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Cathay General Bancorp Announces Third Quarter 2022 Results

Cathay General Bancorp (the “Company”, “we”, “us”, or “our”) (Nasdaq: CATY), the holding company for Cathay Bank, today announced its unaudited financial results for the quarter ended September 30, 2022. The Company reported net income of $99.0 million, or $1.35 per share, for the third quarter of 2022.

FINANCIAL PERFORMANCE

Three months ended
(unaudited) September 30, 2022 June 30, 2022 September 30, 2021
Net income

$99.0 million

$89.0 million

$72.4 million

Basic earnings per common share

$1.35

$1.19

$0.93

Diluted earnings per common share

$1.35

$1.18

$0.93

Return on average assets

1.81%

1.69%

1.45%

Return on average total stockholders' equity

15.94%

14.62%

11.61%

Efficiency ratio

36.35%

39.06%

43.85%

THIRD QUARTER HIGHLIGHTS

  • Total loans increased to $18.1 billion, or 7.8% annualized, in the third quarter.
  • The net interest margin increased to 3.83% in the third quarter of 2022 from 3.22% in third quarter of 2021.
  • Earnings per share increased 14.1% compared to second quarter of 2022 and 45.2% when compared to same quarter in 2021.



    “Net interest income for the quarter increased by 29.5% compared to the same quarter last year primarily as a result of loan growth and the higher level of interest rates. During the third quarter, we repurchased 1.08 million shares at an average cost of $42.88 per share, for a total of $46.3 million.” commented Chang M. Liu, President and Chief Executive Officer of the Company.

THIRD QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended September 30, 2022, was $99.0 million, an increase of $26.6 million, or 36.7%, compared to net income of $72.4 million for the same quarter a year ago. Diluted earnings per share for the quarter ended September 30, 2022, was $1.35 per share compared to $0.93 per share for the same quarter a year ago.

Return on average stockholders’ equity was 15.94% and return on average assets was 1.81% for the quarter ended September 30, 2022, compared to a return on average stockholders’ equity of 11.61% and a return on average assets of 1.45% for the same quarter a year ago.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $45.0 million, or 29.5%, to $197.5 million during the third quarter of 2022, compared to $152.5 million during the same quarter a year ago. The increase was due primarily to an increase in interest income from loans and securities.

The net interest margin was 3.83% for the third quarter of 2022 compared to 3.22% for the third quarter of 2021 and 3.52% for the second quarter of 2022.

For the third quarter of 2022, the yield on average interest-earning assets was 4.38%, the cost of funds on average interest-bearing liabilities was 0.78%, and the cost of interest-bearing deposits was 0.69%. In comparison, for the third quarter of 2021, the yield on average interest-earning assets was 3.56%, the cost of funds on average interest-bearing liabilities was 0.48%, and the cost of interest-bearing deposits was 0.44%. The increase in the yield on average interest-earning assets resulted mainly from higher interest rates on loans and securities. 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 3.60% for the quarter ended September 30, 2022, compared to 3.08% for the same quarter a year ago.

Provision/(reversal) for credit losses

The Company recorded a provision for credit losses of $2.0 million in the third quarter of 2022 compared with $2.5 million in the second quarter of 2022 and $3.1 million in the third quarter of 2021. As of September 30, 2022, the allowance for loan losses increased $12.7 million to $148.8 million, or 0.82% of gross loans, compared to $136.2 million, or 0.83% of gross loans, as of December 31, 2021.

Three months ended

Nine months ended September 30,

September 30, 2022

June 30, 2022

September 30, 2021

2022

2021

(In thousands) (Unaudited)
Charge-offs:
Commercial loans

$

2,091

$

50

 

$

2,649

$

2,362

$

19,499

Real estate loans (1)

 

137

 

1

 

 

3

 

138

 

3

Total charge-offs

 

2,228

 

51

 

 

2,652

 

2,500

 

19,502

Recoveries:
Commercial loans

 

1,576

 

175

 

 

121

 

2,109

 

1,545

Construction loans

 

 

 

 

76

 

6

 

76

Real estate loans (1)

 

95

 

94

 

 

144

 

336

 

558

Total recoveries

 

1,671

 

269

 

 

341

 

2,451

 

2,179

Net charge-offs/(recoveries)

$

557

$

(218

)

$

2,311

$

49

$

17,323

(1)

Real estate loans include commercial mortgage loans, residential mortgage loans, equity lines and installment & other loans.

Non-interest income

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wire transfer fees, and other sources of fee income, was $9.9 million for the third quarter of 2022, a decrease of $2.3 million, or 18.9%, compared to $12.2 million for the third quarter of 2021. The decrease was primarily due to an increase of $3.7 million in unrealized losses on equity securities when compared to the same quarter a year ago.

Non-interest expense

Non-interest expense increased $3.2 million, or 4.4%, to $75.4 million in the third quarter of 2022 compared to $72.2 million in the same quarter a year ago. The increase in non-interest expense in the third quarter of 2022 was primarily due to an increase of $1.2 million in salaries and employee benefits and an increase of $1.1 million in marketing expense when compared to the same quarter a year ago. The efficiency ratio was 36.4% in the third quarter of 2022 compared to 43.9% for the same quarter a year ago.

Income taxes

The effective tax rate for the third quarter of 2022 was 23.8% compared to 19.1% for the third quarter of 2021. The effective tax rate includes the impact of alternative energy investments and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans were $18.1 billion as of September 30, 2022, an increase of $1.8 billion, or 11.0%, from $16.3 billion as of December 31, 2021. The increase was primarily due to an increase of $385.0 million, or 12.9%, in commercial loans, an increase of $948.6 million, or 22.7%, in residential mortgage loans, which included $568.5 million from the acquisition of certain HSBC West Coast branches, and an increase of $534.5 million, or 6.6%, in commercial mortgage loans, offset, in part, by a decrease of $69.0 million, or 16.5%, in home equity loans. For the third quarter of 2022, total loans, increased by $318.9 million or 7.8% annualized.

The loan balances and composition as of September 30, 2022, compared to December 31, 2021, and September 30, 2021, are presented below:

September 30, 2022 December 31, 2021 September 30, 2021
(In thousands) (Unaudited)
Commercial loans

$

3,361,523

 

$

2,891,914

 

$

2,702,333

 

Paycheck protection program loans

 

5,914

 

 

90,485

 

 

169,360

 

Residential mortgage loans

 

5,130,650

 

 

4,182,006

 

 

4,144,789

 

Commercial mortgage loans

 

8,677,733

 

 

8,143,272

 

 

7,835,528

 

Equity lines

 

350,448

 

 

419,487

 

 

433,206

 

Real estate construction loans

 

573,421

 

 

611,031

 

 

688,195

 

Installment and other loans

 

7,114

 

 

4,284

 

 

3,370

 

Gross loans

$

18,106,803

 

$

16,342,479

 

$

15,976,781

 

 
Allowance for loan losses

 

(148,817

)

 

(136,157

)

 

(131,945

)

Unamortized deferred loan fees

 

(6,936

)

 

(4,321

)

 

(3,835

)

Total loans, net

$

17,951,050

 

$

16,202,001

 

$

15,841,001

 

Total deposits were $18.6 billion as of September 30, 2022, an increase of $517.8 million, or 2.9%, from $18.1 billion as of December 31, 2021. During the third quarter of 2022, our deposits increased by $288.4 million, or 6.4% annualized.

The deposit balances and composition as of September 30, 2022, compared to December 31, 2021, and September 30, 2021, are presented below:

September 30, 2022 December 31, 2021 September 30, 2021
(In thousands) (Unaudited)
Non-interest-bearing demand deposits

$

4,398,152

$

4,492,054

$

4,024,504

NOW deposits

 

2,570,036

 

2,522,442

 

2,202,956

Money market deposits

 

4,935,266

 

4,611,579

 

4,132,912

Savings deposits

 

1,128,823

 

915,515

 

920,138

Time deposits

 

5,543,474

 

5,517,252

 

5,726,360

Total deposits

$

18,575,751

$

18,058,842

$

17,006,870

ASSET QUALITY REVIEW

As of September 30, 2022, total non-accrual loans were $68.1 million, an increase of $2.3 million, or 3.5%, from $65.8 million as of December 31, 2021, and a decrease of $557 thousand, or 0.8%, from $68.7 million as of September 30, 2021.

The allowance for loan losses was $148.8 million and the allowance for off-balance sheet unfunded credit commitments was $7.5 million as of September 30, 2022. The allowances represent the amount estimated by management to be appropriate to absorb credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for loan losses represented 0.82% of period-end gross loans, and 208.7% of non-performing loans as of September 30, 2022. The comparable ratios were 0.83% of period-end gross loans, and 202.4% of non-performing loans as of December 31, 2021.

The changes in non-performing assets and troubled debt restructurings as of September 30, 2022, compared to December 31, 2021, and September 30, 2021, are presented below:

(Dollars in thousands) (Unaudited) September 30, 2022 December 31, 2021 %

Change
September 30, 2021 %

Change
Non-performing assets
Accruing loans past due 90 days or more

$

3,172

 

$

1,439

 

120

 

$

4,333

 

(27

)

Non-accrual loans:
Construction loans

 

 

 

 

 

 

5,491

 

(100

)

Commercial mortgage loans

 

26,911

 

 

38,173

 

(30

)

 

36,968

 

(27

)

Commercial loans

 

26,604

 

 

16,558

 

61

 

 

17,098

 

56

 

Residential mortgage loans

 

14,601

 

 

11,115

 

31

 

 

9,125

 

60

 

Installment and other loans

 

9

 

 

 

 

 

 

 

Total non-accrual loans

$

68,125

 

$

65,846

 

3

 

$

68,682

 

(1

)

Total non-performing loans

 

71,297

 

 

67,285

 

6

 

 

73,015

 

(2

)

Other real estate owned

 

4,067

 

 

4,368

 

(7

)

 

5,251

 

(23

)

Total non-performing assets

$

75,364

 

$

71,653

 

5

 

$

78,266

 

(4

)

Accruing troubled debt restructurings (TDRs)

$

15,208

 

$

12,837

 

18

 

$

24,406

 

(38

)

 
Allowance for loan losses

$

148,817

 

$

136,157

 

9

 

$

131,945

 

13

 

Total gross loans outstanding, at period-end

$

18,106,803

 

$

16,342,479

 

11

 

$

15,976,781

 

13

 

 
Allowance for loan losses to non-performing loans, at period-end

 

208.73

%

 

202.36

%

 

180.71

%

Allowance for loan losses to gross loans, at period-end

 

0.82

%

 

0.83

%

 

0.83

%

The ratio of non-performing assets to total assets was 0.3% as of September 30, 2022, compared to 0.3% as of December 31, 2021. Total non-performing assets increased $3.7 million, or 5.2%, to $75.4 million as of September 30, 2022, compared to $71.7 million as of December 31, 2021, primarily due to an increase of $2.3 million, or 3.5%, in nonaccrual loans and an increase of $1.7 million, or 120.4%, in accruing loans past due 90 days or more, offset in part, by a decrease of $301 thousand, or 6.9%, in other real estate owned.

CAPITAL ADEQUACY REVIEW

As of September 30, 2022, the Company’s Tier 1 risk-based capital ratio of 12.06%, total risk-based capital ratio of 13.59%, and Tier 1 leverage capital ratio of 10.02%, calculated under the Basel III capital rules, continue to place the Company in the “well capitalized” category for regulatory purposes, which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 8%, a total risk-based capital ratio equal to or greater than 10%, and a Tier 1 leverage capital ratio equal to or greater than 5%. As of December 31, 2021, the Company’s Tier 1 risk-based capital ratio was 12.80%, total risk-based capital ratio was 14.41%, and Tier 1 leverage capital ratio was 10.40%.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its third quarter 2022 financial results this afternoon, Monday, October 24, 2022, at 3:00 p.m., Pacific Time. Analysts and investors may dial in and participate in the question-and-answer session. To access the call, please dial 1-866-652-5200 and refer to Conference Code 10171990. The presentation accompanying this call and access to the live webcast is available on our site at www.cathaygeneralbancorp.com and a replay of the webcast will be archived for one year within 24 hours after the event.

ABOUT CATHAY GENERAL BANCORP

Cathay General Bancorp is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services. Cathay Bank currently operates 44 branches in California, 9 branches in New York State, four in Washington State, two in Illinois, two in Texas, one in Maryland, Massachusetts, Nevada, and New Jersey, one in Hong Kong, and a representative office in Taipei, Beijing, and Shanghai. Cathay Bank’s website is at www.cathaybank.com. Cathay General Bancorp’s website is at www.cathaygeneralbancorp.com. Information set forth on such websites is not incorporated into this press release.

FORWARD-LOOKING STATEMENTS

Statements made in this press release, other than statements of historical fact, are forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management’s beliefs, projections, and assumptions concerning future results and events. These forward-looking statements may include, but are not limited to, such words as “aims,” “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “predicts,” “potential,” “possible,” “optimistic,” “seeks,” “shall,” “should,” “will,” and variations of these words and similar expressions. Forward-looking statements are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from local, regional, national and international business, market and economic conditions and events (such as the COVID-19 pandemic) and the impact they may have on us, our customers and our operations, assets and liabilities; possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to including potential future supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation including the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act; higher capital requirements from the implementation of the Basel III capital standards; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; our ability to generate anticipated returns on our investments and financings, including in tax-advantaged projects; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; natural disasters, public health crises (such as the COVID-19 pandemic) and geopolitical events; general economic or business conditions in Asia, and other regions where Cathay Bank has operations; failures, interruptions, or security breaches of our information systems; our ability to adapt our systems to technological changes; risk management processes and strategies; adverse results in legal proceedings; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in accounting standards or tax laws and regulations; market disruption and volatility; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuance of preferred stock; successfully raising additional capital, if needed, and the resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; and general competitive, economic political, and market conditions and fluctuations.

These and other factors are further described in Cathay General Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2021 (Item 1A in particular), other reports filed with the Securities and Exchange Commission (“SEC”), and other filings Cathay General Bancorp makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this press release. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. 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 statement to reflect circumstances, developments or events occurring after the date on which the statement is made or to reflect the occurrence of unanticipated events.

CATHAY GENERAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 
Three months ended Nine months ended September 30,
(Dollars in thousands, except per share data)

September 30, 2022

June 30, 2022

September 30, 2021

2022

2021

 
FINANCIAL PERFORMANCE
Net interest income before (reversal)/provision for credit losses

$

197,529

 

$

175,163

 

$

152,484

 

$

531,883

 

$

442,303

 

Provision/(reversal) for credit losses

 

2,000

 

 

2,500

 

 

3,050

 

 

13,143

 

 

(19,508

)

Net interest income after (reversal)/provision for credit losses

 

195,529

 

 

172,663

 

 

149,434

 

 

518,740

 

 

461,811

 

Non-interest income

 

9,876

 

 

14,618

 

 

12,216

 

 

44,726

 

 

34,799

 

Non-interest expense

 

75,388

 

 

74,123

 

 

72,215

 

 

222,208

 

 

213,325

 

Income before income tax expense

 

130,017

 

 

113,158

 

 

89,435

 

 

341,258

 

 

283,285

 

Income tax expense

 

30,982

 

 

24,180

 

 

17,038

 

 

78,217

 

 

60,305

 

Net income

$

99,035

 

$

88,978

 

$

72,397

 

$

263,041

 

$

222,980

 

 
Net income per common share
Basic

$

1.35

 

$

1.19

 

$

0.93

 

$

3.53

 

$

2.83

 

Diluted

$

1.35

 

$

1.18

 

$

0.93

 

$

3.52

 

$

2.82

 

 
Cash dividends paid per common share

$

0.34

 

$

0.34

 

$

0.31

 

$

1.02

 

$

0.93

 

 
 
SELECTED RATIOS
Return on average assets

 

1.81

%

 

1.69

%

 

1.45

%

 

1.66

%

 

1.54

%

Return on average total stockholders’ equity

 

15.94

%

 

14.62

%

 

11.61

%

 

14.35

%

 

12.11

%

Efficiency ratio

 

36.35

%

 

39.06

%

 

43.85

%

 

38.54

%

 

44.71

%

Dividend payout ratio

 

25.30

%

 

28.70

%

 

33.34

%

 

28.94

%

 

32.89

%

 
 
YIELD ANALYSIS (Fully taxable equivalent)
Total interest-earning assets

 

4.38

%

 

3.81

%

 

3.56

%

 

3.91

%

 

3.62

%

Total interest-bearing liabilities

 

0.78

%

 

0.41

%

 

0.48

%

 

0.53

%

 

0.56

%

Net interest spread

 

3.60

%

 

3.40

%

 

3.08

%

 

3.38

%

 

3.06

%

Net interest margin

 

3.83

%

 

3.52

%

 

3.22

%

 

3.54

%

 

3.22

%

 
 
CAPITAL RATIOS September 30, 2022 December 31, 2021 September 30, 2021
Tier 1 risk-based capital ratio

 

12.06

%

 

12.80

%

 

13.29

%

Total risk-based capital ratio

 

13.59

%

 

14.41

%

 

14.93

%

Tier 1 leverage capital ratio

 

10.02

%

 

10.40

%

 

10.67

%

.

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
(In thousands, except share and per share data) September 30, 2022 December 31, 2021 September 30, 2021
 
Assets
Cash and due from banks

$

200,051

 

$

134,141

 

$

156,287

 

Short-term investments and interest bearing deposits

 

1,063,294

 

 

2,315,563

 

 

1,667,875

 

Securities available-for-sale (amortized cost of $1,577,311 at September 30, 2022, $1,126,867 at December 31, 2021 and $1,073,074 at September 30, 2021)

 

1,414,411

 

 

1,127,309

 

 

1,079,216

 

Loans

 

18,106,803

 

 

16,342,479

 

 

15,976,781

 

Less: Allowance for loan losses

 

(148,817

)

 

(136,157

)

 

(131,945

)

Unamortized deferred loan fees, net

 

(6,936

)

 

(4,321

)

 

(3,835

)

Loans, net

 

17,951,050

 

 

16,202,001

 

 

15,841,001

 

Equity securities

 

23,123

 

 

22,319

 

 

20,117

 

Federal Home Loan Bank stock

 

17,250

 

 

17,250

 

 

17,250

 

Other real estate owned, net

 

4,067

 

 

4,368

 

 

5,251

 

Affordable housing investments and alternative energy partnerships, net

 

325,439

 

 

299,211

 

 

313,517

 

Premises and equipment, net

 

96,419

 

 

99,402

 

 

100,344

 

Customers’ liability on acceptances

 

6,899

 

 

8,112

 

 

13,185

 

Accrued interest receivable

 

71,177

 

 

56,994

 

 

56,844

 

Goodwill

 

375,696

 

 

372,189

 

 

372,189

 

Other intangible assets, net

 

6,948

 

 

4,627

 

 

4,831

 

Right-of-use assets- operating leases

 

30,679

 

 

27,834

 

 

29,179

 

Other assets

 

303,628

 

 

195,403

 

 

183,354

 

Total assets

$

21,890,131

 

$

20,886,723

 

$

19,860,440

 

 
Liabilities and Stockholders’ Equity
Deposits
Non-interest-bearing demand deposits

$

4,398,152

 

$

4,492,054

 

$

4,024,504

 

Interest-bearing deposits:
NOW deposits

 

2,570,036

 

 

2,522,442

 

 

2,202,956

 

Money market deposits

 

4,935,266

 

 

4,611,579

 

 

4,132,912

 

Savings deposits

 

1,128,823

 

 

915,515

 

 

920,138

 

Time deposits

 

5,543,474

 

 

5,517,252

 

 

5,726,360

 

Total deposits

 

18,575,751

 

 

18,058,842

 

 

17,006,870

 

 
Advances from the Federal Home Loan Bank

 

360,000

 

 

20,000

 

 

20,000

 

Other borrowings for affordable housing investments

 

22,651

 

 

23,145

 

 

23,197

 

Long-term debt

 

119,136

 

 

119,136

 

 

119,136

 

Acceptances outstanding

 

6,899

 

 

8,112

 

 

13,185

 

Lease liabilities - operating leases

 

33,931

 

 

30,694

 

 

32,028

 

Other liabilities

 

352,204

 

 

180,543

 

 

182,733

 

Total liabilities

 

19,470,572

 

 

18,440,472

 

 

17,397,149

 

Stockholders' equity

 

2,419,559

 

 

2,446,251

 

 

2,463,291

 

Total liabilities and equity

$

21,890,131

 

$

20,886,723

 

$

19,860,440

 

 
Book value per common share

$

32.96

 

$

32.29

 

$

31.89

 

Number of common shares outstanding

 

73,411,960

 

 

75,750,862

 

 

77,240,215

 

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

Three months ended

Nine months ended September 30,

September 30, 2022

June 30, 2022

September 30, 2021

2022

2021

(In thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loan receivable, including loan fees

$

211,541

 

$

181,022

 

$

163,948

 

$

558,657

$

485,162

 

Investment securities

 

7,483

 

 

5,748

 

 

3,707

 

 

18,059

 

9,963

 

Federal Home Loan Bank stock

 

258

 

 

255

 

 

258

 

 

774

 

730

 

Deposits with banks

 

6,732

 

 

2,508

 

 

714

 

 

10,003

 

1,467

 

Total interest and dividend income

 

226,014

 

 

189,533

 

 

168,627

 

 

587,493

 

497,322

 

 
INTEREST EXPENSE
Time deposits

 

10,218

 

 

5,724

 

 

9,299

 

 

22,002

 

33,363

 

Other deposits

 

13,871

 

 

6,895

 

 

5,243

 

 

25,894

 

16,302

 

Advances from Federal Home Loan Bank

 

2,941

 

 

312

 

 

146

 

 

3,396

 

1,036

 

Long-term debt

 

1,455

 

 

1,439

 

 

1,455

 

 

4,318

 

4,318

 

Total interest expense

 

28,485

 

 

14,370

 

 

16,143

 

 

55,610

 

55,019

 

 
Net interest income before (reversal)/provision for credit losses

 

197,529

 

 

175,163

 

 

152,484

 

 

531,883

 

442,303

 

Provision/(reversal) for credit losses

 

2,000

 

 

2,500

 

 

3,050

 

 

13,143

 

(19,508

)

Net interest income after (reversal)/provision for credit losses

 

195,529

 

 

172,663

 

 

149,434

 

 

518,740

 

461,811

 

 
NON-INTEREST INCOME
Net (losses)/gains from equity securities

 

(3,661

)

 

(955

)

 

3

 

 

1,358

 

(3,628

)

Securities gains, net

 

 

 

 

 

 

 

 

853

 

Letters of credit commissions

 

1,609

 

 

1,602

 

 

1,764

 

 

4,767

 

5,236

 

Depository service fees

 

1,690

 

 

1,632

 

 

1,401

 

 

4,993

 

4,107

 

Wealth management fees

 

4,184

 

 

3,956

 

 

3,578

 

 

12,494

 

11,074

 

Other operating income

 

6,054

 

 

8,383

 

 

5,470

 

 

21,114

 

17,157

 

Total non-interest income

 

9,876

 

 

14,618

 

 

12,216

 

 

44,726

 

34,799

 

 
NON-INTEREST EXPENSE
Salaries and employee benefits

 

34,677

 

 

37,301

 

 

33,437

 

 

107,453

 

98,917

 

Occupancy expense

 

5,975

 

 

5,562

 

 

5,136

 

 

17,150

 

15,142

 

Computer and equipment expense

 

3,509

 

 

3,297

 

 

3,175

 

 

9,762

 

10,093

 

Professional services expense

 

6,337

 

 

7,704

 

 

6,232

 

 

20,738

 

16,698

 

Data processing service expense

 

3,484

 

 

3,420

 

 

3,524

 

 

9,813

 

10,422

 

FDIC and State assessments

 

2,003

 

 

2,194

 

 

1,830

 

 

5,999

 

5,195

 

Marketing expense

 

2,005

 

 

1,740

 

 

945

 

 

4,692

 

5,270

 

Other real estate owned expense/(income)

 

55

 

 

(33

)

 

(88

)

 

93

 

197

 

Amortization of investments in low income housing and

alternative energy partnerships

 

11,949

 

 

7,235

 

 

12,411

 

 

27,471

 

34,663

 

Amortization of core deposit intangibles

 

250

 

 

250

 

 

172

 

 

724

 

515

 

Cost associated with debt redemption

 

 

 

 

 

 

 

 

732

 

Acquisition, integration and restructuring costs

 

59

 

 

91

 

 

476

 

 

4,086

 

476

 

Other operating expense

 

5,085

 

 

5,362

 

 

4,965

 

 

14,227

 

15,005

 

Total non-interest expense

 

75,388

 

 

74,123

 

 

72,215

 

 

222,208

 

213,325

 

 
Income before income tax expense

 

130,017

 

 

113,158

 

 

89,435

 

 

341,258

 

283,285

 

Income tax expense

 

30,982

 

 

24,180

 

 

17,038

 

 

78,217

 

60,305

 

Net income

$

99,035

 

$

88,978

 

$

72,397

 

$

263,041

$

222,980

 

Net income per common share:
Basic

$

1.35

 

$

1.19

 

$

0.93

 

$

3.53

$

2.83

 

Diluted

$

1.35

 

$

1.18

 

$

0.93

 

$

3.52

$

2.82

 

 
Cash dividends paid per common share

$

0.34

 

$

0.34

 

$

0.31

 

$

1.02

$

0.93

 

Basic average common shares outstanding

 

73,158,096

 

 

74,958,913

 

 

77,846,424

 

 

74,475,032

 

78,841,899

 

Diluted average common shares outstanding

 

73,444,096

 

 

75,268,485

 

 

78,153,408

 

 

74,799,324

 

79,128,644

 

CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

 
Three months ended
(In thousands) September 30, 2022 June 30, 2022 September 30, 2021
Interest-earning assets Average

Balance
Average

Yield/Rate (1)
Average

Balance
Average

Yield/Rate (1)
Average

Balance
Average

Yield/Rate (1)
Loans (1)

$

17,923,495

4.68

%

$

17,530,650

4.14

%

$

15,798,496

4.12

%

Taxable investment securities

 

1,364,013

2.18

%

 

1,249,679

1.84

%

 

1,058,004

1.39

%

FHLB stock

 

18,756

5.46

%

 

17,250

5.93

%

 

17,250

5.93

%

Deposits with banks

 

1,178,261

2.27

%

 

1,173,702

0.86

%

 

1,893,785

0.15

%

Total interest-earning assets

$

20,484,525

4.38

%

$

19,971,281

3.81

%

$

18,767,535

3.56

%

 
Interest-bearing liabilities
Interest-bearing demand deposits

$

2,508,526

0.30

%

$

2,459,940

0.13

%

$

2,109,632

0.10

%

Money market deposits

 

5,153,566

0.90

%

 

5,291,824

0.45

%

 

4,228,025

0.43

%

Savings deposits

 

1,151,126

0.07

%

 

1,183,821

0.07

%

 

914,540

0.07

%

Time deposits

 

5,013,213

0.81

%

 

4,881,365

0.47

%

 

5,882,576

0.63

%

Total interest-bearing deposits

$

13,826,431

0.69

%

$

13,816,950

0.37

%

$

13,134,773

0.44

%

Other borrowed funds

 

496,811

2.35

%

 

82,660

1.52

%

 

43,246

1.34

%

Long-term debt

 

119,136

4.85

%

 

119,136

4.85

%

 

119,136

4.84

%

Total interest-bearing liabilities

 

14,442,378

0.78

%

 

14,018,746

0.41

%

 

13,297,155

0.48

%

 
Non-interest-bearing demand deposits

 

4,456,214

 

4,391,925

 

3,830,485

 
Total deposits and other borrowed funds

$

18,898,592

$

18,410,671

$

17,127,640

 
Total assets

$

21,658,860

$

21,079,634

$

19,812,442

Total equity

$

2,465,193

$

2,441,128

$

2,473,166

 
Nine months ended
(In thousands) September 30, 2022 September 30, 2021
Interest-earning assets Average

Balance
Average

Yield/Rate (1)
Average

Balance
Average

Yield/Rate (1)
Loans (1)

$

17,468,247

4.28

%

$

15,725,324

4.12

%

Taxable investment securities

 

1,263,341

1.91

%

 

1,010,328

1.32

%

FHLB stock

 

17,757

5.83

%

 

17,250

5.66

%

Deposits with banks

 

1,332,491

1.00

%

 

1,605,851

0.12

%

Total interest-earning assets

$

20,081,836

3.91

%

$

18,358,753

3.62

%

 
Interest-bearing liabilities
Interest-bearing demand deposits

$

2,456,556

0.17

%

$

1,989,833

0.12

%

Money market deposits

 

5,088,227

0.58

%

 

3,913,073

0.47

%

Savings deposits

 

1,137,485

0.07

%

 

885,863

0.09

%

Time deposits

 

5,060,286

0.58

%

 

6,105,604

0.73

%

Total interest-bearing deposits

$

13,742,554

0.47

%

$

12,894,373

0.51

%

Other borrowed funds

 

209,200

2.17

%

 

86,410

1.60

%

Long-term debt

 

119,136

4.85

%

 

119,136

4.85

%

Total interest-bearing liabilities

 

14,070,890

0.53

%

 

13,099,919

0.56

%

 
Non-interest-bearing demand deposits

 

4,403,195

 

3,613,026

Total deposits and other borrowed funds

$

18,474,085

$

16,712,945

 
Total assets

$

21,203,918

$

19,394,431

Total equity

$

2,450,650

$

2,461,895

(1)

Yields and interest earned include net loan fees. Non-accrual loans are included in the average balance.

CATHAY GENERAL BANCORP

GAAP to NON-GAAP RECONCILIATION

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible equity to tangible assets ratio are non-GAAP financial measures. Tangible equity and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.

September 30, 2022 June 30, 2022 September 30, 2021
 
Stockholders' equity (a)

$

2,419,559

 

$

2,431,532

 

$

2,463,291

 

Less: Goodwill

 

(375,696

)

 

(375,696

)

 

(372,189

)

Other intangible assets (1)

 

(6,948

)

 

(7,231

)

 

(4,831

)

Tangible equity (b)

$

2,036,915

 

$

2,048,605

 

$

2,086,271

 

 
Total assets (c)

$

21,890,131

 

$

21,235,553

 

$

19,860,440

 

Less: Goodwill

 

(375,696

)

 

(375,696

)

 

(372,189

)

Other intangible assets (1)

 

(6,948

)

 

(7,231

)

 

(4,831

)

Tangible assets (d)

$

21,507,487

 

$

20,852,626

 

$

19,483,420

 

 
Number of common shares outstanding (e)

 

73,411,960

 

 

74,421,884

 

 

77,240,215

 

 
Total stockholders' equity to total assets ratio (a)/(c)

 

11.05

%

 

11.45

%

 

12.40

%

Tangible equity to tangible assets ratio (b)/(d)

 

9.47

%

 

9.82

%

 

10.71

%

Tangible book value per share (b)/(e)

$

27.75

 

$

27.53

 

$

27.01

 

 
Three Months Ended Nine Months Ended
September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Net Income

$

99,035

 

$

88,978

 

$

72,397

 

$

263,041

 

$

222,980

 

Add: Amortization of other intangibles

 

250

 

 

277

 

 

205

 

 

724

 

 

626

 

Tax effect of amortization adjustments (2)

 

(74

)

 

(82

)

 

(61

)

 

(215

)

 

(186

)

Tangible net income (f)

$

99,211

 

$

89,173

 

$

72,541

 

$

263,550

 

$

223,420

 

 
Return on tangible common equity (3) (f)/(b)

 

19.48

%

 

17.41

%

 

13.91

%

 

17.25

%

 

14.28

%

(1)

Includes core deposit intangibles and mortgage servicing

(2)

Applied the statutory rate of 29.65%.

(3)

Annualized

 

Contacts

Heng W. Chen

(626) 279-3652

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