to regulatory approval , underscoring our commitment to returning capital to shareholders in a balanced and controlled way .

Chang M. Liu: In addition, our board approved a new 150 million share repurchase program subject to regulatory approval, underscoring our commitment to returning capital to shareholders in a balanced and controlled way. Loan growth was softer than we anticipated, but this reflects our disciplined underwriting approach. Our focus remains on supporting our loyal customers and deepening long-standing relationships, rather than pursuing volume that would require taking on additional credit risk in this unpredictable economic environment. This relationship-driven strategy has served us well through many cycles and positions us well going forward. I will now turn the call over to Mr. Al Wang to walk through our Q1 results in more detail. I'll provide some closing comments before we open the call up to Q&A.

Chang Liu: In addition, our board approved a new 150 million share repurchase program subject to regulatory approval, underscoring our commitment to returning capital to shareholders in a balanced and controlled way. Loan growth was softer than we anticipated, but this reflects our disciplined underwriting approach. Our focus remains on supporting our loyal customers and deepening long-standing relationships, rather than pursuing volume that would require taking on additional credit risk in this unpredictable economic environment. This relationship-driven strategy has served us well through many cycles and positions us well going forward. I will now turn the call over to Mr. Al Wang to walk through our Q1 results in more detail. I'll provide some closing comments before we open the call up to Q&A.

Speaker #3: Loan growth was softer than we anticipated, but this reflects our disciplined underwriting approach. Our focus remains on supporting our loyal customers and deepening long-standing relationships, rather than pursuing volume.

Speaker #3: That will require taking on additional credit risk. In this unpredictable, unpredictable economic environment, this relationship-driven strategy has served us well through many cycles and positions us well.

Speaker #3: Going forward, I will now turn the call over to Mr. Al Wang to walk through our first quarter results in more detail.

Speaker #3: I'll provide some closing comments before we open the call up to to Q&A .

Speaker #4: Thank you . Cheng , I'll start with our balance sheet on slide four . We decreased our on balance sheet cash and short term investments by 219 million to a state to stay aligned with shifts in our funding profile Period end loans of 20.2 billion grew 0.2% linked quarter , reflecting our focus on relationship lending .

Albert J. Wang: Thank you, Chang. I'll start with our balance sheet on slide four. We decreased our on-balance sheet cash and short-term investments by $219 million to stay aligned with shifts in our funding profile. Period-end loans of $20.2 billion grew 0.2% linked quarter, reflecting our focus on relationship lending. Period-end deposits of $20.7 billion declined by 1% linked quarter, led by $71 million in broker deposits. Capital levels remained in excess of regulatory well-capitalized thresholds and our internal limits. We continued to grow book value per share by 2% linked quarter and 9% year over year. Slide five breaks down our loan and deposit mix. Average loan balances increased 1% on an annualized basis linked quarter, while the composition remained stable and well-diversified. CRE concentration of 278% declined by 9 points and continued to stay below regulatory guidelines.

Albert Wang: Thank you, Chang. I'll start with our balance sheet on slide four. We decreased our on-balance sheet cash and short-term investments by $219 million to stay aligned with shifts in our funding profile. Period-end loans of $20.2 billion grew 0.2% linked quarter, reflecting our focus on relationship lending. Period-end deposits of $20.7 billion declined by 1% linked quarter, led by $71 million in broker deposits. Capital levels remained in excess of regulatory well-capitalized thresholds and our internal limits. We continued to grow book value per share by 2% linked quarter and 9% year over year. Slide five breaks down our loan and deposit mix. Average loan balances increased 1% on an annualized basis linked quarter, while the composition remained stable and well-diversified. CRE concentration of 278% declined by 9 points and continued to stay below regulatory guidelines.

Speaker #4: Peer to end deposits of 20.7 billion declined by 1% linked quarter led by 71 million in brokered deposits Capital levels remained in excess of regulatory well capitalized thresholds , and our internal limits , and we continued to grow book value per share by 2% linked quarter and 9% year over year Slide five breaks down our loan and deposit mix .

Speaker #4: Average loan balances increased 1% on an annualized basis linked quarter, while the composition remains stable and well-diversified. CRE concentration of 278% declined by nine points and continued to stay below regulatory guidelines.

Speaker #4: In addition , our exposure to private credit is minimal , with NFI loans making up less than 2% of total loans . Average deposits decreased 3% linked quarter on an annualized basis , driven by the decline in brokered deposits .

Albert J. Wang: In addition, our exposure to private credit is minimal, with MDI loans making up less than 2% of total loans. Average deposits decreased 3% linked quarter on an annualized basis, driven by the decline in broker deposits. Core deposit outflows were largely seasonal and reflected normal cash management activity by our commercial customers. Our uninsured deposit ratio stayed consistent at 45%. Slide 6 is a new slide to illustrate the strong liquidity, credit, and interest rate risk profile of our available-for-sale investment portfolio. In Q1, we recognized a $15.7 million impairment loss on our AFS securities portfolio as part of a securities repositioning initiative. During the first week of April, we sold $210 million of lower yielding mortgage-backed securities and reinvested $197 million into similar duration securities at significantly higher yields. This trade carried an earn back under 3 years while keeping our overall duration and credit profile essentially unchanged.

Albert Wang: In addition, our exposure to private credit is minimal, with MDI loans making up less than 2% of total loans. Average deposits decreased 3% linked quarter on an annualized basis, driven by the decline in broker deposits. Core deposit outflows were largely seasonal and reflected normal cash management activity by our commercial customers. Our uninsured deposit ratio stayed consistent at 45%. Slide 6 is a new slide to illustrate the strong liquidity, credit, and interest rate risk profile of our available-for-sale investment portfolio. In Q1, we recognized a $15.7 million impairment loss on our AFS securities portfolio as part of a securities repositioning initiative. During the first week of April, we sold $210 million of lower yielding mortgage-backed securities and reinvested $197 million into similar duration securities at significantly higher yields. This trade carried an earn back under 3 years while keeping our overall duration and credit profile essentially unchanged.

Speaker #4: Core deposit outflows were largely seasonal and reflected normal cash management activity by our commercial customers. Our uninsured deposit ratio stayed consistent at 45%.

Speaker #4: Slide six is a new slide to illustrate the strong liquidity , credit and interest rate risk profile of our available for sale investment portfolio in Q1 , we recognized a 15.7 million impairment loss on our AFS securities portfolio as part of a securities repositioning initiative During the first week of April , we sold 210 million of lower yielding mortgage backed securities and reinvested 197 million into similar duration securities at a at significantly higher yields .

Speaker #4: This trade carried an under three years while keeping our overall duration and credit profile essentially unchanged . We keep the overall portfolio short and high quality duration is just under two years , and nearly two thirds of the cash flows will come back this year Unrealized losses have been improving as rates move and over 90% of the portfolio is U.S.

Albert J. Wang: We keep the overall portfolio short and high quality. Duration is just under two years, and nearly two-thirds of the cash flows will come back this year. Unrealized losses have been improving as rates move, and over 90% of the portfolio is US government-backed, with the rest in investment-grade securities. Slide 7 highlights our income statement. Net income of $86.9 million decreased 4% linked quarter due to lower non-interest income, offset by lower non-interest expense, which I will discuss in more detail in the following slides. Slide 8 summarizes our yield and funding costs. Net interest income of $194 million declined $0.8 million compared to last quarter due to day count, offset by margin expansion.

Albert Wang: We keep the overall portfolio short and high quality. Duration is just under two years, and nearly 2/3 of the cash flows will come back this year. Unrealized losses have been improving as rates move, and over 90% of the portfolio is US government-backed, with the rest in investment-grade securities. Slide 7 highlights our income statement. Net income of $86.9 million decreased 4% linked quarter due to lower non-interest income, offset by lower non-interest expense, which I will discuss in more detail in the following slides. Slide 8 summarizes our yield and funding costs. Net interest income of $194 million declined $0.8 million compared to last quarter due to day count, offset by margin expansion.

Speaker #4: government backed , with the rest in investment grade securities Slide seven . Highlights . Net . Our income statement . Net income of 86.9 million decreased 4% linked quarter due to lower non-interest income , offset by lower non-interest expense , which I will discuss in more detail in the following slides Slide eight summarizes our yield and funding costs .

Speaker #4: Net interest income of 194 million declined 0.8 million compared to last quarter due to day count , offset by margin expansion , net interest margin of 3.43 grew seven basis points compared to last quarter , as deposit costs decreased , offset by a decline in loan yields driven by the Federal Reserve's latest interest rate cuts in the fourth quarter Slide nine highlights non-interest income .

Albert J. Wang: Net interest margin of 3.43% grew 7 basis points compared to last quarter as deposit costs decreased, offset by a decline in loan yields driven by the Federal Reserve's latest interest rate cuts in Q4. Slide 9 highlights non-interest income. Non-interest income decreased $7.1 million linked quarter, driven by the notable items Chang mentioned previously. Specifically, we recognized $17.3 million in valuation gains in our equity securities portfolio, offset by the $15.7 million AFS securities impairment repositioning loss. Adjusting for these items, including the gain on equity securities in both periods, non-interest income would have been $19.1 million, compared to $18.1 million in the prior quarter, reflecting an increase of 5.52%. Moving to slide 10, non-interest expense decreased $92.2 million to $86.7 million this quarter.

Albert Wang: Net interest margin of 3.43% grew 7 basis points compared to last quarter as deposit costs decreased, offset by a decline in loan yields driven by the Federal Reserve's latest interest rate cuts in Q4. Slide 9 highlights non-interest income. Non-interest income decreased $7.1 million linked quarter, driven by the notable items Chang mentioned previously. Specifically, we recognized $17.3 million in valuation gains in our equity securities portfolio, offset by the $15.7 million AFS securities impairment repositioning loss. Adjusting for these items, including the gain on equity securities in both periods, non-interest income would have been $19.1 million, compared to $18.1 million in the prior quarter, reflecting an increase of 5.52%. Moving to slide 10, non-interest expense decreased $92.2 million to $86.7 million this quarter.

Speaker #4: Non-interest income decreased $7.1 million linked quarter, driven by the notable items Chang mentioned previously. Specifically, we recognized $17.3 million in valuation gains in our equity securities portfolio, offset by the $15.7 million AFS securities impairment repositioning loss.

Speaker #4: Adjusting for these items, including the gain on equity securities in both periods, non-interest income would have been $19.1 million compared to $18.1 million in the prior quarter, reflecting an increase of 5.52%.

Speaker #4: Moving to slide ten , non-interest expense 92.2 million to 86.7 million this quarter This decline was driven by 4.5 million of lower amortization expense on our low income housing and alternative energy partnerships , along with lower compensation and benefit costs It's worth noting that most peer banks record the amortization of tax credit investments and income tax expense under the proportional amortization method , rather than in non-interest expense , as we do when adjusting for this difference and other non-core items .

Albert J. Wang: This decline was driven by $4.5 million of lower amortization expense on our low-income housing and alternative energy partnerships, along with lower compensation and benefit costs. It's worth noting that most peer banks record the amortization of tax credit investments in income tax expense under the proportional amortization method rather than in non-interest expense as we do. When adjusting for this difference and other non-core items, adjusted non-interest expense would have been $78.7 million, which is $3 million lower than last quarter. On the same basis, our adjusted efficiency ratio improves to 36.9% compared to 38.4% in the prior quarter. On slide 11, you'll see that our asset quality stayed solid. We increased our allowance by $13 million to $209 million, which puts coverage at 1.03%, or 1.30% excluding residential mortgages. That increase was driven by model updates, including a slight softening in the macroeconomic outlook.

Albert Wang: This decline was driven by $4.5 million of lower amortization expense on our low-income housing and alternative energy partnerships, along with lower compensation and benefit costs. It's worth noting that most peer banks record the amortization of tax credit investments in income tax expense under the proportional amortization method rather than in non-interest expense as we do. When adjusting for this difference and other non-core items, adjusted non-interest expense would have been $78.7 million, which is $3 million lower than last quarter. On the same basis, our adjusted efficiency ratio improves to 36.9% compared to 38.4% in the prior quarter. On slide 11, you'll see that our asset quality stayed solid. We increased our allowance by $13 million to $209 million, which puts coverage at 1.03%, or 1.30% excluding residential mortgages. That increase was driven by model updates, including a slight softening in the macroeconomic outlook.

Speaker #4: Adjusted non-interest expense would have been 78.7 million , which is 3.8 million lower than last quarter on the same basis . Our adjusted efficiency ratio improves to 36.9% , compared to 38.4% in the prior quarter .

Speaker #4: On slide 11 , you'll see that our asset quality stayed solid . We increased our allowance by 13 million to 209 million , which puts coverage at 1.03% , or 1.30% , excluding residential mortgages that increase was driven by model updates , including a slight softening in the macroeconomic outlook .

Speaker #4: Net charge offs improved , dropping from 5.4 million last 1:45 point 1 million this quarter . Classified loans were up 39 million , while special mention loans came down 55 million .

Albert J. Wang: Net charge-offs improved, dropping from $5.4 million last quarter to $2.1 million this quarter. Classified loans were up $39 million, while special mention loans came down $55 million. Importantly, our non-performing asset ratio continued to trend in the right direction, improving from 59 to 51 basis points. Turning to slide 12, capital levels remain strong and well above well-capitalized regulatory thresholds, with a modest increase from last quarter. I'll wrap up on slide 13 with our outlook. We continue to expect full year loan growth in the 3.5% to 4.5% range, and deposit growth of 4% to 5%. Adjusted non-interest expense is still expected to increase between 3.5% to 4.5% for the year. Our NIM and NII outlook no longer assumes any rate cuts in 2026. Even with that change, we remain confident in achieving our NIM target of 340% to 350%.

Albert Wang: Net charge-offs improved, dropping from $5.4 million last quarter to $2.1 million this quarter. Classified loans were up $39 million, while special mention loans came down $55 million. Importantly, our non-performing asset ratio continued to trend in the right direction, improving from 59 to 51 basis points. Turning to slide 12, capital levels remain strong and well above well-capitalized regulatory thresholds, with a modest increase from last quarter. I'll wrap up on slide 13 with our outlook. We continue to expect full year loan growth in the 3.5% to 4.5% range, and deposit growth of 4% to 5%. Adjusted non-interest expense is still expected to increase between 3.5% to 4.5% for the year. Our NIM and NII outlook no longer assumes any rate cuts in 2026. Even with that change, we remain confident in achieving our NIM target of 340% to 350%.

Speaker #4: And importantly, our non-performing asset ratio continued to trend in the right direction, improving from 59 to 51 basis points. Turning to slide 12.

Speaker #4: Capital levels remain strong and well above well capitalized regulatory thresholds with a modest increase from last quarter I'll wrap up on slide 13 with our outlook .

Speaker #4: We continue to expect full year loan growth in the three and a half to 4.5% range , and deposit growth of 4 to 5% .

Speaker #4: Adjusted non-interest expense is still expected to increase between three and a half to 4.5% for the year Our Nim and NII outlook no longer assumes any rate cuts in 2026 , but even with that change , we remain confident in achieving our Nim target of 340 to 350% .

Speaker #4: We expect an effective tax rate of roughly 21% . And with that , I'll turn the call back over to Cheng

Albert J. Wang: We expect an effective tax rate of roughly 21%. With that, I'll turn the call back over to Chang.

Albert Wang: We expect an effective tax rate of roughly 21%. With that, I'll turn the call back over to Chang.

Speaker #3: Thank you . Al . Overall , we feel very good about how we started the year . Notwithstanding geopolitical tensions and uncertainty in the in the macro environment .

Chang M. Liu: Thank you, Al. Overall, we feel very good about how we started the year, notwithstanding geopolitical tensions and uncertainty in the macro environment. We deliver solid financial performance by growing tangible book value per share to $30.95, expanding NIM by seven basis points, and continuing to manage capital prudently to expand a buyback capacity and dividend increases. Looking ahead, we are entering Q2 with good momentum. Similar to last year, we saw a slower start to Q1, but activity strengthened meaningfully as the year progressed. We expect a similar pattern as we move through 2026. Finally, I want to thank our team members for everything they do for our company, our communities, and our clients. With that, we can now open it up for questions.

Chang Liu: Thank you, Al. Overall, we feel very good about how we started the year, notwithstanding geopolitical tensions and uncertainty in the macro environment. We deliver solid financial performance by growing tangible book value per share to $30.95, expanding NIM by seven basis points, and continuing to manage capital prudently to expand a buyback capacity and dividend increases. Looking ahead, we are entering Q2 with good momentum. Similar to last year, we saw a slower start to Q1, but activity strengthened meaningfully as the year progressed. We expect a similar pattern as we move through 2026. Finally, I want to thank our team members for everything they do for our company, our communities, and our clients. With that, we can now open it up for questions.

Speaker #3: We delivered solid financial performance by growing tangible book value per share to $30.90 and $0.95, expanding NIM by seven basis points, and continuing to manage capital prudently through.

Speaker #3: Expanded buyback capacity and dividend increases . Looking ahead , we are entering a second quarter with good momentum , similar to last year , we saw a slower start to the first quarter , but activity strengthened meaningfully as the year progressed , and we expect a similar pattern as we move through 2026 .

Speaker #3: Finally , I want to thank our team members for everything they do for our company , our communities and our clients . With that , we can now open it up for questions

Speaker #1: Ladies and gentlemen , if you have a question at this time , please press the star key and then one on your touch tone telephone .

Operator: Ladies and gentlemen, if you have a question at this time, please press the star key, and then one on your touchtone telephone. We ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. If your question has been answered or you wish to remove yourself from the queue, please press star then two. To prevent any background noise, we ask that you please place yourself on mute once your question has been stated. Your first question comes from David Chiaverini with Jefferies. Please go ahead.

Speaker #1: We ask that you please limit yourself to one question and one follow up question . You may then return to the queue if your question has been answered .

Speaker #1: Answered , or you wish to remove yourself from the queue , please press star . Then two to prevent any background noise . We ask that you please place yourself on mute .

Speaker #1: Once your question has been stated Your first question comes from David Chiavarini with Jefferies . Please go ahead

Speaker #5: Hi . Thanks for taking the question . So I wanted to start on the net interest margin . So it was very strong in the quarter .

David Chiaverini: Hi, thanks for taking the question. Wanted to start on the net interest margin. It was very strong in the quarter. Can you talk about, and you reiterated the guide, so I'm curious about the outlook kind of sequentially from here, and then to your point about rate cuts being eliminated from your assumptions, whether that would take us either to the high end or the low end, or if you're still kind of thinking the midpoint of that range. Can you talk about that?

Speaker #5: Can you talk about and you reiterated the guide . So I'm curious about the outlook kind of sequentially from here . And then to your point about rate cuts being eliminated from your assumptions , whether that would take us either to the high end or the low end , or if you're still kind of thinking the midpoint of that range .

Speaker #5: Can you talk about that ?

Speaker #4: Yeah , obviously the , you know , the without any cuts forecasted in , that's obviously going to put pressure and point us lower down slightly .

Albert J. Wang: Yeah. Obviously without any cuts forecasted in, that's obviously going to put pressure, and point us down slightly. Remember, we did the securities reposition, so that should help by a few basis points for the year. When I look at our loan portfolio, our yield was 601 for the quarter. When I take a look at the origination rates for the commercial real estate book in Q1 and the origination rates in mortgage, those came in at like 6.15 and 6.12 respectively. Higher than kind of the NIM. I think, obviously there was more pressure on C&I, but I think with the mortgage and CRE kind of repricing and what we're repricing, I think that'll support. I think if the loan yield, we don't expect it to drop off very much, if at all.

Albert Wang: Yeah. Obviously without any cuts forecasted in, that's obviously going to put pressure, and point us down slightly. Remember, we did the securities reposition, so that should help by a few basis points for the year. When I look at our loan portfolio, our yield was 601 for the quarter. When I take a look at the origination rates for the commercial real estate book in Q1 and the origination rates in mortgage, those came in at like 6.15 and 6.12 respectively. Higher than kind of the NIM. I think, obviously there was more pressure on C&I, but I think with the mortgage and CRE kind of repricing and what we're repricing, I think that'll support. I think if the loan yield, we don't expect it to drop off very much, if at all.

Speaker #4: But remember , we did the securities reposition . So that should help by a few basis points for the year . And I look at kind of our loan portfolio , right , so we our yield was 601 for the quarter .

Speaker #4: But when I take a look at kind of the origination rates for the commercial real estate book in the first quarter and kind of the origination rates and mortgage , those came in at like six , 15 and 612 , respectively .

Speaker #4: So higher than kind of the Nim . So I think obviously there's more pressure on CNI , but I think with the the mortgage and CRE kind of repricing and kind of what we're repricing , I think that'll support .

Speaker #4: So I think , you know , if the loan yield I don't we don't expect it to you know drop off very much if at all .

Speaker #4: So I think that's going to help support on the deposit side . We still have room to run . Also . I mean we we had a 296 cost for interest bearing this past quarter .

Albert J. Wang: I think that's going to help support. On the deposit side, we still have room to run also. I mean, we had a 2.96 cost for interest bearing this past quarter. If you think about it, a lot of the expansion was that I think we said last quarter that we had almost $4 billion of CDs rolling off at a 3.80 weighted average rate. So obviously those came on favorably this quarter. If I look at next quarter, for example, we've got close to $3 billion with a 3.62 handle or a kind of weighted average rate. So we think that there's definitely, I think most of the benefits from the lower rate environment and the cuts are kind of behind us. We still think there's still some room there to manage those costs down slightly.

Albert Wang: I think that's going to help support. On the deposit side, we still have room to run also. I mean, we had a 2.96 cost for interest bearing this past quarter. If you think about it, a lot of the expansion was that I think we said last quarter that we had almost $4 billion of CDs rolling off at a 3.80 weighted average rate. So obviously those came on favorably this quarter. If I look at next quarter, for example, we've got close to $3 billion with a 3.62 handle or a kind of weighted average rate. So we think that there's definitely, I think most of the benefits from the lower rate environment and the cuts are kind of behind us. We still think there's still some room there to manage those costs down slightly.

Speaker #4: But if you think about it , we've got , you know , that that was a lot of the expansion was that I think we said last quarter that we had , you know , almost 4 billion of CDs rolling off at a 380 weighted average rate .

Speaker #4: So obviously , we you know , that those came on favorably this quarter . And if I look at next quarter , for example , we've got close to 3 billion with the 362 handle or kind of weighted average rate .

Speaker #4: So we think that , you know , there's definitely , I think most of the benefits from the , the lower rate environment and the cuts are kind of behind us , but we still think there's still some room there to , to , to manage those costs down slightly .

Speaker #4: So between the two , I think we still feel comfortable with the , the overall kind of guide for the year . We do acknowledge that , you know , if I look at brokered rates , for example , you know , at the beginning of the year , it was like in the 360 to 370 for for CDs , for large CDs today , that's a there's definitely a lot more pressure .

Albert J. Wang: Between the two, I think we still feel comfortable with the overall kind of guide for the year. We do acknowledge that if I look at brokered rates, for example, at the beginning of the year, it was like in the 3.60% to 3.70% for large CDs. Today that's 4.00% to 4.05%. There's definitely a lot more pressure and competition with deposits. Right now when we look at kind of the profile, we think that there's still a little bit of room for expansion through this year. Obviously, depending on if rates are cut and there actually are cuts later in the year, that'll be beneficial to us. For now, I think we're good for the year for our guide.

Albert Wang: Between the two, I think we still feel comfortable with the overall kind of guide for the year. We do acknowledge that if I look at brokered rates, for example, at the beginning of the year, it was like in the 3.60% to 3.70% for large CDs. Today that's 4.00% to 4.05%. There's definitely a lot more pressure and competition with deposits. Right now when we look at kind of the profile, we think that there's still a little bit of room for expansion through this year. Obviously, depending on if rates are cut and there actually are cuts later in the year, that'll be beneficial to us. For now, I think we're good for the year for our guide.

Speaker #4: And competition with deposits , but but right now when we look at kind of the profile , we think that there's still a little bit of room for expansion through this year .

Speaker #4: Obviously , you know , depending on if rates , you know , are cut and there actually are cuts later in the year that be beneficial to us .

Speaker #4: But for now, I think we're good for the year for our guide.

Speaker #5: Very helpful color on that . And on that securities repositioning held in isolation . Can you estimate how much that should contribute to Nim you gave ?

David Chiaverini: Very helpful color on that. On that securities repositioning held in isolation, can you estimate how much that should contribute to NIM? You gave the sizing of it. Maybe you can help us with what the yield was that rolled off or was sold, and what the yield was that came on.

Speaker #5: You know, the sizing of it. Maybe you can help us with how much—what the yield was that rolled off or was sold, and what the yield was that came on?

Speaker #4: Yeah , it was , I think about 245 . Was the yield that we sold and we put on , you know , there were the coupon was like five and a half and they were mostly kind of long dated , mortgage backed securities .

Albert J. Wang: Yeah. I think about 2.45 was the yield that we sold, and we put on the coupon was like 5.5, and they were mostly kind of long-dated mortgage-backed securities. I think the effective yield on that is like 5.33 or something around that range. A little over $5.5 million annually. If you think about for 2026, the trade happened early in the quarter, so we'll take three quarters of that amount into this year. Probably about 2 to 3 basis points or 2 to 2.5 basis points to NIM for the year, and then maybe $4 million, let's call it, of additional boost to NII.

Albert Wang: Yeah. I think about 2.45 was the yield that we sold, and we put on the coupon was like 5.5, and they were mostly kind of long-dated mortgage-backed securities. I think the effective yield on that is like 5.33 or something around that range. A little over $5.5 million annually. If you think about for 2026, the trade happened early in the quarter, so we'll take three quarters of that amount into this year. Probably about 2 to 3 basis points or 2 to 2.5 basis points to NIM for the year, and then maybe $4 million, let's call it, of additional boost to NII.

Speaker #4: I think the effective yield on that's like 533 or something around that range . So a little over five , 5.5 million annually .

Speaker #4: So if you think about for 2026 , we take , you know , this the trade happened early in the quarter . So we'll take , you know , three quarters of that amount into this year .

Speaker #4: So probably about 2 to 3 basis points or two and a two and a half basis points to Nim . And then for the year .

Speaker #4: And then , you know , maybe 4 million , let's call it of additional boost to NII .

Speaker #5: Very helpful . Thank you

David Chiaverini: Very helpful. Thank you.

Speaker #1: The next question comes from Matthew Clark with Piper Sandler . Please go ahead .

Operator: The next question comes from Matthew Clark with Piper Sandler. Please go ahead.

Speaker #6: Hey . Good afternoon . I just want to get the amount of pre-pay and any interest recoveries and net interest income . I think it was around 3 million last quarter .

Matthew Clark: Hey, good afternoon. Just want to get the amount of prepay and any interest recoveries in net interest income. I think it was around $3 million last quarter.

Speaker #4: Yeah . So it was about three and a half this quarter , which was about six basis points . So we for the quarter hour reported Nim was 343 .

Albert J. Wang: Yes. It was about 3.5 this quarter, which was about 6 basis points. For the quarter, our reported NIM was 343. It would've been 337, save for those items. We also had a small FHLB dividend, a special dividend as well, included in that number.

Albert Wang: Yes. It was about 3.5 this quarter, which was about 6 basis points. For the quarter, our reported NIM was 343. It would've been 337, save for those items. We also had a small FHLB dividend, a special dividend as well, included in that number.

Speaker #4: It would have been 337 . Say for those items . We also had a small fobby dividend , a special dividend as well included in that number

Speaker #6: Within that 3.5 million .

Matthew Clark: Within that $3.5 million?

Speaker #4: Yes .

Albert J. Wang: Yes.

Albert Wang: Yes.

Speaker #6: Okay . Okay . And then the low income housing tax credit amortization came down more so relative to your guide coming into the year .

Matthew Clark: Okay. The low-income housing tax credit amortization came down more so relative to your guide coming into the year. Just want to get your updated thoughts on that run rate for the balance of the year.

Speaker #6: Just want to get your updated thoughts on that run rate for the balance of the year .

Speaker #4: Yeah , it's I mean , that that's a fluid number . Obviously it depends of the timing of tax credits . And the , you know , the performance of the , the projects in the portfolio .

Albert J. Wang: Yeah. That's a fluid number. Obviously, it depends on kind of the timing of tax credits and the performance of the projects in the portfolio. We think that it's probably going to be in the $7 to $8 million range for the next few quarters throughout the year.

Albert Wang: Yeah. That's a fluid number. Obviously, it depends on kind of the timing of tax credits and the performance of the projects in the portfolio. We think that it's probably going to be in the $7 to $8 million range for the next few quarters throughout the year.

Speaker #4: We think that it's probably going to be in the 7 to $8 million range for the next few quarters throughout the year

Speaker #6: Okay . Good . And then just on the , the loan growth commentary in your prepared remarks , and I think in the release about just being a little more cautious , but sticking , sticking to the guide for the year , is that , you know , is it because you're seeing the pipeline building or is it because you're a little you feel like at this point , you're a little more open or and not as cautious as maybe you were during the first quarter .

Matthew Clark: Okay, good. Just on the loan growth commentary in your prepared remarks and I think in the release, about just being a little more cautious. Sticking to the guide for the year. Is it because you're seeing the pipeline building, or is it because you feel like at this point you're a little more open and not as cautious as maybe you were during Q1? Just want to get some thoughts there. Thanks.

Speaker #6: Just want to get some thoughts there. Thanks.

Chang M. Liu: Yeah. For us, on the loan growth side, we saw some increased pay downs in our construction loan portfolio. Some of our customers took advantage of some of the refinancing opportunities with the life companies and Fannie Mae that had much better competitive longer-term rates than we had. Our originations were healthy, but not enough to offset the timing of the pay downs. Today, our pipelines are still healthy and strong, and the customer engagement has improved. We expect the growth to be more weighted towards the middle and the back end of the half.

Chang Liu: Yeah. For us, on the loan growth side, we saw some increased pay downs in our construction loan portfolio. Some of our customers took advantage of some of the refinancing opportunities with the life companies and Fannie Mae that had much better competitive longer-term rates than we had. Our originations were healthy, but not enough to offset the timing of the pay downs. Today, our pipelines are still healthy and strong, and the customer engagement has improved. We expect the growth to be more weighted towards the middle and the back end of the half.

Speaker #3: Yeah . So for us on the loan growth side , we saw some sort of some some some increased paydowns in our construction loan portfolio .

Speaker #3: So some of our customers took advantage of some of the refinancing opportunities with the life companies and the fannie's that have much better competitive , longer term rates than we had our originations were healthy , but not enough to offset the timing of of the paydowns .

Speaker #3: But today , our pipelines are still healthy and strong , and the customer engagement has improved . So we expect the growth to be sort of more weighted towards the middle and the back end of the half

Matthew Clark: Okay, thanks again.

Speaker #6: Okay . Thanks again

Operator: The next question comes from Gary Tenner with D.A. Davidson. Please go ahead.

Speaker #1: The next question comes from Gary Tenner with D.A. Davidson. Please go ahead.

Gary Tenner: Thanks. Good afternoon. Just wanted to follow up a little bit on the funding side of the equation. Al, I appreciate the color on the Q2 CD maturities. Can you give us an idea of where the Q1 ones that rolled off at $380, where they were renewed?

Speaker #7: Thanks. Good afternoon. I just wanted to follow up a little bit on the funding side of the equation. I appreciate the color on the second quarter CD maturities.

Speaker #7: Can you give us an idea of where the first quarter ones that rolled off at 380 , where they were renewed ?

Albert J. Wang: Yeah. As you know, we had a Lunar New Year promotion at, I think, 365 for six months and 350 for 12. I think we extended that program by a couple of weeks. Like I said in my commentary, you can see there's been a lot more pressure, especially since February and even since the war started. The pressure on rates has been kind of pushing upwards. We think it's around the mid-350s, kind of in Q1 of what we kind of put on.

Albert Wang: Yeah. As you know, we had a Lunar New Year promotion at, I think, 365 for six months and 350 for 12. I think we extended that program by a couple of weeks. Like I said in my commentary, you can see there's been a lot more pressure, especially since February and even since the war started. The pressure on rates has been kind of pushing upwards. We think it's around the mid-350s, kind of in Q1 of what we kind of put on.

Speaker #4: Yeah . So as you know , we had a Lunar New Year promotion at , I think 365 for six months and 350 for 12 .

Speaker #4: So , you know , I think , you know , we extended that program by a couple of weeks . And then like I said in my commentary , we had , you know , you could see there's been a lot more pressure , especially since since kind of February and even since the war started that , you know , you know , the , the pressure on rates has been kind of pushing upwards .

Speaker #4: So , you know , we think it's around kind of the , the mid three 50s is kind of in the first quarter of what we kind of put on

Gary Tenner: Okay. That would suggest that the 360 rolling off in Q2, even without the specials, probably not too much of a benefit. Is that fair? Just marginally lower.

Speaker #7: Okay . And so that would suggest that the 360 rolling off in , in the second quarter , even without the specials , probably not too much of a benefit is that fair ?

Albert J. Wang: Yeah. We think there'll be a marginal benefit from that. Again, it's probably around 350, is the rate that we put on last quarter.

Albert Wang: Yeah. We think there'll be a marginal benefit from that. Again, it's probably around 350, is the rate that we put on last quarter.

Speaker #7: Yeah . It'll be .

Speaker #4: We think they'll . Yeah , we think there'll be a marginal benefit from that . Again , it's probably around 350 . Is the , the rate that we put on last quarter

Gary Tenner: Okay. Appreciate that. In terms of and you talked about the NIM a little bit, and I appreciate the color there. I guess, just to encapsulate it, with no cuts, pretty flat NIM bias ex the securities repositioning. Is that kind of in a nutshell the way you think about it?

Speaker #7: Okay . Appreciate that . So in terms of the and you talked about that in a little bit . I appreciate the color there .

Speaker #7: I guess just to encapsulate it , I mean , with no cuts , pretty flat , non-biased x the securities repositioning I mean , is that kind of in a nutshell , the way you think about .

Albert J. Wang: Yeah. That's right. Again, I think the lending side, we shouldn't see much degradation in terms of the yields on that side. Again, we have mortgages, for example, that we put on 5 years ago in a lower rate environment, for example, 5+ years ago. I think when those come back and get booked back on, that'll help support kind of our NIM.

Albert Wang: Yeah. That's right. Again, I think the lending side, we shouldn't see much degradation in terms of the yields on that side. Again, we have mortgages, for example, that we put on 5 years ago in a lower rate environment, for example, 5+ years ago. I think when those come back and get booked back on, that'll help support kind of our NIM.

Speaker #4: It ? Yeah . Yeah . That's right . Again , I think the , the , the lending side , we're not we shouldn't see much degradation in terms of the , the yields on that side .

Speaker #4: Again , we have some we have , you know , we have mortgages , for example , that we put on , you know , five years ago in the lower rate environment , for example , five plus years ago .

Speaker #4: So I think when those come back and get booked back on , that'll help support kind of our Nim .

Gary Tenner: Okay, great. If I could ask one more, just on the asset quality front. The metrics overall were good, and yet you increased the allowance by six basis points and you kind of comment about a model recalibration and deterioration in macro conditions. Did you change weightings in your model in terms of building the allowance? Or maybe just kind of give us a sense of how you were thinking about that.

Speaker #7: Okay , great . If I could ask one more just on the asset quality front , I mean , the metrics overall , were good .

Speaker #7: You know, and yet you increase the allowance by six basis points, and you kind of comment about, you know, a model recalibration and deterioration in macro conditions.

Speaker #7: Did you did you change weightings in your model in terms of building the allowance or maybe just kind of give us a sense of , of how you were thinking about that ?

Albert J. Wang: Yeah. The biggest move was just kind of a recalibration of one of the inputs in the model. In terms of the weightings, I would say for the overall book, we kept the weightings the same, but we did change the weightings for certain portfolios within the book. That pushed the reserves up for those particular portfolios, and obviously overall as a result.

Albert Wang: Yeah. The biggest move was just kind of a recalibration of one of the inputs in the model. In terms of the weightings, I would say for the overall book, we kept the weightings the same, but we did change the weightings for certain portfolios within the book. That pushed the reserves up for those particular portfolios, and obviously overall as a result.

Speaker #4: Yeah . The biggest move was just a kind of a recalibration of one of the inputs in the model . And in terms of the , the weightings , I would say for the overall book , we kept the weightings the same , but we did change the weightings for certain portfolios within the book that pushed that pushed the reserves up for those particular portfolios .

Speaker #4: And obviously, overall, as a result.

Gary Tenner: Can you comment just which portfolios you increased or changed the weightings on?

Speaker #7: Can you comment , just which portfolios you increased or , you know , changed the weightings on ?

Albert J. Wang: Yeah.

Albert Wang: Yeah.

Gary Tenner: ±.

Albert J. Wang: The way we thought about it is, in our models, we use kind of a national kind of economic forecast. Obviously, as you know, we're very coastal, right? We've got a lot of mortgage portfolio in California and New York. We looked specifically at the office portfolio and said, "Hey, we have a lot of office on the coast." I don't know if the national forecasts are doing those portfolios justice, so we stressed those portfolios a little bit more.

Speaker #4: Yeah . So we so basically , yeah , so the way we thought about it is , you know , in our models , we use kind of national , national , kind of economic forecasts .

Albert Wang: So basically, the way we thought about it is, in our models, we use kind of a national kind of economic forecast. Obviously, as you know, we're very coastal, right? We've got a lot of mortgage portfolio in California and New York. We looked specifically at the office portfolio and said, "Hey, we have a lot of office on the coast." I don't know if the national forecasts are doing those portfolios justice, so we stressed those portfolios a little bit more.

Speaker #4: But obviously , as you know , we're very coastal , right ? We've got a lot of portfolio and kind of California and New York .

Speaker #4: So we look specifically at kind of the office portfolio and said , hey , we have a lot of office kind of on the coasts .

Speaker #4: And , you know , I don't know if the the national forecast kind of are doing those portfolios justice . So we kind of stress those portfolios a little bit more .

Gary Tenner: Thank you.

Speaker #7: Thank you

Operator: Once again, if you have a question, please press star then one. The next question comes from Andrew Terrell with Stephens. Please go ahead.

Speaker #1: Once again , if you have a question , please press star . Then one the next question comes from Andrew Tyrell with Stephens .

Speaker #1: Please go ahead .

Andrew Terrell: Hey, good afternoon.

Speaker #8: Hey , good afternoon . Hey , I just wanted to start on the operating expenses . Looks like , you know , holding the amortization aside relatively , you know , flat quarter on quarter .

Albert J. Wang: Andrew.

Albert Wang: Andrew.

Andrew Terrell: Hey, I just wanted to start on the operating expenses. Looks like, holding the amortization aside, relatively flat quarter-on-quarter. If we annualize Q1, it tracks to the low end of your adjusted expense growth guide for 2026. I'm just curious if any seasonality impacts in Q1. Do you feel like we grow off this operating expense base throughout the year? Just any kind of expectation around expense run rate would be helpful.

Speaker #8: If we annualize the first quarter, it kind of tracks to the low end of your adjusted expense growth guide for '26. I'm just curious, you know, if there are any seasonality impacts in the first quarter—do you feel like we grow off this operating expense base throughout the year?

Speaker #8: Just any kind of expectation around expense run rate would be helpful?

Albert J. Wang: Yeah, I think the Q1 was slightly lower on the comp and benefit, especially compared to year-end. Year-end, we had a little bit more in the incentive compensation accruals. That's what's driving why it's lower versus Q4, for example. We think where we are now, the runway's pretty good. We are projected in headcount, open positions, things like that. Yeah, I think our current where we ended Q3 with the growth rates that we were projecting, that's kind of our expectation right now.

Albert Wang: Yeah, I think the Q1 was slightly lower on the comp and benefit, especially compared to year-end. Year-end, we had a little bit more in the incentive compensation accruals. That's what's driving why it's lower versus Q4, for example. We think where we are now, the runway's pretty good. We are projected in headcount, open positions, things like that. Yeah, I think our current where we ended Q3 with the growth rates that we were projecting, that's kind of our expectation right now.

Speaker #4: Yeah , I think the first quarter was slightly lower on the cop and benefit , especially compared to year end year end . We we had a little bit more in kind of the incentive compensation accruals .

Speaker #4: So that's kind of what's driving the why . It's lower versus fourth quarter , for example . So we think kind of where we are now , the run rate is pretty good .

Speaker #4: We do , you know , we are projected in kind of headcount , open positions , things like that . But yeah , I think it's , I think our , our current kind of where we ended Q3 with the , you know , the growth rates that we were projecting , that's kind of our expectation right now

Andrew Terrell: Yep. Okay. I wanted to ask about. I know it's just proposed, but any thoughts behind the Fed's proposed capital rules? Any kind of benefit that could provide to you guys in terms of CET1 or risk-weighted release?

Speaker #8: Yeah . Okay . And then I wanted to ask around , I know it's just , you know , proposed , but any , any thoughts behind the the Fed's proposed capital rules , you know , any kind of benefit that could provide to you guys in terms of CT one or risk relief ?

Albert J. Wang: Yeah. We think it would be a huge win for us, obviously. We've got a decently sized mortgage portfolio with very low LTVs, so I think we'll get an outsized benefit from that. It could be in the low double digit in terms of the reduction in risk-weighted assets for us, and anywhere from, let's call it 150 to 175 boost to our capital ratios, depending on the ratio.

Albert Wang: Yeah. We think it would be a huge win for us, obviously. We've got a decently sized mortgage portfolio with very low LTVs, so I think we'll get an outsized benefit from that. It could be in the low double digit in terms of the reduction in risk-weighted assets for us, and anywhere from, let's call it 150 to 175 boost to our capital ratios, depending on the ratio.

Speaker #4: Yeah . I mean , we think it's it would be a huge win for us . Obviously we've got a decently sized mortgage portfolio with very low ltvs .

Speaker #4: So I think we'll get an outsized benefit from that . So it could be in the low kind of double digit in terms of the reduction in risk weighted assets for us and anywhere from , let's call it 150 to , you know , 175 kind of boost to our capital ratios , depending on the ratio

Andrew Terrell: Oh, okay. Great. Yeah, that's pretty solid. If I could just ask lastly, one of your competitors commented maybe around M&A recently. Just would love to hear your thoughts on the M&A landscape today and how you see it fitting into the puzzle for Cathay.

Speaker #8: Oh , okay . Great . Yeah , that's pretty solid . You know , if I could just ask lastly , you know , one of your competitors commented , you know , maybe around M&A recently , just would love to hear kind of your , your thoughts on , on the M&A landscape today .

Speaker #8: You know, how do you see it fitting into the puzzle for Cathay?

Chang M. Liu: Yeah. For us, we're always going to think about looking at things more opportunistically, just based on what's presented to us. We're always going to focus more on just our organic growth and executing the business plan. If there's a candidate out there that makes sense for us, but that's not the top priority at this point. We want to just make sure we strengthen our franchise, make strategic decisions, and meet the financial plans that we've laid out to our investors.

Chang Liu: Yeah. For us, we're always going to think about looking at things more opportunistically, just based on what's presented to us. We're always going to focus more on just our organic growth and executing the business plan. If there's a candidate out there that makes sense for us, but that's not the top priority at this point. We want to just make sure we strengthen our franchise, make strategic decisions, and meet the financial plans that we've laid out to our investors.

Speaker #3: Yeah . So for us , you know , we're always going to kind of think about looking at things more , more opportunity , more opportunistically just based on what was presented to us .

Speaker #3: We're always going to focus more on just our , our organic growth and executing the business plan . You know , if there's a , you know , a candidate out there that makes sense for us , you know , but that's not the top priority at this point .

Speaker #3: We want to just make sure we strengthen the , the , our franchise and make strategic decisions . And , and meet the , the financial plans that we , we've laid out to the , to our , to our investors

Andrew Terrell: Great. Thank you for taking the questions.

Speaker #8: Great. Thank you for taking the questions.

Chang M. Liu: Of course.

Chang Liu: Of course.

Speaker #9: Of course

Operator: The next question comes from Kelly Motta with KBW. Please go ahead.

Speaker #1: The next question comes from Kerry Mota with KBW. Please go ahead.

Kelly Motta: Hey, good afternoon. Thanks for the question. Turning to fees, excluding the noise of the securities repositioning and the other gains, core fee income still came in pretty strong, and I think in your prepared remarks, you hit on that being in part attributed to wealth management. Just wondering if you could talk a bit about that business and what you're seeing more broadly on the fee income side, that this, call it $19 million core operating run rate is a good line that could hold or if there's kind of puts and takes there. Thanks.

Speaker #10: Hey , good afternoon . Thanks for the question . You know , turning to fees , excluding the noise of the securities repositioning and the the gate , the other gains core fee income still came in pretty strong .

Speaker #10: And I think in your prepared remarks , you hit on that being in part attributed to wealth management . Just wondering if you could talk a bit about , you know , that business and what you're seeing more broadly on the on the fee income side ?

Speaker #10: And it's this call it 19 million core operating run rate is a good , a good line that could hold or if there's kind of puts and takes , there .

Speaker #10: Thanks .

Albert J. Wang: Kelly, our core strength in the fee income is really the sort of wealth business that drives that income. We're obviously trying to find other ancillary fee income as well. There's things such as foreign exchange, the international fee, and some of our swap fee income. That kind of sporadic based on the rate environment as well. The treasury management functions also drive some of the fee income as well. The bulk of it is really from the wealth side of the business.

Chang Liu: Kelly, our core strength in the fee income is really the sort of wealth business that drives that income. We're obviously trying to find other ancillary fee income as well. There's things such as foreign exchange, the international fee, and some of our swap fee income. That kind of sporadic based on the rate environment as well. The treasury management functions also drive some of the fee income as well. The bulk of it is really from the wealth side of the business.

Speaker #3: So Kelly , our , our core strength in the fee income is really the sort of the wealth business that drives that , that , that income , you know , we're obviously trying to find other ancillary fee income as well .

Speaker #3: There are things such as foreign exchange, the international fee, some of our swapping fee income, but that is kind of sporadic—based on the rate environment as well.

Speaker #3: Treasury , the Treasury management functions also drive some of the fee income as well . But the bulk of it is really from the from the wealth side of the business

Kelly Motta: Got it. Is this $19 million? It's a step up, it's an approximate $19 million step up from the H2 of last year. Is this a good level to kind of hold here, or was this particularly strong? Just trying to parse out how to think about it.

Speaker #10: Got it . And is this 19 million ? I mean , it's a it's a step up . It's a Step up from from the back half of last year .

Speaker #10: Is is this a good , good level to kind of hold here ? Or was this particularly strong just just trying to parse out how to , how to .

Albert J. Wang: Yeah. We think so. We do have some new leadership in wealth, so we think that we've gotten a decent amount of referrals as well. We're optimistic that wealth is going to hold in there and how it performed in Q1.

Albert Wang: Yeah. We think so. We do have some new leadership in wealth, so we think that we've gotten a decent amount of referrals as well. We're optimistic that wealth is going to hold in there and how it performed in Q1.

Speaker #4: Think about it ? I mean , we think so . I mean , we , we do have some new leadership in wealth .

Speaker #4: And so we think , you know , that with we've gotten a decent amount of referrals as well . So , you know , we're , we're optimistic that wealth is going to hold in there kind of and how it performed in Q1 .

Kelly Motta: Okay, great. Most of mine have otherwise been asked and answered, so thanks for the time.

Speaker #10: Okay, great. Most of mine have otherwise been asked and answered. So, thanks for the time.

Albert J. Wang: Yeah.

Albert Wang: Yeah.

Operator: Thank you for your participation. I will now turn the call back over to Cathay General Bancorp's management for closing remarks.

Speaker #1: Thank you for your will now turn the call back over to CATHAY GENERAL BANCORP management for closing remarks .

Albert J. Wang: I want to thank everyone for joining us and your interest in Cathay. We look forward to speaking with you on our next quarterly earnings release call.

Chang Liu: I want to thank everyone for joining us and your interest in Cathay. We look forward to speaking with you on our next quarterly earnings release call.

Speaker #3: I want to thank everyone for joining us and for your interest in Cathay. We look forward to speaking with you on our next quarterly earnings release call.

Operator: Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect.

Q1 2026 Cathay General Bancorp Earnings Call

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