• Net Income: $33.5 million

• Earnings Per Share (EPS): $2.44 per fully diluted share

• Loan Growth: Annualized at 4%

• Deposit Growth: Annualized at 6.5%

• Net Interest Margin: 4.19%, slight decrease from previous quarter

• Total Criticized Loans: $87.6 million, up from $83 million at year end

• Nonperforming Loans: Reduced to $18.2 million from $28.7 million at year end

• Loan Charge: $3.5 million related to previously identified losses

• Provision for Loan Losses: $4.4 million for the quarter

• Loan Loss Reserve Ratio: 1.049%

• New Branch: Opened in Orange County, Irvine area

• New Loan Production Office: Opened in Silicon Valley area

• Warning! GuruFocus has detected 3 Warning Signs with AEYE.

Release Date: April 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Can you provide some visibility into the net interest margin (NIM) for Q2, specifically the average NIM in March and the spot rate on deposits at the end of March? A: (Edward Czajka - Executive Vice President and Chief Financial Officer) The average NIM for March was 4.04%. This figure represents the average for the entire month.

Q: Could you discuss the pipeline of loans and deposits and your growth outlook for the year? A: (Yu Li - Chairman of the Board, Chief Executive Officer) The pipeline is healthy, and while we focus on existing customers, there are significant opportunities for growth. The impact of new hires typically materializes in 1.5 to 2 quarters, contributing to the growth outlook.

Q: What are the details regarding CD repricing and the expected rate differentials over the next few quarters? A: (Edward Czajka - Executive Vice President and Chief Financial Officer) In Q2, about $1 billion in CDs are maturing at an average rate of 4.9%. The rate differential is not expected to be significant, with $374 million maturing in Q3.

Q: Can you provide some insights into the recent performance and management of nonperforming assets? A: (Yu Li - Chairman of the Board, Chief Executive Officer) Nonperforming assets have been managed proactively, with early identification and full reserving being key strategies. This proactive management helps in maintaining stability in credit quality.

Q: How has the loan yield been affected this quarter, and were there any significant one-time recoveries? A: (Edward Czajka - Executive Vice President and Chief Financial Officer) The loan yield was positively impacted by a prepayment penalty of just over $200,000 on a large credit in March, which slightly boosted yields.

Q: What are your expectations for the expense base and its trend in the upcoming quarter, especially with new branch openings? A: (Edward Czajka - Executive Vice President and Chief Financial Officer) With new branches opening in prime locations and the addition of staff, the expense base is expected to remain around $20 million, plus or minus, in the next quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.