Good afternoon, ladies and gentlemen, and welcome to the Cathay General Bancorp's First Quarter 2018 Earnings Conference Call. My name is Sherrie, and I'll be your coordinator for today. At this time all participants are in a listen-only mode. Following the prepared remarks there will be a question-and-answer session. (Operator Instructions) Today's call is being recorded and will be available for replay at www.cathaygeneralbancorp.com.
Now, I would like to turn the call over to Lisa Kim, Secretary of Cathay General Bancorp.
Thank you, Sherrie, and good afternoon, everyone. Here to discuss the financial results today are Mr. Pin Tai, our CEO and President; and Mr. Heng Chen, our EVP and CFO. (Forward-Looking Cautionary Statements).
This afternoon, Cathay General Bancorp issued an earnings release outlining its first quarter 2018 results. To obtain a copy, please visit our website at ww.cathaygeneralbancorp.com. After comments by management today, we will open up this call for questions.
I will now turn the call over to our CEO, Mr. Pin Tai.
Thank you, Lisa, and good afternoon. Welcome to our 2018 first quarter earnings conference call. This afternoon, we reported net income of $63.8 million for the first quarter of 2018, a 30.4% increase when compared to our net income of $48.9 million for the first quarter of 2017. Diluted earnings per share increased 27.9% to $0.78 per share for the first quarter of 2018 compared to $0.61 per share for the same quarter a year ago.
First quarter results include a $3.9 million decrease in the fair value of equity securities that was recorded in the income statement due to the adoption of a new accounting pronouncement, which reduced earnings per share by $0.03. Adjusted to these items, first quarter earnings per share was $0.81 per share. Heng will further discuss this item in his remarks.
In the first quarter of 2018, our gross loans grew by $144 million to $13 billion or an increase of 4.5% on an annualized basis. Increases in loans for the first quarter of 2018 resulted primarily from residential and commercial mortgage loans growth of $137 million or 18% annualized and $128 million or 8% annualized respectively, which were partially offset by a decrease in commercial loans of $25 million and construction loans of $91 million. We anticipate loan growth in 2018 to be around 7% to 8%. For the first quarter of 2018, our total deposits increased $322 million or 10.2% annualized to $13 billion as we benefited from our Chinese New Year City promotion.
The systems conversion for Far East National Bank onto Cathay's systems is scheduled for this weekend, which will permit the completion of the integration of our operations. On July 14, 2017 until the system conversion, we have been running two sets of back room operations, which will no longer be necessary. We anticipate that additional cost savings will occur over time as additional branch consolidations occur.
With that, I'll turn the floor over to our EVP and CFO, Heng Chen to discuss the first quarter
CEO and President
EVP and CFO
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