CATY Cathay General Bancorp

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 June 30, 2023. The Company reported net income of $93.2 million, or $1.28 per share, for the second quarter of 2023.

FINANCIAL PERFORMANCE

Three months ended

(unaudited)

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Net income $ 93.2 million $ 96.0 million $89.0 million Basic earnings per common share

$1.29

$1.32

$1.19

Diluted earnings per common share

$1.28

$1.32

$1.18

Return on average assets

1.67%

1.76%

1.69%

Return on average total stockholders' equity

14.47%

15.39%

14.62%

Efficiency ratio

45.36%

40.25%

39.06%

SECOND QUARTER HIGHLIGHTS

• Total gross loans increased by $635.5 million, or 13.9% annualized, to $19.0 billion in the second quarter of 2023.
• The net interest margin decreased to 3.44% in the second quarter of 2023 from 3.74% in the first quarter of 2023.
• Diluted earnings per share decreased to $1.28 for the second quarter of 2023 compared to $1.32 for the first quarter of 2023.

“For the second quarter of 2023, our total loans increased by $635.5 million or 13.9% annualized to $19.0 billion. We are pleased by the $448.1 million increase or 9.7% in total deposits for the quarter,” commented Chang M. Liu, President and Chief Executive Officer of the Company.

INCOME STATEMENT REVIEW SECOND QUARTER 2023 COMPARED TO THE FIRST QUARTER 2023

Net income for the quarter ended June 30, 2023 was $93.2 million, a decrease of $2.8 million, or 2.9%, compared to net income of $96.0 million for the first quarter of 2023. Net income for the second quarter of 2023 included a $10.7 million unrealized gain on equity securities, or $0.10 per diluted share. Diluted earnings per share for the second quarter of 2023 was $1.28 per share compared to $1.32 per share for the first quarter of 2023.

Return on average stockholders’ equity was 14.47% and return on average assets was 1.67% for the quarter ended June 30, 2023, compared to a return on average stockholders’ equity of 15.39% and a return on average assets of 1.76% in the first quarter of 2023.

Net interest income before provision for credit losses

Net interest income before provision for credit losses decreased $10.9 million, or 5.7%, to $181.5 million during the second quarter of 2023, compared to $192.4 million in the first quarter of 2023. The decrease was due primarily to an increase in deposit interest expense, offset by an increase in income from loans and securities.

The net interest margin was 3.44% for the second quarter of 2023 compared to 3.74% for the first quarter of 2023.

For the second quarter of 2023, the yield on average interest-earning assets was 5.68%, the cost of funds on average interest-bearing liabilities was 2.99%, and the cost of interest-bearing deposits was 2.91%. In comparison, for the first quarter of 2023, the yield on average interest-earning assets was 5.54%, the cost of funds on average interest-bearing liabilities was 2.46%, and the cost of interest-bearing deposits was 2.40%. The increase in the costs of interest-bearing liabilities was mainly a result of higher interest rates on interest bearing deposits. 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 2.69% for the second quarter of 2023, compared to 3.08% for the first quarter of 2023.

Provision for credit losses

The Company recorded a provision for credit losses of $9.2 million in the second quarter of 2023 compared with $8.1 million in the first quarter of 2023. As of June 30, 2023, the allowance for credit losses, comprised of the reserve for loan losses and the reserve for unfunded loan commitments, increased $7.1 million to $165.6 million, or 0.87% of gross loans, compared to $158.5 million, or 0.87% of gross loans, as of March 31, 2023.

Three months ended

 

Six months ended June 30,

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

2023

 

2022

(In thousands) (Unaudited)

Charge-offs:

Commercial loans

$

2,448

$

3,911

$

50

 

$

6,359

$

271

 

Real estate loans (1)

 

34

 

3,990

 

1

 

 

4,024

 

1

 

Installment and other loans

 

1

 

6

 

—

 

 

7

 

—

 

Total charge-offs

 

2,483

 

7,907

 

51

 

 

10,390

 

272

 

Recoveries: Commercial loans

 

442

 

511

 

175

 

 

953

 

534

 

Construction loans

 

—

 

—

 

—

 

 

—

 

6

 

Real estate loans (1)

 

61

 

2,540

 

94

 

 

2,601

 

240

 

Total recoveries

 

503

 

3,051

 

269

 

 

3,554

 

780

 

Net charge-offs/(recoveries)

$

1,980

$

4,856

$

(218

)

$

6,836

$

(508

)

 

(1) Real estate loans include commercial mortgage loans, residential mortgage loans and equity lines.

Non-interest income

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 $23.1 million for the second quarter of 2023, an increase of $8.9 million, or 62.7%, compared to $14.2 million for the first quarter of 2023. The increase was primarily due to a $5.8 million increase in unrealized gains on equity securities and a decrease in the write-off of $3.0 million of an available for sale security from Signature Bank when compared to the first quarter of 2023.

Non-interest expense

Non-interest expense increased $9.6 million, or 11.5%, to $92.8 million in the second quarter of 2023 compared to $83.2 million in the first quarter of 2023. The increase in non-interest expense in the second quarter of 2023 was primarily due to an increase of $6.2 million in amortization expense of investments in low-income housing and alternative energy partnerships, an increase of $1.5 million in contributions to the Cathay Bank Foundation, and an increase of $1.5 million in professional services expenses offset, in part, by a decrease of $1.2 million in salaries and employee benefits when compared to the first quarter of 2023. The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, was 45.36% in the second quarter of 2023 compared to 40.25% for the first quarter of 2023.

Income taxes

The effective tax rate for the second quarter of 2023 was 9.2% compared to 16.8% for the first quarter of 2023. The effective tax rate includes the impact of alternative energy investments, including the impact of a new solar tax credit fund that closed in the second quarter of 2023, and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans were $18.95 billion as of June 30, 2023, an increase of $635.5 million, or 3.5%, from $18.32 billion as of March 31, 2023. The increase from March 31, 2023 was primarily due to an increase of $376.7 million, or 4.2%, in commercial mortgage loans, an increase of $164.8 million, or 5.2%, in commercial loans and an increase of $158.2 million, or 2.9%, in residential mortgage loans offset, in part, by a decrease of $37.3 million, or 6.7%, in real estate construction loans, and a decrease of $26.6 million, or 8.9%, in home equity loans.

The loan balances and composition as of June 30, 2023, compared to March 31, 2023, and June 30, 2022, are presented below:

June 30, 2023

 

March 31, 2023

 

June 30, 2022

(In thousands) (Unaudited)

Commercial loans

$ 3,317,868

$ 3,153,039

$ 3,194,509

Residential mortgage loans

5,542,466

5,384,220

5,045,383

Commercial mortgage loans

9,293,475

8,916,766

8,563,001

Equity lines

272,055

298,630

377,009

Real estate construction loans

521,673

558,967

602,052

Installment and other loans

5,257

5,717

5,934

Gross loans

$ 18,952,794

$ 18,317,339

$ 17,787,888

Allowance for loan losses

(155,109)

(144,884)

(148,772)

Unamortized deferred loan fees

(9,497)

(5,872)

(5,540)

Total loans, net

$ 18,788,188

$ 18,166,583

$ 17,633,576

Total deposits were $19.10 billion as of June 30, 2023, an increase of $448.1 million, or 2.4%, from $18.65 billion as of March 31, 2023.

The deposit balances and composition as of June 30, 2023, compared to March 31, 2023, and June 30, 2022, are presented below:

June 30, 2023

  March 31, 2023   June 30, 2022

(In thousands) (Unaudited)

Non-interest-bearing demand deposits

$ 3,561,237

 

$ 3,748,719

 

$ 4,433,959

NOW deposits

2,404,470

  2,354,195   2,494,524 Money market deposits

3,033,868

  3,014,500   5,322,510 Savings deposits

1,131,602

  891,061   1,178,572 Time deposits

8,965,826

  8,640,397   4,857,762 Total deposits

$ 19,097,003

 

$ 18,648,872

 

$ 18,287,327

ASSET QUALITY REVIEW

As of June 30, 2023, total non-accrual loans were $69.0 million, a decrease of $4.6 million, or 6.2%, from $73.6 million as of March 31, 2023.

The allowance for loan losses was $155.1 million and the allowance for off-balance sheet unfunded credit commitments was $10.5 million as of June 30, 2023. The allowances represent 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 loan losses represented 0.82% of period-end gross loans, and 206.89% of non-performing loans as of June 30, 2023. The comparable ratios were 0.79% of period-end gross loans, and 167.81% of non-performing loans as of March 31, 2023.

The changes in non-performing assets and modifications to borrowers experiencing financial difficulties as of June 30, 2023, compared to March 31, 2023, and June 30, 2022, are presented below:

(Dollars in thousands) (Unaudited)

June 30, 2023

 

March 31, 2023

 

% Change

 

June 30, 2022

 

% Change

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

$

5,968

 

$

12,756

 

(53

)

$

1,737

 

244

 

Non-accrual loans: Commercial mortgage loans

 

39,558

 

 

40,218

 

(2

)

 

15,141

 

161

 

Commercial loans

 

17,574

 

 

22,079

 

(20

)

 

27,849

 

(37

)

Residential mortgage loans

 

11,872

 

 

11,283

 

5

 

 

17,583

 

(32

)

Installment and other loans

 

—

 

 

—

 

—

 

 

79

 

(100

)

Total non-accrual loans

$

69,004

 

$

73,580

 

(6

)

$

60,652

 

14

 

Total non-performing loans

 

74,972

 

 

86,336

 

(13

)

 

62,389

 

20

 

Other real estate owned

 

4,067

 

 

4,067

 

—

 

 

4,067

 

—

 

Total non-performing assets

$

79,039

 

$

90,403

 

(13

)

$

66,456

 

19

 

Accruing loan modifications to borrowers experiencing financial difficulties (1)

$

—

 

$

—

 

—

 

$

—

 

—

 

Accruing troubled debt restructurings (TDRs)

$

—

 

$

—

 

—

 

$

12,675

 

(100

)

Allowance for loan losses

$

155,109

 

$

144,884

 

7

 

$

148,772

 

4

 

Total gross loans outstanding, at period-end

$

18,952,794

 

$

18,317,339

 

3

 

$

17,787,888

 

7

 

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

 

206.89

%

 

167.81

%

 

238.46

%

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

 

0.82

%

 

0.79

%

 

0.84

%

 

(1) Beginning after January 1, 2023, modifications are reported in accordance with the new guidance under ASU 2022-02.

 

The ratio of non-performing assets to total assets was 0.3% as of June 30, 2023, compared to 0.4% as of March 31, 2023. Total non-performing assets decreased $11.4 million, or 12.6%, to $79.0 million as of June 30, 2023, compared to $90.4 million as of March 31, 2023, primarily due to a decrease of $6.8 million, or 53.2%, in accruing loans past due 90 days or more and a decrease of $4.6 million, or 6.2%, in nonaccrual loans.

CAPITAL ADEQUACY REVIEW

As of June 30, 2023, the Company’s Tier 1 risk-based capital ratio of 12.38%, total risk-based capital ratio of 13.88%, and Tier 1 leverage capital ratio of 10.45%, 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 March 31, 2023, the Company’s Tier 1 risk-based capital ratio was 12.42%, total risk-based capital ratio was 13.94%, and Tier 1 leverage capital ratio was 10.27%.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its second quarter 2023 financial results this afternoon, Monday, July 24, 2023, 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 1-833-816-1377 and refer to Conference Code 10180640. 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 a publicly traded company (Nasdaq: CATY) and is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services and currently operate over 60 branches across the United States in California, New York, Washington, Texas, Illinois, Massachusetts, Maryland, Nevada, and New Jersey. Overseas, it has a branch outlet in Hong Kong, and a representative office in Beijing, Shanghai, and Taipei. To learn more about Cathay Bank, please visit 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 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 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, 2022 (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

 

Six months ended June 30,

(Dollars in thousands, except per share data)

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

2023

 

2022

  Financial performance Net interest income before provision for credit losses

$

181,533

 

$

192,435

 

$

175,163

 

$

373,968

 

$

334,354

 

Provision for credit losses

 

9,155

 

 

8,100

 

 

2,500

 

 

17,255

 

 

11,143

 

Net interest income after provision for credit losses

 

172,378

 

 

184,335

 

 

172,663

 

 

356,713

 

 

323,211

 

Non-interest income

 

23,110

 

 

14,244

 

 

14,618

 

 

37,354

 

 

34,850

 

Non-interest expense

 

92,821

 

 

83,186

 

 

74,123

 

 

176,007

 

 

146,820

 

Income before income tax expense

 

102,667

 

 

115,393

 

 

113,158

 

 

218,060

 

 

211,241

 

Income tax expense

 

9,447

 

 

19,386

 

 

24,180

 

 

28,833

 

 

47,235

 

Net income

$

93,220

 

$

96,007

 

$

88,978

 

$

189,227

 

$

164,006

 

  Net income per common share Basic

$

1.29

 

$

1.32

 

$

1.19

 

$

2.61

 

$

2.18

 

Diluted

$

1.28

 

$

1.32

 

$

1.18

 

$

2.60

 

$

2.17

 

  Cash dividends paid per common share

$

0.34

 

$

0.34

 

$

0.34

 

$

0.68

 

$

0.68

 

    Selected ratios Return on average assets

 

1.67

%

 

1.76

%

 

1.69

%

 

1.71

%

 

1.58

%

Return on average total stockholders’ equity

 

14.47

%

 

15.39

%

 

14.62

%

 

14.92

%

 

13.54

%

Efficiency ratio

 

45.36

%

 

40.25

%

 

39.06

%

 

42.79

%

 

39.77

%

Dividend payout ratio

 

26.46

%

 

25.63

%

 

28.70

%

 

26.04

%

 

31.13

%

    Yield analysis (Fully taxable equivalent) Total interest-earning assets

 

5.68

%

 

5.54

%

 

3.81

%

 

5.61

%

 

3.67

%

Total interest-bearing liabilities

 

2.99

%

 

2.46

%

 

0.41

%

 

2.73

%

 

0.39

%

Net interest spread

 

2.69

%

 

3.08

%

 

3.40

%

 

2.88

%

 

3.27

%

Net interest margin

 

3.44

%

 

3.74

%

 

3.52

%

 

3.59

%

 

3.39

%

    Capital ratios June 30, 2023 March 31, 2023 June 30, 2022 Tier 1 risk-based capital ratio

 

12.38

%

 

12.42

%

 

12.18

%

Total risk-based capital ratio

 

13.88

%

 

13.94

%

 

13.74

%

Tier 1 leverage capital ratio

 

10.45

%

 

10.27

%

 

10.15

%

.

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

June 30, 2023

March 31, 2023

June 30, 2022

  Assets Cash and due from banks

$

187,886

 

$

252,048

 

$

141,734

 

Short-term investments and interest bearing deposits

 

1,294,379

 

 

881,282

 

 

1,012,228

 

Securities available-for-sale (amortized cost of $1,629,357 at June 30, 2023, $1,672,440 at March 31, 2023 and $1,336,293 at June 30, 2022)

 

1,487,321

 

 

1,541,250

 

 

1,234,571

 

Loans

 

18,952,794

 

 

18,317,339

 

 

17,787,888

 

Less: Allowance for loan losses

 

(155,109

)

 

(144,884

)

 

(148,772

)

Unamortized deferred loan fees, net

 

(9,497

)

 

(5,872

)

 

(5,540

)

Loans, net

 

18,788,188

 

 

18,166,583

 

 

17,633,576

 

Equity securities

 

37,674

 

 

27,011

 

 

26,785

 

Federal Home Loan Bank stock

 

25,242

 

 

17,250

 

 

17,250

 

Other real estate owned, net

 

4,067

 

 

4,067

 

 

4,067

 

Affordable housing investments and alternative energy partnerships, net

 

323,984

 

 

316,475

 

 

321,717

 

Premises and equipment, net

 

92,090

 

 

93,204

 

 

97,565

 

Customers’ liability on acceptances

 

4,364

 

 

6,547

 

 

12,650

 

Accrued interest receivable

 

86,211

 

 

82,420

 

 

61,939

 

Goodwill

 

375,696

 

 

375,696

 

 

375,696

 

Other intangible assets, net

 

4,992

 

 

5,564

 

 

7,231

 

Right-of-use assets- operating leases

 

31,399

 

 

29,906

 

 

31,883

 

Other assets

 

284,945

 

 

232,298

 

 

256,661

 

Total assets

$

23,028,438

 

$

22,031,601

 

$

21,235,553

 

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

$

3,561,237

 

$

3,748,719

 

$

4,433,959

 

Interest-bearing deposits: NOW deposits

 

2,404,470

 

 

2,354,195

 

 

2,494,524

 

Money market deposits

 

3,033,868

 

 

3,014,500

 

 

5,322,510

 

Savings deposits

 

1,131,602

 

 

891,061

 

 

1,178,572

 

Time deposits

 

8,965,826

 

 

8,640,397

 

 

4,857,762

 

Total deposits

 

19,097,003

 

 

18,648,872

 

 

18,287,327

 

  Advances from the Federal Home Loan Bank

 

815,000

 

 

360,000

 

 

95,000

 

Other borrowings for affordable housing investments

 

22,428

 

 

22,481

 

 

22,319

 

Long-term debt

 

119,136

 

 

119,136

 

 

119,136

 

Acceptances outstanding

 

4,364

 

 

6,547

 

 

12,650

 

Lease liabilities - operating leases

 

33,870

 

 

32,599

 

 

35,171

 

Other liabilities

 

333,966

 

 

299,627

 

 

232,418

 

Total liabilities

 

20,425,767

 

 

19,489,262

 

 

18,804,021

 

Stockholders' equity

 

2,602,671

 

 

2,542,339

 

 

2,431,532

 

Total liabilities and equity

$

23,028,438

 

$

22,031,601

 

$

21,235,553

 

  Book value per common share

$

35.87

 

$

35.12

 

$

32.67

 

Number of common shares outstanding

 

72,563,169

 

 

72,390,694

 

 

74,421,884

 

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended

 

Six months ended June 30,

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

2023

 

2022

(In thousands, except share and per share data)

Interest and Dividend Income Loan receivable, including loan fees

$

273,478

$

261,179

 

$

181,022

 

$

534,657

 

$

347,116

Investment securities

 

12,370

 

11,764

 

 

5,748

 

 

24,134

 

 

10,576

Federal Home Loan Bank stock

 

298

 

304

 

 

255

 

 

602

 

 

516

Deposits with banks

 

13,959

 

12,139

 

 

2,508

 

 

26,098

 

 

3,271

Total interest and dividend income

 

300,105

 

285,386

 

 

189,533

 

 

585,491

 

 

361,479

  Interest Expense Time deposits

 

79,975

 

64,174

 

 

5,724

 

 

144,149

 

 

11,784

Other deposits

 

30,659

 

23,817

 

 

6,895

 

 

54,476

 

 

12,023

Advances from Federal Home Loan Bank

 

5,498

 

2,598

 

 

312

 

 

8,096

 

 

455

Long-term debt

 

1,552

 

1,443

 

 

1,439

 

 

2,995

 

 

2,863

Short-term borrowings

 

888

 

919

 

 

—

 

 

1,807

 

 

—

Total interest expense

 

118,572

 

92,951

 

 

14,370

 

 

211,523

 

 

27,125

  Net interest income before provision for credit losses

 

181,533

 

192,435

 

 

175,163

 

 

373,968

 

 

334,354

Provision for credit losses

 

9,155

 

8,100

 

 

2,500

 

 

17,255

 

 

11,143

Net interest income after provision for credit losses

 

172,378

 

184,335

 

 

172,663

 

 

356,713

 

 

323,211

  Non-Interest Income Net gains/(losses) from equity securities

 

10,663

 

4,853

 

 

(955

)

 

15,516

 

 

5,019

Debt securities losses, net

 

—

 

(3,000

)

 

—

 

 

(3,000

)

 

—

Letters of credit commissions

 

1,664

 

1,570

 

 

1,602

 

 

3,234

 

 

3,158

Depository service fees

 

1,641

 

1,832

 

 

1,632

 

 

3,473

 

 

3,303

Wealth management fees

 

3,639

 

3,897

 

 

3,956

 

 

7,536

 

 

8,310

Other operating income

 

5,503

 

5,092

 

 

8,383

 

 

10,595

 

 

15,060

Total non-interest income

 

23,110

 

14,244

 

 

14,618

 

 

37,354

 

 

34,850

  Non-Interest Expense Salaries and employee benefits

 

37,048

 

38,226

 

 

37,301

 

 

75,274

 

 

72,776

Occupancy expense

 

5,528

 

5,504

 

 

5,562

 

 

11,032

 

 

11,175

Computer and equipment expense

 

4,227

 

4,285

 

 

3,297

 

 

8,512

 

 

6,253

Professional services expense

 

8,900

 

7,406

 

 

7,704

 

 

16,306

 

 

14,401

Data processing service expense

 

3,672

 

3,724

 

 

3,420

 

 

7,396

 

 

6,329

FDIC and State assessments

 

3,012

 

3,155

 

 

2,194

 

 

6,167

 

 

3,996

Marketing expense

 

2,416

 

774

 

 

1,740

 

 

3,190

 

 

2,687

Other real estate owned expense

 

81

 

50

 

 

(33

)

 

131

 

 

38

Amortization of investments in low income housing andalternative energy partnerships

 

21,746

 

15,594

 

 

7,235

 

 

37,340

 

 

15,522

Amortization of core deposit intangibles

 

559

 

250

 

 

250

 

 

809

 

 

474

Acquisition, integration and restructuring costs

 

—

 

—

 

 

91

 

 

—

 

 

4,027

Other operating expense

 

5,632

 

4,218

 

 

5,362

 

 

9,850

 

 

9,142

Total non-interest expense

 

92,821

 

83,186

 

 

74,123

 

 

176,007

 

 

146,820

  Income before income tax expense

 

102,667

 

115,393

 

 

113,158

 

 

218,060

 

 

211,241

Income tax expense

 

9,447

 

19,386

 

 

24,180

 

 

28,833

 

 

47,235

Net income

$

93,220

$

96,007

 

$

88,978

 

$

189,227

 

$

164,006

Net income per common share: Basic

$

1.29

$

1.32

 

$

1.19

 

$

2.61

 

$

2.18

Diluted

$

1.28

$

1.32

 

$

1.18

 

$

2.60

 

$

2.17

  Cash dividends paid per common share

$

0.34

$

0.34

 

$

0.34

 

$

0.68

 

$

0.68

Basic average common shares outstanding

 

72,536,301

 

72,533,239

 

 

74,958,913

 

 

72,534,779

 

 

75,144,414

Diluted average common shares outstanding

 

72,753,746

 

72,899,662

 

 

75,270,140

 

 

72,826,301

 

 

75,493,516

CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

Three months ended

(In thousands)(Unaudited)

June 30, 2023

March 31, 2023

June 30, 2022

Interest-earning assets:

Average Balance

Average Yield/Rate (1)

 

Average Balance

Average Yield/Rate (1)

 

Average

Balance

Average Yield/Rate (1)

Loans (1)

$

18,503,889

5.93

%

$

18,245,488

5.81

%

$

17,530,650

4.14

%

Taxable investment securities

 

1,561,443

3.18

%

 

1,548,841

3.08

%

 

1,249,679

1.84

%

FHLB stock

 

18,431

6.49

%

 

17,276

7.14

%

 

17,250

5.93

%

Deposits with banks

 

1,090,019

5.14

%

 

1,070,188

4.60

%

 

1,173,702

0.86

%

Total interest-earning assets

$

21,173,782

5.68

%

$

20,881,793

5.54

%

$

19,971,281

3.81

%

  Interest-bearing liabilities: Interest-bearing demand deposits

$

2,325,101

1.57

%

$

2,354,531

1.12

%

$

2,459,940

0.13

%

Money market deposits

 

3,047,163

2.55

%

 

3,378,257

2.05

%

 

5,291,824

0.45

%

Savings deposits

 

1,076,260

0.81

%

 

938,485

0.10

%

 

1,183,821

0.07

%

Time deposits

 

8,803,900

3.64

%

 

8,225,215

3.16

%

 

4,881,365

0.47

%

Total interest-bearing deposits

$

15,252,424

2.91

%

$

14,896,488

2.40

%

$

13,816,950

0.37

%

Other borrowed funds

 

508,081

5.04

%

 

321,522

4.44

%

 

82,660

1.51

%

Long-term debt

 

119,136

5.22

%

 

119,136

4.91

%

 

119,136

4.85

%

Total interest-bearing liabilities

 

15,879,641

2.99

%

 

15,337,146

2.46

%

 

14,018,746

0.41

%

  Non-interest-bearing demand deposits

 

3,667,533

 

3,958,533

 

4,391,925

  Total deposits and other borrowed funds

$

19,547,174

$

19,295,679

$

18,410,671

  Total average assets

$

22,403,606

$

22,098,431

$

21,079,634

Total average equity

$

2,583,677

$

2,530,719

$

2,441,128

Six months ended (In thousands)(Unaudited) June 30, 2023 June 30, 2022 Interest-earning assets: AverageBalance AverageYield/Rate (1) AverageBalance AverageYield/Rate (1) Loans (1)

$

18,375,402

5.87

%

$

17,236,850

4.06

%

Taxable investment securities

 

1,555,177

3.13

%

 

1,212,170

1.76

%

FHLB stock

 

17,856

6.80

%

 

17,250

6.03

%

Deposits with banks

 

1,080,158

4.87

%

 

1,410,884

0.47

%

Total interest-earning assets

$

21,028,593

5.61

%

$

19,877,154

3.67

%

  Interest-bearing liabilities: Interest-bearing demand deposits

$

2,339,735

1.35

%

$

2,430,141

0.11

%

Money market deposits

 

3,211,795

2.29

%

 

5,055,017

0.41

%

Savings deposits

 

1,007,753

0.48

%

 

1,130,551

0.07

%

Time deposits

 

8,516,156

3.41

%

 

5,084,212

0.47

%

Total interest-bearing deposits

$

15,075,439

2.66

%

$

13,699,921

0.35

%

Securities sold under agreements to repurchase Other borrowed funds

 

415,317

4.81

%

 

63,011

1.46

%

Long-term debt

 

119,136

5.07

%

 

119,136

4.85

%

Total interest-bearing liabilities

 

15,609,892

2.73

%

 

13,882,068

0.39

%

  Non-interest-bearing demand deposits

 

3,812,215

 

4,376,246

Total deposits and other borrowed funds

$

19,422,107

$

18,258,314

  Total average assets

$

22,251,927

$

20,972,677

Total average equity

$

2,557,390

$

2,443,258

 

(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.

As of

June 30, 2023

 

March 31, 2023

 

June 30, 2022

(In thousands) (Unaudited)

Stockholders' equity (a)

$

2,602,671

 

$

2,542,339

 

$

2,431,532

 

Less: Goodwill

 

(375,696

)

 

(375,696

)

 

(375,696

)

Other intangible assets (1)

 

(4,992

)

 

(5,564

)

 

(7,231

)

Tangible equity (b)

$

2,221,983

 

$

2,161,079

 

$

2,048,605

 

  Total assets (c)

$

23,028,438

 

$

22,031,601

 

$

21,235,553

 

Less: Goodwill

 

(375,696

)

 

(375,696

)

 

(375,696

)

Other intangible assets (1)

 

(4,992

)

 

(5,564

)

 

(7,231

)

Tangible assets (d)

$

22,647,750

 

$

21,650,341

 

$

20,852,626

 

  Number of common shares outstanding (e)

 

72,563,169

 

 

72,390,694

 

 

74,421,884

 

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

 

11.30

%

 

11.54

%

 

11.45

%

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

 

9.81

%

 

9.98

%

 

9.82

%

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

$

30.62

 

$

29.85

 

$

27.53

 

Three months ended

Six months ended

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

June 30, 2023

June 30, 2022

(In thousands) (Unaudited) Net Income

$

93,220

 

$

96,007

 

$

88,978

 

$

189,227

 

$

164,006

 

Add: Amortization of other intangibles (1)

 

570

 

 

192

 

 

277

 

 

762

 

 

528

 

Tax effect of amortization adjustments (2)

 

(169

)

 

(57

)

 

(82

)

 

(226

)

 

(157

)

Tangible net income (f)

$

93,621

 

$

96,142

 

$

89,173

 

$

189,763

 

$

164,377

 

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

 

16.85

%

 

17.80

%

 

17.41

%

 

17.08

%

 

16.05

%

 

(1) Includes core deposit intangibles and mortgage servicing (2) Applied the statutory rate of 29.65%. (3) Annualized

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230721406719/en/

Heng W. Chen (626) 279-3652