CATHAY GENERAL BANCORP

Previous wording

Net income for the quarter ended September 30, 2024, was $67.5 million, a decrease of $14.9 million, or 18.1%, compared to net income of $82.4 million for the same quarter a year ago. Diluted earnings per share for the quarter ended September 30, 2024, was $0.94 per share compared to $1.13 per share for the same quarter a year ago.

Current wording

Net income for the quarter ended March 31, 2025, was $69.5 million, a decrease of $1.9 million, or 2.7%, compared to net income of $71.4 million for the same quarter a year ago. Diluted earnings per share for the quarter ended March 31, 2025, was $0.98 per share compared to $0.98 per share for the same quarter a year ago.

Previous wording

Return on average stockholders’ equity was 9.50% and return on average assets was 1.15% for the quarter ended September 30, 2024, compared to a return on average stockholders’ equity of 12.36% and a return on average assets of 1.42% for the same quarter a year ago.

Current wording

Return on average stockholders’ equity was 9.84% and return on average assets was 1.22% for the quarter ended March 31, 2025, compared to a return on average stockholders’ equity of 10.40% and a return on average assets of 1.23% for the same quarter a year ago.

Previous wording

Net interest income before provision for credit losses decreased $16.4 million, or 8.8%, to $169.2 million during the third quarter of 2024, compared to $185.6 million during the same quarter a year ago. The decrease was due primarily to an increase in interest expense from deposits, offset by an increase in interest income from loans and securities.

Current wording

Net interest income before provision for credit losses increased $8.0 million, or 4.7%, to $176.6 million during the first quarter of 2025, compared to $168.6 million during the same quarter a year ago. The increase was due primarily to a decrease in interest expense from deposits, offset by a decrease in interest income from loans and securities.

Previous wording

The net interest margin was 3.04% for the third quarter of 2024 compared to 3.38% for the third quarter of 2023.

Current wording

The net interest margin was 3.25% for the first quarter of 2025 compared to 3.05% for the first quarter of 2024.

Previous wording

For the third quarter of 2024, the yield on average interest-earning assets was 6.10%, the cost of funds on average interest-bearing liabilities was 3.99%, and the average cost of interest-bearing deposits was 3.95%. In comparison, for the third quarter of 2023, the yield on average interest-earning assets was 5.89%, the cost of funds on average interest-bearing liabilities was 3.33%, and the average cost of interest-bearing deposits was 3.23%. The increase in the yield on average interest-bearing liabilities and on average interest-earning assets resulted mainly from higher interest rates. The net interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, was 2.11% for the quarter ended September 30, 2024, compared to 2.56% for the same quarter a year ago.

Current wording

For the first quarter of 2025, the yield on average interest-earning assets was 5.89%, the cost of funds on average interest-bearing liabilities was 3.46%, and the average cost of interest-bearing deposits was 3.43%. In comparison, for the first quarter of 2024, the yield on average interest-earning assets was 6.01%, the cost of funds on average interest-bearing liabilities was 3.87%, and the average cost of interest-bearing deposits was 3.78%. The decrease in the yield on average interest-bearing liabilities and on average interest-earning assets resulted mainly from lower interest rates on deposits and lower interest rates on loans and securities, respectively. The net interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, was 2.43% for the quarter ended March 31, 2025, compared to 2.14% for the same quarter a year ago.

Previous wording

The Company recorded a provision for credit losses of $14.5 million in the third quarter of 2024 compared with $7.0 million in the third quarter of 2023. As of September 30, 2024, the allowance for credit losses, comprised of the reserve for loan losses and the reserve for unfunded loan commitments, increased $9.6 million to $173.2 million, or 0.89% of gross loans, compared to $163.6 million, or 0.84% of gross loans, as of December 31, 2023. The change in the allowance for credit losses during the third quarter of 2024 consisted of a $14.5 million provision for credit losses, and $4.2 million in net charge-offs.

Current wording

The Company recorded a provision for credit losses of $15.5 million in the first quarter of 2025 compared with $1.9 million in the first quarter of 2024. As of March 31, 2025, the allowance for credit losses, comprised of the reserve for loan losses and the reserve for unfunded loan commitments, increased $13.5 million to $184.9 million, or 0.96% of gross loans, compared to $171.4 million, or 0.88% of gross loans, as of December 31, 2024. The change in the allowance for credit losses during the first quarter of 2025 consisted of a $15.5 million provision for credit losses, the majority of which related to one commercial loan, and $2.0 million in net charge-offs.

Previous wording

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wealth management fees, and other sources of fee income, was $20.4 million for the third quarter of 2024, an increase of $12.6 million, or 161.5%, compared to $7.8 million for the third quarter of 2023. The increase was primarily due to an increase of $10.5 million in unrealized gain on equity securities and an increase of $1.4 million in Wealth Management fees, when compared to the same quarter a year ago.

Current wording

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wealth management fees, and other sources of fee income, was $11.2 million for the first quarter of 2025, an increase of $4.6 million, or 69.7%, compared to $6.6 million for the first quarter of 2024. The increase was primarily due to a decrease of $4.8 million in unrealized loss on equity securities when compared to the same quarter a year ago.

Previous wording

Non-interest expense increased $2.9 million, or 3.1%, to $96.9 million in the third quarter of 2024 compared to $94.0 million in the same quarter a year ago. The increase in non-interest expense in the third quarter of 2024 was primarily due to an increase of $2.1 million in salaries and employee benefits, and an increase of $0.9 million in amortization expense of investments in low-income housing and alternative energy partnerships when compared to the same quarter a year ago. The efficiency ratio was 51.11% in the third quarter of 2024 compared to 48.57% for the same quarter a year ago.

Current wording

Non-interest expense decreased $7.5 million, or 8.0%, to $85.7 million in the first quarter of 2025 compared to $93.2 million in the same quarter a year ago. The decrease in non-interest expense in the first quarter of 2025 was primarily due to a decrease of $5.4 million in amortization expense of investments in low-income housing and alternative energy partnerships and a decrease of $2.7 million in FDIC and state assessment when compared to the same quarter a year ago. The efficiency ratio was 45.60% in the first quarter of 2025 compared to 53.22% for the same quarter a year ago.

Previous wording

The effective tax rate for the third quarter of 2024 was 13.6% compared to 11.0% for the third quarter of 2023. The effective tax rate includes the impact of alternative energy investments and low-income housing tax credits.

Current wording

The effective tax rate for the first quarter of 2025 was 19.8% compared to 10.8% for the first quarter of 2024. The effective tax rate includes the impact of low-income housing tax credits in 2025 and solar tax credits and low-income housing tax credits in 2024.

Previous wording

Securities available-for-sale represented 6.5% of total assets as of September 30, 2024, compared to 7.0% of total assets as of December 31, 2023. Securities available-for-sale were $1.51 billion as of September 30, 2024, compared to $1.60 billion as of December 31, 2023.

Current wording

Securities available-for-sale represented 6.2% of total assets as of March 31, 2025, compared to 6.7% of total assets as of December 31, 2024. Securities available-for-sale were $1.43 billion as of March 31, 2025, compared to $1.55 billion as of December 31, 2024.

Previous wording

Securities available-for-sale having a carrying value of $18.4 million as of September 30, 2024, and $134.2 million as of December 31, 2023, were pledged to secure public deposits and other borrowings.

Current wording

Securities available-for-sale having a carrying value of $17.1 million as of March 31, 2025, and $17.8 million as of December 31, 2024, were pledged to secure public deposits and other borrowings.

Previous wording

Gross loans held for investment were $19.37 billion at September 30, 2024, a decrease of $174.5 million, or 0.9%, from $19.55 billion at December 31, 2023. The decrease was primarily due to a decrease of $198.1 million, or 6.0%, in commercial loans, a decrease of $115.6 million, or 27.3% in real estate construction loans, and a decrease of $88.2 million, or 1.5% in residential mortgage loans, offset, in part, by an increase of $245.7 million, or 2.5% in commercial real estate loans.

Current wording

Gross loans held for investment were $19.35 billion at March 31, 2025, a decrease of $23.0 million, or 0.12%, from $19.38 billion at December 31, 2024. The decrease was primarily due to a decrease of $99.6 million, or 3.2%, in commercial loans, and a decrease of $65.5 million, or 1.2% in residential mortgage loans, offset, in part, by an increase of $127.1 million, or 1.3% in commercial real estate loans, and an increase of $13.1 million, or 4.1% in real estate construction loans.

Previous wording

The ratio of non-performing assets to total assets was 0.81% as of September 30, 2024, compared to 0.40% as of December 31, 2023. Total non-performing assets increased $94.7 million, or 101.5% to $188.0 million at September 30, 2024, compared to $93.3 million at December 31, 2023, primarily due to an increase of $96.1 million, or 144.1%, in non-accrual loans offset, in part, by a decrease of $1.2 million, or 6.0% in other real estate owned, and a decrease of $0.2 million, or 3.2% in accruing loans past due 90 days or more.

Current wording

The ratio of non-performing assets to total assets was 0.75% as of March 31, 2025, compared to 0.85% as of December 31, 2024. Total non-performing assets decreased $22.6 million, or 11.5% to $173.7 million at March 31, 2025, compared to $196.3 million at December 31, 2024, primarily due to a decrease of $14.6 million, or 8.6%, in non-accrual loans, a decrease of $4.6 million, or 19.9% in other real estate owned, and a decrease of $3.4 million, or 85.3% in accruing loans past due 90 days or more.

Previous wording

As a percentage of gross loans, excluding loans held for sale, plus OREO, our non-performing assets were 0.97% as of September 30, 2024, compared to 0.48% as of December 31, 2023. The non-performing loan portfolio coverage ratio, defined as the allowance for credit losses to non-performing loans, decreased to 102.07% as of September 30, 2024, from 221.58% as of December 31, 2023.

Current wording

As a percentage of gross loans, excluding loans held for sale, plus OREO, our non-performing assets were 0.90% as of March 31, 2025, compared to 1.01% as of December 31, 2024. The non-performing loan portfolio coverage ratio, defined as the allowance for credit losses to non-performing loans, increased to 119.16% as of March 31, 2025, from 98.98% as of December 31, 2024.

Previous wording

As of September 30, 2024, total non-accrual loans were $162.8 million, an increase of $96.1 million, or 144.1%, from $66.7 million at December 31, 2023, and an increase of $85.5 million, or 110.5%, from $77.3 million at September 30, 2023. The allowance for the collateral-dependent loans is calculated based on the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals, sales contracts, or other available market price information, less cost to sell. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. We continue to monitor the collateral coverage of these loans, based on recent appraisals, on a quarterly basis and adjust the allowance accordingly.

Current wording

As of March 31, 2025, total non-accrual loans were $154.6 million, a decrease of $14.6 million, or 8.6%, from $169.2 million at December 31, 2024, and an increase of $56.5 million, or 57.6%, from $98.1 million at March 31, 2024. The allowance for the collateral-dependent loans is calculated based on the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals, sales contracts, or other available market price information, less cost to sell. The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. We continue to monitor the collateral coverage of these loans, based on recent appraisals, on a quarterly basis and adjust the allowance accordingly.

Previous wording

For non-accrual loans, the amounts previously charged-off represent 10.0% of the contractual balances for non-accrual loans as of September 30, 2024, and 15.8% as of December 31, 2023. As of September 30, 2024, $110.8 million, or 68.0%, of the $162.8 million of non-accrual loans were secured by real estate compared to $52.3 million, or 78.4%, of the $66.7 million of non-accrual loans that were secured by real estate as of December 31, 2023. The Bank generally seeks to obtain current appraisals, sales contracts, or other available market price information intended to provide updated factors in evaluating potential loss.

Current wording

For non-accrual loans, the amounts previously charged-off represent 11.9% of the contractual balances for non-accrual loans as of March 31, 2025, and 11.7% as of December 31, 2024. As of March 31, 2025, $101.3 million, or 65.5%, of the $154.6 million of non-accrual loans were secured by real estate compared to $109.4 million, or 64.7%, of the $169.2 million of non-accrual loans that were secured by real estate as of December 31, 2024. The Bank generally seeks to obtain current appraisals, sales contracts, or other available market price information intended to provide updated factors in evaluating potential loss.

Previous wording

The allowance for loan losses to non-performing loans was 96.4% as of September 30, 2024, compared to 209.3% as of December 31, 2023. The decrease was due primarily to an increase in non-accrual loans. Non-accrual loans also include those modified loans to borrowers experiencing financial difficulty that do not qualify for accrual status.

Current wording

The allowance for loan losses to non-performing loans was 112.06% as of March 31, 2025, compared to 93.39% as of December 31, 2024. The increase was due primarily to a decrease in non-accrual loans. Non-accrual loans also include those modified loans to borrowers experiencing financial difficulty that do not qualify for accrual status.

Previous wording

As of September 30, 2024, construction loans of $248.2 million were disbursed with pre-established interest reserves of $32.8 million, compared to $220.6 million with pre-established interest reserves of $41.3 million at December 31, 2023. The balance for construction loans with interest reserves that have been extended was $5.5 million with pre-established interest reserves of $0.2 million at September 30, 2024, compared to $6.4 million with pre-established interest reserves of $0.5 million at December 31, 2023. Land loans of $8.8 million were disbursed with pre-established interest reserves of $59 thousand at September 30, 2024, compared to $12.9 million of land loans disbursed with pre-established interest reserves of $0.4 million at December 31, 2023. There were no land loans with interest reserves which have been extended as of September 30, 2024, and December 31, 2023.

Current wording

As of March 31, 2025, construction loans of $247.1 million were disbursed with pre-established interest reserves of $31.6 million, compared to $227.9 million with pre-established interest reserves of $31.3 million at December 31, 2024. The balance for construction loans with interest reserves that have been extended was $4.2 million with pre-established interest reserves of $1.1 million at March 31, 2025, compared to $4.2 million with pre-established interest reserves of $53 thousand at December 31, 2024. Land loans of $1.1 million were disbursed with pre-established interest reserves of $97 thousand at March 31, 2025, compared to no land loans disbursements with pre-established interest reserves at December 31, 2024. There were no land loans with interest reserves which have been extended as of March 31, 2025, and December 31, 2024.

Previous wording

At September 30, 2024, and December 31, 2023, the Bank had no loans on non-accrual status with available interest reserves. At September 30, 2024, and December 31, 2023, there were zero non-accrual non-residential construction loans, residential construction loans, or land loans that were originated with pre-established interest reserves. While we typically expect loans with interest reserves to be repaid in full according to the original contractual terms, some loans may require one or more extensions beyond the original maturity before full repayment. Typically, these extensions are required due to construction delays, delays in the sale or lease of the property, or some combination of these two factors.

Current wording

At March 31, 2025, and December 31, 2024, the Bank had no loans on non-accrual status with available interest reserves. At March 31, 2025, and December 31, 2024, there were no non-accrual non-residential construction loans, residential construction loans, or land loans that were originated with pre-established interest reserves. While we typically expect loans with interest reserves to be repaid in full according to the original contractual terms, some loans may require one or more extensions beyond the original maturity before full repayment. Typically, these extensions are required due to construction delays, delays in the sale or lease of the property, or some combination of these two factors.

Previous wording

The federal banking regulatory agencies issued final guidance on December 6, 2006, regarding risk management practices for financial institutions with high or increasing concentrations of commercial real estate (“CRE”) loans on their balance sheets. The regulatory guidance reiterates the need for sound internal risk management practices for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific types of CRE, or are approaching or exceeding the supervisory criteria used to evaluate the CRE concentration risk, but the guidance is not to be construed as a limit for CRE exposure. The supervisory criteria are: (1) total reported loans for construction, land development, and other land represent 100% of the institution’s total risk-based capital, and (2) both total CRE loans represent 300% or more of the institution’s total risk-based capital and the institution’s CRE loan portfolio has increased 50% or more within the last thirty-six months. The Bank’s loans for construction, land development, and other land represented 14% and 19% of the Bank’s total risk-based capital as of September 30, 2024, and December 31, 2023, respectively. Total CRE loans represented 289% of total risk-based capital as of September 30, 2024, and 292% as of December 31, 2023, which were within the Bank’s internal limit of 400%, of total capital.

Current wording

The federal banking regulatory agencies issued final guidance on December 6, 2006, regarding risk management practices for financial institutions with high or increasing concentrations of commercial real estate (“CRE”) loans on their balance sheets. The regulatory guidance reiterates the need for sound internal risk management practices for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific types of CRE, or are approaching or exceeding the supervisory criteria used to evaluate the CRE concentration risk, but the guidance is not to be construed as a limit for CRE exposure. The supervisory criteria are: (1) total reported loans for construction, land development, and other land represent 100% of the institution’s total risk-based capital, and (2) both total CRE loans represent 300% or more of the institution’s total risk-based capital and the institution’s CRE loan portfolio has increased 50% or more within the last thirty-six months. The Bank’s loans for construction, land development, and other land represented 15% and 15% of the Bank’s total risk-based capital as of March 31, 2025, and December 31, 2024, respectively. Total CRE loans represented 286% of total risk-based capital as of March 31, 2025, and 289% as of December 31, 2024, which were within the Bank’s internal limit of 400%, of total capital.

Previous wording

The Company’s total CREC loan portfolio is diversified by property type with an average CREC loan size of $1.9 million and $1.8 million as of September 30, 2024, and December 31, 2023, respectively. The following table summarizes the Company’s total CREC loans by property type as of September 30, 2024, and December 31, 2023:

Current wording

The Company’s total CREC loan portfolio is diversified by property type with an average CREC loan size of $1.9 million as of March 31, 2025, and December 31, 2024. The following table summarizes the Company’s total CREC loans by property type as of March 31, 2025, and December 31, 2024:

Previous wording

The weighted-average loan-to-value (“LTV”) ratio of the total CREC loan portfolio was 49% and 50% as of September 30, 2024, and December 31, 2023, respectively. Approximately 85% and 83% of total CREC loans had an LTV ratio of 60% or lower as of September 30, 2024, and December 31, 2023, respectively.

Current wording

The weighted-average loan-to-value (“LTV”) ratio of the total CREC loan portfolio was 49% as of March 31, 2025, and December 31, 2024. Approximately 86% and 85% of total CREC loans had an LTV ratio of 60% or lower as of March 31, 2025, and December 31, 2024, respectively.

Previous wording

There were 48% of total CREC loans concentrated in California as of both September 30, 2024, and December 31, 2023. Changes in California’s economy and real estate values could have a significant impact on the collectability of these loans and the required level of allowance for loan losses.

Current wording

There were 47% of total CREC loans concentrated in California as of March 31, 2025, and December 31, 2024. Changes in California’s economy and real estate values could have a significant impact on the collectability of these loans and the required level of allowance for loan losses.

Previous wording

The Company focuses on providing financing to experienced real estate investors and developers who have moderate levels of leverage, many of whom are long-time customers of the Bank. CRE loans totaled $7.16 billion as of September 30, 2024, compared with $7.06 billion as of December 31, 2023, and accounted for 37% and 36% of total loans held-for-investment, not including loans held for sale, as of September 30, 2024, and December 31, 2023, respectively. Interest rates on CRE loans may be fixed or variable. As of September 30, 2024, 25% and 37% of our CRE portfolio were variable rate and hybrid loans in their fixed period, respectively. In comparison, as of December 31, 2023, 25% and 40% of our CRE portfolio were variable rate and hybrid loans in their fixed period, respectively. Loans are underwritten with conservative standards for cash flows, debt service coverage and LTV.

Current wording

The Company focuses on providing financing to experienced real estate investors and developers who have moderate levels of leverage, many of whom are long-time customers of the Bank. CRE loans totaled $7.35 billion as of March 31, 2025, compared with $7.23 billion as of December 31, 2024, and accounted for 38% and 37% of total loans held-for-investment, not including loans held for sale, as of March 31, 2025, and December 31, 2024, respectively. Interest rates on CRE loans may be fixed or variable. As of March 31, 2025, 28% and 35% of our CRE portfolio were variable rate and hybrid loans in their fixed period, respectively. In comparison, as of December 31, 2024, 25% and 37% of our CRE portfolio were variable rate and hybrid loans in their fixed period, respectively. Loans are underwritten with conservative standards for cash flows, debt service coverage and LTV.

Previous wording

Owner-occupied properties comprised 23% of the CRE loans as of both September 30, 2024, and December 31, 2023, respectively. The remainder were non-owner-occupied properties, where 50% or more of the debt service for the loan is typically provided by rental income from an unaffiliated third party.

Current wording

Owner-occupied properties comprised 24% of the CRE loans as of March 31, 2025, and December 31, 2024. The remainder were non-owner-occupied properties, where 50% or more of the debt service for the loan is typically provided by rental income from an unaffiliated third party.

Previous wording

The multifamily residential loan portfolio is largely comprised of loans secured by residential properties with five or more units. Multifamily residential loans totaled $2.73 billion as of September 30, 2024, compared with $2.60 billion as of December 31, 2023, and accounted for 14% and 13% of total loans held-for investment, not including loans held for sale, as of September 30, 2024, and December 31, 2023, respectively. The Company offers a variety of first lien mortgages, including fixed- and variable-rate loans. As of September 30, 2024, 21% and 39% of our multifamily residential loan portfolio were variable rate and hybrid loans in their fixed period, respectively. In comparison, as of December 31, 2023, 20% and 40% of our multifamily residential loan portfolio were variable rate and hybrid loans in their fixed period, respectively.

Current wording

The multifamily residential loan portfolio is largely comprised of loans secured by residential properties with five or more units. Multifamily residential loans totaled $2.72 billion as of March 31, 2025, compared with $2.72 billion as of December 31, 2024, and accounted for 14% of total loans held-for investment, not including loans held for sale, as of March 31, 2025, and December 31, 2024. The Company offers a variety of first lien mortgages, including fixed- and variable-rate loans. As of March 31, 2025, 20% and 40% of our multifamily residential loan portfolio were variable rate and hybrid loans in their fixed period, respectively. In comparison, as of December 31, 2024, 18% and 41% of our multifamily residential loan portfolio were variable rate and hybrid loans in their fixed period, respectively.

Previous wording

Construction and land loans provide financing for diversified projects by real estate property type. Construction and land loans totaled $384.5 million as of September 30, 2024, compared with $494.5 million as of December 31, 2023, and accounted for 2% and 3% of total loans held-for-investment, not including loans held for sale, as of September 30, 2024, and December 31, 2023, respectively. Construction loan exposure was made up of $307.1 million in loans outstanding, plus $180.9 million in unfunded commitments as of September 30, 2024, compared with $422.6 million in loans outstanding, plus $280.5 million in unfunded commitments as of December 31, 2023. Land loans totaled $77.4 million as of September 30, 2024, compared with $71.8 million as of December 31, 2023.

Current wording

Construction and land loans provide financing for diversified projects by real estate property type. Construction and land loans totaled $417.9 million as of March 31, 2025, compared with $403.1 million as of December 31, 2024, and accounted for 2% of total loans held-for-investment, not including loans held for sale, as of March 31, 2025, and December 31, 2024. Construction loan exposure was made up of $332.7 million in outstanding loans, plus $158.6 million in unfunded commitments as of March 31, 2025, compared with $319.6 million in outstanding loans, plus $186.5 million in unfunded commitments as of December 31, 2024. Land loans totaled $85.2 million as of March 31, 2025, compared with $83.4 million as of December 31, 2024.

Previous wording

The allowance for loan losses was $163.7 million and the allowance for off-balance sheet unfunded credit commitments was $9.5 million at September 30, 2024, which represented the amount estimated by management to be appropriate to absorb expected credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for credit losses, which is the sum of the allowances for loan losses and for off-balance sheet unfunded credit commitments, was $173.2 million at September 30, 2024, compared to $163.6 million at December 31, 2023. The allowance for credit losses represented 0.89% of period-end gross loans and 102.07% of non-performing loans at September 30, 2024. The comparable ratios were 0.84% of period-end gross loans and 221.58% of non-performing loans at December 31, 2023.

Current wording

The allowance for loan losses was $173.9 million and the allowance for off-balance sheet unfunded credit commitments was $11.0 million at March 31, 2025, which represented the amount estimated by management to be appropriate to absorb expected credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for credit losses, which is the sum of the allowances for loan losses and for off-balance sheet unfunded credit commitments, was $184.9 million at March 31, 2025, compared to $171.4 million at December 31, 2024. The allowance for credit losses represented 0.96% of period-end gross loans and 119.16% of non-performing loans at March 31, 2025. The comparable ratios were 0.88% of period-end gross loans and 98.98% of non-performing loans at December 31, 2024.

Previous wording

In calculating our allowance for credit losses in the third quarter of 2024, the change in Moody’s forecast of future GDP, unemployment rates, CRE and home price indexes did not result in a significant impact to the allowance for credit losses. The increase in the allowance for credit losses was primarily due to a provision for the delay in getting current appraisals for the new non-accrual loans added during the third quarter. Our methodology and framework along with the 8-quarter reasonable and supportable forecast period and the 4-quarter reversion period have remained consistent since the implementation of CECL. Certain management assumptions are reassessed every quarter based on current expectations for credit losses, while other assumptions are assessed and updated on at least an annual basis.

Current wording

In calculating our allowance for credit losses in the first quarter of 2025, the change in Moody’s forecast of future GDP, unemployment rates, CRE and home price indexes did not result in a significant impact to the allowance for credit losses. The increase in the allowance for credit losses was primarily due to an increase in the specific reserve and an increase to the general reserve due to economic uncertainty. Our methodology and framework along with the 8-quarter reasonable and supportable forecast period and the 4-quarter reversion period have remained consistent since the implementation of CECL. Certain management assumptions are reassessed every quarter based on current expectations for credit losses, while other assumptions are assessed and updated on at least an annual basis.

Previous wording

Our allowance for credit losses is sensitive to a number of inputs, including macroeconomic forecast assumptions and credit rating migrations during the period. Our macroeconomic forecasts used in determining the September 30, 2024, allowance for credit losses consisted of three scenarios as provided by an outside forecaster. Because the December 2022 baseline scenario did not forecast a recession in the forecast period, we increased the weighting of the downside scenario to reflect our expectations that a recession in the forecast period was more likely than not. During the third quarter of 2023, in light of the continued strength of the economy, we reduced the weighting of the most severe scenario slightly. The baseline scenario reflects modest ongoing GDP growth and a steady decline in the unemployment rate starting from 4.20% in the fourth quarter of 2024 to 4.03% by the end of the R&S period. The upside scenario reflects higher GDP growth and lower unemployment rates with the stronger economy resulting in inflation and interest rates a bit higher than in the baseline scenario, though the Federal Reserve is projected to continue to cut the Fed funds rate in the fourth quarter of 2024. The downside scenario contemplates a recession and the weakening economy prompts the Fed to lower the fed funds rate below the baseline in the fourth quarter of 2024, resulting in negative GDP growth for three quarters peaking at 3.5% in the first quarter of 2025, rising unemployment that peaks at 8.3% in the fourth quarter of 2025, a decline in CRE prices of 12.4% and a decline in residential home prices of 12.7% during the forecast period. As of September 30, 2024, we placed the same weight on our downside and base scenario, with a small weighting on the upside scenario.

Current wording

Our allowance for credit losses is sensitive to a number of inputs, including macroeconomic forecast assumptions and credit rating migrations during the period. Our macroeconomic forecasts used in determining the March 31, 2025, allowance for credit losses consisted of three scenarios as provided by a reputable third party economic forecaster. After increasing the weighting of the downside scenario in 2022 to reflect our expectations that a recession was more likely than not, we reduced the weighting of the severe scenario slightly during the third quarter of 2023, in light of the continued strength of the economy. At the end of 2024, with the economy continuing to expand at a solid pace, the downside scenario weighting was once again reduced while giving greater weight to the baseline scenario. This quarter the weighting remains the same, however, management made certain qualitative adjustments to the allowance for credit loss in light of the economic uncertainty. The baseline scenario reflects modest ongoing GDP growth in spite of a slight rise in the unemployment rate, starting from 4.03% in the second quarter of 2025, peaking at 4.38% in the third quarter of 2026, and dropping back down to 4.33% by the end of the R&S period. The upside scenario assumes the impacts of tariffs and deportations on the economy are less than expected and reflects higher GDP growth and lower unemployment rates with the stronger economy resulting in inflation and interest rates a bit higher than in the baseline scenario. The downside scenario assumes the impacts of tariffs and deportations on the economy are significantly worse than expected and contemplates a recession as rising inflation prompts the Federal Reserve to raise the fed funds rate in the second and third quarter of 2025. This results in negative GDP growth for three quarters peaking at 3.7% in the fourth quarter of 2025, rising unemployment that peaks at 8.3% in the second quarter of 2026, a decline in CRE prices of 16.9% and a decline in residential home prices of 10.8% during the forecast period.

Previous wording

Keeping all other factors constant, we estimate that if we had applied 100% weighting to the downside scenario, the allowance for credit losses as of September 30, 2024, would have been approximately $58.8 million higher. This estimate is intended to reflect the sensitivity of the allowance for credit losses to changes in our scenario weights and is not intended to be indicative of future changes in the allowance for credit losses.

Current wording

Keeping all other factors constant, we estimate that if we had applied 100% weighting to the downside scenario, the allowance for credit losses as of March 31, 2025, would have been approximately $65.2 million higher. This estimate is intended to reflect the sensitivity of the allowance for credit losses to changes in our scenario weights and is not intended to be indicative of future changes in the allowance for credit losses.

Previous wording

The allowance allocated to commercial loans decreased $2.9 million, or 5.4%, to $50.9 million at September 30, 2024, from $53.8 million at December 31, 2023. The decrease was mainly due to net charge-offs of $11.8 million.

Current wording

The allowance allocated to commercial loans increased $11.2 million, or 19.4%, to $69.0 million at March 31, 2025, from $57.8 million at December 31, 2024. The increase was mainly due to an increase in specific reserves and economic uncertainty.

Previous wording

The allowance allocated to commercial real estate loans increased $10.9 million, or 14.7%, to $85.3 million at September 30, 2024, from $74.4 million at December 31, 2023. The increase is due primarily to an increase in substandard and non-accrual commercial real estate loans.

Current wording

The allowance allocated to commercial real estate loans increased $1.3 million, or 1.6%, to $80.9 million at March 31, 2025, from $79.6 million at December 31, 2024. The increase is due primarily to an increase in non-performing loans.

Previous wording

The allowance allocated for residential mortgage loans and equity lines increased $0.8 million, or 4.4% to $18.9 million at September 30, 2024, compared to $18.1 million at December 31, 2023. The increase is due primarily to an increase in non-accrual residential mortgage loans.

Current wording

The allowance allocated for residential mortgage loans and equity lines decreased $0.7 million, or 4.3% to $15.5 million at March 31, 2025, compared to $16.2 million at December 31, 2024.

Previous wording

The Company calculates its uninsured deposits based on the methodologies and assumptions used for regulatory reporting. Total uninsured deposits were $9.18 billion as of September 30, 2024, increased approximately $470.3 million, from $8.71 billion as of December 31, 2023. Excluding $780.2 million in collateralized deposits, the uninsured and uncollateralized deposits of $8.40 billion was 42.1% of total deposits as of September 30, 2024. Our unused borrowing capacity from the Federal Home Loan Bank as of September 30, 2024, was $7.29 billion and unpledged securities at September 30, 2024, was $1.49 billion. These sources of available liquidity, including cash and short-term investments, were more than 100% of uninsured and uncollateralized deposits as of September 30, 2024.

Current wording

The Company calculates its uninsured deposits based on the methodologies and assumptions used for regulatory reporting. Total uninsured deposits were $9.26 billion as of March 31, 2025, decreasing approximately $177.5 million, from $9.43 billion as of December 31, 2024. Excluding $791.5 million in collateralized deposits, the uninsured and uncollateralized deposits of $8.46 billion was 42.7% of total deposits as of March 31, 2025. Our unused borrowing capacity from the Federal Home Loan Bank as of March 31, 2025, was $7.35 billion and unpledged securities at March 31, 2025, was $1.42 billion. These sources of available liquidity, including cash and short-term investments, were more than 100% of uninsured and uncollateralized deposits as of March 31, 2025.

Previous wording

The following table sets forth the maturity distribution of time deposits at September 30, 2024:

Current wording

The following table sets forth the maturity distribution of time deposits as of March 31, 2025:

Previous wording

In November 2023, the FDIC approved a final rule that would impose a special deposit insurance assessment on banks in order to recover losses that the FDIC's Deposit Insurance Fund ("DIF") has incurred in the receiverships of failed institutions. Under the final rule, the FDIC would impose the special assessment for eight quarterly assessment periods beginning with the first quarter of 2024 assessment period, subject to adjustment if the total amount collected is insufficient to cover the DIF's cost. Each quarterly special assessment would be equal to 3.36 basis points (0.0336%) of a bank's estimated uninsured deposits that exceeded $5 billion as of December 31, 2022. The Company recognized $11.3 million related to the special assessment in the fourth quarter of 2023. Based on updated information received from the FDIC about the estimated losses for the failed institutions, the Company recognized an additional $2.9 million of the special assessment in the first quarter ended March 31, 2024. Depending on future adjustments to the DIF's estimated loss, the FDIC has retained the ability to cease collection early, extend the special assessment collection period, or impose a one-time final shortfall assessment.

Current wording

In November 2023, the FDIC approved a final rule that would impose a special deposit insurance assessment on banks in order to recover losses that the FDIC's Deposit Insurance Fund ("DIF") has incurred in the receiverships of failed institutions. Under the final rule, the FDIC would impose the special assessment for eight quarterly assessment periods beginning with the first quarter of 2024 assessment period, subject to adjustment if the total amount collected is insufficient to cover the DIF's cost. As of December 31, 2024, the total loss estimate to the DIF was $22.0 billion of which $19.1 billion is attributable to the protection of uninsured depositors and will be recovered through the special assessment. The quarterly special assessment will be collected at a quarterly rate of 3.36 basis points (0.0336%) of a bank's estimated uninsured deposits that exceeded $5 billion as of December 31, 2022. Given the update to the loss estimates and the increase in the aggregate special assessment base resulting from amendments to the reported amount of estimated uninsured deposits, the FDIC currently projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate. Based on updated information received from the FDIC about the estimated losses for the failed institutions, the Company has recognized $13.3 million cumulatively related to the special assessment as of March 31, 2025. Depending on future adjustments to the DIF's estimated loss, the FDIC has retained the ability to cease collection early, extend the special assessment collection period, or impose a one-time final shortfall assessment.

Previous wording

Total equity was $2.83 billion as of September 30, 2024, an increase of $93.7 million, from $2.74 billion as of December 31, 2023, primarily due to net income of $205.8 million, other comprehensive income of $19.0 million, stock-based compensation of $4.1 million, proceeds from dividend reinvestment of $2.2 million, and stock issued to directors of $850 thousand, offset by, common stock cash dividends of $73.8 million, purchase of treasury stock of $60.6 million, and shares withheld related to net share settlement of RSUs of $3.7 million.

Current wording

Total equity was $2.87 billion as of March 31, 2025, an increase of $19.5 million, from $2.85 billion as of December 31, 2024, primarily due to net income of $69.5 million, other comprehensive income of $13.9 million, stock-based compensation of $1.5 million, and proceeds from dividend reinvestment of $0.7 million, offset by, purchase of treasury stock of $41.5 million, common stock cash dividends of $23.9 million, and shares withheld related to net share settlement of RSUs of $0.8 million.

Previous wording

The following table summarizes changes in total equity for the nine months ended September 30, 2024:

Current wording

The following table summarizes changes in total equity for the three months ended March 31, 2025:

Previous wording

The Company declared a cash dividend of $0.34 per share on 71,559,973 shares outstanding on August 15, 2024, for distribution to holders of our common stock on August 29, 2024. The Company paid total cash dividends of $24.3 million in the third quarter of 2024 and $73.8 million for the nine months ended September 30, 2024.

Current wording

The Company declared a cash dividend of $0.34 per share on 70,163,216 shares outstanding on February 27, 2025, for distribution to holders of our common stock on March 10, 2025. The Company paid total cash dividends of $23.9 million in the first quarter of 2025.