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 September 30, 2023. The Company reported net income of $82.4 million, or $1.13 per share, for the third quarter of 2023.

FINANCIAL PERFORMANCE

Three months ended (unaudited) September 30, 2023 June 30, 2023 September 30, 2022 Net income $ 82.4 million $ 93.2 million $99.0 million Basic earnings per common share

$1.14

$1.29

$1.34

Diluted earnings per common share

$1.13

$1.28

$1.33

Return on average assets

1.42%

1.67%

1.81%

Return on average total stockholders' equity

12.36%

14.47%

15.94%

Efficiency ratio

48.57%

45.36%

36.35%

THIRD QUARTER HIGHLIGHTS

• Total deposits increased by $538.6 million, or 11.6% annualized, to $19.6 billion in the third quarter of 2023.
• Total gross loans increased by $71.0 million, or 1.6% annualized, to $19.0 billion in the third quarter of 2023.
• Diluted earnings per share decreased to $1.13 for the third quarter of 2023 compared to $1.28 for the second quarter of 2023 due in part to changes in equity securities valuations.
• Our net interest margin declined slightly from 3.44% in the second quarter to 3.38% in the third quarter.

“For the third quarter of 2023, our total deposits increased by $538.6 million or 11.6% annualized to $19.6 billion. Our net interest margin declined slightly from 3.44% in the second quarter to 3.38% in the third quarter,” commented Chang M. Liu, President and Chief Executive Officer of the Company.

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

Net income for the quarter ended September 30, 2023 was $82.4 million, a decrease of $10.8 million, or 11.6%, compared to net income of $93.2 million for the second quarter of 2023. Diluted earnings per share for the third quarter of 2023 was $1.13 per share compared to $1.28 per share for the second quarter of 2023. Net income for the third quarter included a $6.2 million unrealized loss on equity securities or $0.06 per diluted share, in the third quarter of 2023 compared to a $10.7 million unrealized gain on equity securities, or $0.10 per diluted share, for the second quarter of 2023.

Return on average stockholders’ equity was 12.36% and return on average assets was 1.42% for the quarter ended September 30, 2023, compared to a return on average stockholders’ equity of 14.47% and a return on average assets of 1.67% in the second quarter of 2023.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $4.1 million, or 2.3%, to $185.6 million during the third quarter of 2023, compared to $181.5 million in the second quarter of 2023. The increase was due primarily to an increase in interest income from loans and securities, partially offset by an increase in deposit interest expense.

The net interest margin was 3.38% for the third quarter of 2023 compared to 3.44% for the second quarter of 2023.

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 cost of interest-bearing deposits was 3.23%. In comparison, 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%. 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 2.56% for the third quarter of 2023, compared to 2.69% for the second quarter of 2023.

Provision for credit losses

The Company recorded a provision for credit losses of $7.0 million in the third quarter of 2023 compared with $9.2 million in the second quarter of 2023. As of September 30, 2023, the allowance for credit losses, comprised of the reserve for loan losses and the reserve for unfunded loan commitments, increased $312 thousand to $166.0 million, or 0.87% of gross loans, compared to $165.6 million, or 0.87% of gross loans, as of June 30, 2023.

Three months ended Nine months ended September 30,

September 30, 2023

June 30, 2023

September 30, 2022

2023

2022

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

$ 6,254

$ 2,448

$ 2,091

$ 12,517

$ 2,362

Real estate loans (1)

1,221

34

137

5,341

138

Installment and other loans

8

1

—

15

—

Total charge-offs

7,483

2,483

2,228

17,873

2,500

Recoveries: Commercial loans

611

442

1,576

1,564

2,109

Construction loans

—

—

—

—

6

Real estate loans (1)

261

61

95

2,862

336

Total recoveries

872

503

1,671

4,426

2,451

Net charge-offs/(recoveries)

$ 6,611

$ 1,980

$ 557

$ 13,447

$ 49

(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 $7.8 million for the third quarter of 2023, a decrease of $15.3 million, or 66.2%, compared to $23.1 million for the second quarter of 2023. The decrease was primarily due to a $16.9 million decrease in unrealized gains on equity securities offset, in part, by a $1.5 million increase in commissions from wealth management, when compared to the second quarter of 2023.

Non-interest expense

Non-interest expense increased $1.2 million, or 1.3%, to $94.0 million in the third quarter of 2023 compared to $92.8 million in the second quarter of 2023. The increase in non-interest expense in the third quarter of 2023 was primarily due to an increase of $1.7 million in salaries and employee benefits, an increase of $1.4 million in amortization expense of investments in low-income housing and alternative energy partnerships, offset, in part, by a decrease of $1.0 million in professional services expenses when compared to the second 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 48.57% in the third quarter of 2023 compared to 45.36% for the second quarter of 2023.

Income taxes

The effective tax rate for the third quarter of 2023 was 10.95% compared to 9.20% for the second 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 $19.02 billion as of September 30, 2023, an increase of $71.0 million, or 0.4%, from $18.95 billion as of June 30, 2023. The increase from June 30, 2023 was primarily due to an increase of $218.3 million, or 2.3%, in commercial mortgage loans, and an increase of $143.4 million, or 2.6%, in residential mortgage loans offset, in part, by a decrease of $227.3 million, or 6.8%, in commercial loans, a decrease of $47.4 million, or 9.1%, in real estate construction loans, and a decrease of $18.2 million, or 6.7%, in home equity loans.

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

September 30, 2023 June 30, 2023 September 30, 2022 (In thousands) (Unaudited) Commercial loans

$ 3,090,609

$ 3,317,868

$ 3,367,437

Residential mortgage loans

5,685,844

5,542,466

5,130,650

Commercial mortgage loans

9,511,805

9,293,475

8,677,733

Equity lines

253,826

272,055

350,448

Real estate construction loans

474,294

521,673

573,421

Installment and other loans

7,444

5,257

7,114

Gross loans

$ 19,023,822

$ 18,952,794

$ 18,106,803

  Allowance for loan losses

(154,619)

(155,109)

(148,817)

Unamortized deferred loan fees

(9,521)

(9,497)

(6,936)

Total loans, net

$ 18,859,682

$ 18,788,188

$ 17,951,050

Total deposits were $19.64 billion as of September 30, 2023, an increase of $538.6 million, or 2.8%, from $19.10 billion as of June 30, 2023.

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

September 30, 2023 June 30, 2023 September 30, 2022 (In thousands) (Unaudited) Non-interest-bearing demand deposits

$ 3,623,483

$ 3,561,237

$ 4,398,152

NOW deposits

2,454,878

2,404,470

2,570,036

Money market deposits

3,222,612

3,033,868

4,935,266

Savings deposits

1,131,352

1,131,602

1,128,823

Time deposits

9,203,263

8,965,826

5,543,474

Total deposits

$ 19,635,588

$ 19,097,003

$ 18,575,751

ASSET QUALITY REVIEW

As of September 30, 2023, total non-accrual loans were $77.3 million, an increase of $8.3 million, or 12.0%, from $69.0 million as of June 30, 2023.

The allowance for loan losses was $154.6 million and the allowance for off-balance sheet unfunded credit commitments was $11.4 million as of September 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. We reported net charge-offs of $6.6 million for the three months ended September 30, 2023, of which $4.3 million had been reserved for in prior quarters. The allowance for loan losses represented 0.81% of period-end gross loans, and 195.09% of non-performing loans as of September 30, 2023. The comparable ratios were 0.82% of period-end gross loans, and 206.89% of non-performing loans as of June 30, 2023.

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

(Dollars in thousands) (Unaudited) September 30, 2023 June 30, 2023 %Change September 30, 2022 %Change Non-performing assets Accruing loans past due 90 days or more

$

1,924

 

$

5,968

 

(68

)

$

3,172

 

(39

)

  Non-accrual loans: Construction loans

 

16,992

 

 

—

 

—

 

 

—

 

—

 

Commercial mortgage loans

 

32,539

 

 

39,558

 

(18

)

 

26,911

 

21

 

Commercial loans

 

14,661

 

 

17,574

 

(17

)

 

26,604

 

(45

)

Residential mortgage loans

 

13,138

 

 

11,872

 

11

 

 

14,601

 

(10

)

Installment and other loans

 

—

 

 

—

 

—

 

 

9

 

(100

)

Total non-accrual loans

$

77,330

 

$

69,004

 

12

 

$

68,125

 

14

 

Total non-performing loans

 

79,254

 

 

74,972

 

6

 

 

71,297

 

11

 

Other real estate owned

 

14,407

 

 

4,067

 

254

 

 

4,067

 

254

 

Total non-performing assets

$

93,661

 

$

79,039

 

18

 

$

75,364

 

24

 

Accruing loan modifications to borrowers experiencing financialdifficulties (1)

$

1,489

 

$

—

 

—

 

$

—

 

—

 

Accruing troubled debt restructurings (TDRs)

$

—

 

$

—

 

—

 

$

15,208

 

(100

)

  Allowance for loan losses

$

154,619

 

$

155,109

 

(0

)

$

148,817

 

4

 

Total gross loans outstanding, at period-end

$

19,023,822

 

$

18,952,794

 

0

 

$

18,106,803

 

5

 

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

 

195.09

%

 

206.89

%

 

208.73

%

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

 

0.81

%

 

0.82

%

 

0.82

%

(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 0.41% as of September 30, 2023, compared to 0.34% as of June 30, 2023. Total non-performing assets increased $14.7 million, or 18.6%, to $93.7 million as of September 30, 2023, compared to $79.0 million as of June 30, 2023, primarily due to an increase of $10.3 million, or 254.2%, in other real estate owned, an increase of $8.3 million, or 12.1%, in non-accrual loans offset, in part, by a decrease of $4.0 million, or 67.8%, in accruing loans past due 90 days or more.

CAPITAL ADEQUACY REVIEW

As of September 30, 2023, the Company’s Tier 1 risk-based capital ratio of 12.70%, total risk-based capital ratio of 14.21%, and Tier 1 leverage capital ratio of 10.44%, 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 June 30, 2023, the Company’s Tier 1 risk-based capital ratio was 12.38%, total risk-based capital ratio was 13.88%, and Tier 1 leverage capital ratio was 10.45%.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its third quarter 2023 financial results this afternoon, Monday, October 23, 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 10183158. 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; 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

 

Nine months ended September 30,

(Dollars in thousands, except per share data)

September 30, 2023

 

June 30, 2023

 

September 30, 2022

 

 

2023

 

 

 

2022

 

  Financial performance Net interest income before provision for credit losses

$

185,640

 

$

181,533

 

$

197,529

 

$

559,608

 

$

531,883

 

Provision for credit losses

 

7,000

 

 

9,155

 

 

2,000

 

 

24,255

 

 

13,143

 

Net interest income after provision for credit losses

 

178,640

 

 

172,378

 

 

195,529

 

 

535,353

 

 

518,740

 

Non-interest income

 

7,837

 

 

23,110

 

 

9,876

 

 

45,191

 

 

44,726

 

Non-interest expense

 

93,973

 

 

92,821

 

 

75,388

 

 

269,980

 

 

222,208

 

Income before income tax expense

 

92,504

 

 

102,667

 

 

130,017

 

 

310,564

 

 

341,258

 

Income tax expense

 

10,133

 

 

9,447

 

 

30,982

 

 

38,966

 

 

78,217

 

Net income

$

82,371

 

$

93,220

 

$

99,035

 

$

271,598

 

$

263,041

 

  Net income per common share Basic

$

1.14

 

$

1.29

 

$

1.34

 

$

3.74

 

$

3.52

 

Diluted

$

1.13

 

$

1.28

 

$

1.33

 

$

3.73

 

$

3.50

 

  Cash dividends paid per common share

$

0.34

 

$

0.34

 

$

0.34

 

$

1.02

 

$

1.02

 

    Selected ratios Return on average assets

 

1.42

%

 

1.67

%

 

1.81

%

 

1.61

%

 

1.66

%

Return on average total stockholders’ equity

 

12.36

%

 

14.47

%

 

15.94

%

 

14.04

%

 

14.35

%

Efficiency ratio

 

48.57

%

 

45.36

%

 

36.35

%

 

44.64

%

 

38.54

%

Dividend payout ratio

 

29.95

%

 

26.46

%

 

25.30

%

 

27.22

%

 

28.94

%

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

 

5.89

%

 

5.68

%

 

4.38

%

 

5.71

%

 

3.91

%

Total interest-bearing liabilities

 

3.33

%

 

2.99

%

 

0.78

%

 

2.94

%

 

0.53

%

Net interest spread

 

2.56

%

 

2.69

%

 

3.60

%

 

2.77

%

 

3.38

%

Net interest margin

 

3.38

%

 

3.44

%

 

3.83

%

 

3.52

%

 

3.54

%

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

 

12.70

%

 

12.38

%

 

12.06

%

Total risk-based capital ratio

 

14.21

%

 

13.88

%

 

13.59

%

Tier 1 leverage capital ratio

 

10.44

%

 

10.45

%

 

10.02

%

.

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

  (In thousands, except share and per share data) September 30, 2023 June 30, 2023 September 30, 2022   Assets Cash and due from banks

$ 145,580

$ 187,886

$ 200,051

Short-term investments and interest bearing deposits

1,017,354

1,294,379

1,063,294

Securities available-for-sale (amortized cost of $1,684,951 at September 30, 2023, $1,629,357 at June 30, 2023 and $1,577,311 at September 30, 2022)

1,508,798

1,487,321

1,414,411

Loans

19,023,822

18,952,794

18,106,803

Less: Allowance for loan losses

(154,619)

(155,109)

(148,817)

Unamortized deferred loan fees, net

(9,521)

(9,497)

(6,936)

Loans, net

18,859,682

18,788,188

17,951,050

Equity securities

31,456

37,674

23,123

Federal Home Loan Bank stock

17,250

25,242

17,250

Other real estate owned, net

14,407

4,067

4,067

Affordable housing investments and alternative energy partnerships, net

332,903

323,984

325,439

Premises and equipment, net

91,033

92,090

96,419

Customers’ liability on acceptances

16,900

4,364

6,899

Accrued interest receivable

90,875

86,211

71,177

Goodwill

375,696

375,696

375,696

Other intangible assets, net

4,725

4,992

6,948

Right-of-use assets- operating leases

30,586

31,399

30,679

Other assets

307,284

284,945

303,628

Total assets

$ 22,844,529

$ 23,028,438

$ 21,890,131

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

$ 3,623,483

$ 3,561,237

$ 4,398,152

Interest-bearing deposits: NOW deposits

2,454,878

2,404,470

2,570,036

Money market deposits

3,222,612

3,033,868

4,935,266

Savings deposits

1,131,352

1,131,602

1,128,823

Time deposits

9,203,263

8,965,826

5,543,474

Total deposits

19,635,588

19,097,003

18,575,751

  Advances from the Federal Home Loan Bank

15,000

815,000

360,000

Other borrowings for affordable housing investments

22,374

22,428

22,651

Long-term debt

119,136

119,136

119,136

Acceptances outstanding

16,900

4,364

6,899

Lease liabilities - operating leases

32,962

33,870

33,931

Other liabilities

363,833

333,966

352,204

Total liabilities

20,205,793

20,425,767

19,470,572

Stockholders' equity

2,638,736

2,602,671

2,419,559

Total liabilities and equity

$ 22,844,529

$ 23,028,438

$ 21,890,131

  Book value per common share

$ 36.35

$ 35.87

$ 32.67

Number of common shares outstanding

72,586,992

72,563,169

73,411,960

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended

 

Nine months ended September 30,

September 30, 2023

 

June 30, 2023

 

September 30, 2022

 

 

2023

 

 

 

2022

(In thousands, except share and per share data)

Interest and Dividend Income Loan receivable, including loan fees

$

293,108

 

$

273,478

$

211,541

 

$

827,765

 

$

558,657

Investment securities

 

12,698

 

 

12,370

 

7,483

 

 

36,832

 

 

18,059

Federal Home Loan Bank stock

 

355

 

 

298

 

258

 

 

957

 

 

774

Deposits with banks

 

17,307

 

 

13,959

 

6,732

 

 

43,405

 

 

10,003

Total interest and dividend income

 

323,468

 

 

300,105

 

226,014

 

 

908,959

 

 

587,493

  Interest Expense Time deposits

 

90,022

 

 

79,975

 

10,218

 

 

234,171

 

 

22,002

Other deposits

 

38,207

 

 

30,659

 

13,871

 

 

92,683

 

 

25,894

Advances from Federal Home Loan Bank

 

6,779

 

 

5,498

 

2,941

 

 

14,875

 

 

3,396

Long-term debt

 

1,726

 

 

1,552

 

1,455

 

 

4,721

 

 

4,318

Short-term borrowings

 

1,094

 

 

888

 

—

 

 

2,901

 

 

—

Total interest expense

 

137,828

 

 

118,572

 

28,485

 

 

349,351

 

 

55,610

  Net interest income before provision for credit losses

 

185,640

 

 

181,533

 

197,529

 

 

559,608

 

 

531,883

Provision for credit losses

 

7,000

 

 

9,155

 

2,000

 

 

24,255

 

 

13,143

Net interest income after provision for credit losses

 

178,640

 

 

172,378

 

195,529

 

 

535,353

 

 

518,740

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

 

(6,218

)

 

10,663

 

(3,661

)

 

9,298

 

 

1,358

Debt securities losses, net

 

—

 

 

—

 

—

 

 

(3,000

)

 

—

Letters of credit commissions

 

1,738

 

 

1,664

 

1,609

 

 

4,972

 

 

4,767

Depository service fees

 

1,536

 

 

1,641

 

1,690

 

 

5,009

 

 

4,993

Wealth management fees

 

5,150

 

 

3,639

 

4,184

 

 

12,686

 

 

12,494

Other operating income

 

5,631

 

 

5,503

 

6,054

 

 

16,226

 

 

21,114

Total non-interest income

 

7,837

 

 

23,110

 

9,876

 

 

45,191

 

 

44,726

  Non-Interest Expense Salaries and employee benefits

 

38,774

 

 

37,048

 

34,677

 

 

114,048

 

 

107,453

Occupancy expense

 

5,851

 

 

5,528

 

5,975

 

 

16,883

 

 

17,150

Computer and equipment expense

 

4,387

 

 

4,227

 

3,509

 

 

12,899

 

 

9,762

Professional services expense

 

7,906

 

 

8,900

 

6,337

 

 

24,212

 

 

20,738

Data processing service expense

 

3,614

 

 

3,672

 

3,484

 

 

11,010

 

 

9,813

FDIC and State assessments

 

3,063

 

 

3,012

 

2,003

 

 

9,230

 

 

5,999

Marketing expense

 

1,587

 

 

2,416

 

2,005

 

 

4,777

 

 

4,692

Other real estate owned expense

 

435

 

 

81

 

55

 

 

566

 

 

93

Amortization of investments in low income housing andalternative energy partnerships

 

23,157

 

 

21,746

 

11,949

 

 

60,497

 

 

27,471

Amortization of core deposit intangibles

 

250

 

 

559

 

250

 

 

1,059

 

 

724

Acquisition, integration and restructuring costs

 

—

 

 

—

 

59

 

 

—

 

 

4,086

Other operating expense

 

4,949

 

 

5,632

 

5,085

 

 

14,799

 

 

14,227

Total non-interest expense

 

93,973

 

 

92,821

 

75,388

 

 

269,980

 

 

222,208

  Income before income tax expense

 

92,504

 

 

102,667

 

130,017

 

 

310,564

 

 

341,258

Income tax expense

 

10,133

 

 

9,447

 

30,982

 

 

38,966

 

 

78,217

Net income

$

82,371

 

$

93,220

$

99,035

 

$

271,598

 

$

263,041

Net income per common share: Basic

$

1.14

 

$

1.29

$

1.34

 

$

3.74

 

$

3.52

Diluted

$

1.13

 

$

1.28

$

1.33

 

$

3.73

 

$

3.50

  Cash dividends paid per common share

$

0.34

 

$

0.34

$

0.34

 

$

1.02

 

$

1.02

Basic average common shares outstanding

 

72,568,518

 

 

72,536,301

 

73,956,052

 

 

72,546,149

 

 

74,743,941

Diluted average common shares outstanding

 

72,890,414

 

 

72,753,746

 

74,242,052

 

 

72,847,907

 

 

75,068,232

CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

Three months ended (In thousands)(Unaudited) September 30, 2023 June 30, 2023 September 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)

$

18,959,444

6.13

%

$

18,503,889

5.93

%

$

17,923,495

4.68

%

Taxable investment securities

 

1,530,767

3.29

%

 

1,561,443

3.18

%

 

1,364,013

2.18

%

FHLB stock

 

19,141

7.35

%

 

18,431

6.49

%

 

18,756

5.46

%

Deposits with banks

 

1,273,751

5.39

%

 

1,090,019

5.14

%

 

1,178,261

2.27

%

Total interest-earning assets

$

21,783,103

5.89

%

$

21,173,782

5.68

%

$

20,484,525

4.38

%

  Interest-bearing liabilities: Interest-bearing demand deposits

$

2,405,011

1.98

%

$

2,325,101

1.57

%

$

2,508,526

0.30

%

Money market deposits

 

3,036,445

2.98

%

 

3,047,163

2.55

%

 

5,153,566

0.90

%

Savings deposits

 

1,151,615

1.17

%

 

1,076,260

0.81

%

 

1,151,126

0.07

%

Time deposits

 

9,145,176

3.91

%

 

8,803,900

3.64

%

 

5,013,213

0.81

%

Total interest-bearing deposits

$

15,738,247

3.23

%

$

15,252,424

2.91

%

$

13,826,431

0.69

%

Other borrowed funds

 

586,824

5.32

%

 

508,081

5.04

%

 

498,234

2.34

%

Long-term debt

 

119,136

5.75

%

 

119,136

5.22

%

 

119,136

4.85

%

Total interest-bearing liabilities

 

16,444,207

3.33

%

 

15,879,641

2.99

%

 

14,443,801

0.78

%

  Non-interest-bearing demand deposits

 

3,603,779

 

3,667,533

 

4,456,214

  Total deposits and other borrowed funds

$

20,047,986

$

19,547,174

$

18,900,015

  Total average assets

$

22,997,408

$

22,403,606

$

21,658,860

Total average equity

$

2,644,005

$

2,583,677

$

2,465,192

  Nine months ended (In thousands)(Unaudited) September 30, 2023 September 30, 2022 Interest-earning assets: Average Balance Average Yield/Rate (1) Average Balance Average Yield/Rate (1) Loans (1)

$

18,572,222

5.96

%

$

17,468,247

4.28

%

Taxable investment securities

 

1,546,951

3.18

%

 

1,263,341

1.91

%

FHLB stock

 

18,290

7.00

%

 

17,757

5.83

%

Deposits with banks

 

1,145,398

5.07

%

 

1,332,491

1.00

%

Total interest-earning assets

$

21,282,861

5.71

%

$

20,081,836

3.91

%

  Interest-bearing liabilities: Interest-bearing demand deposits

$

2,361,732

1.57

%

$

2,456,556

0.17

%

Money market deposits

 

3,152,703

2.51

%

 

5,088,227

0.58

%

Savings deposits

 

1,056,234

0.73

%

 

1,137,485

0.07

%

Time deposits

 

8,728,133

3.59

%

 

5,060,286

0.58

%

Total interest-bearing deposits

$

15,298,802

2.86

%

$

13,742,554

0.47

%

Securities sold under agreements to repurchase Other borrowed funds

 

473,114

5.02

%

 

209,679

2.17

%

Long-term debt

 

119,136

5.30

%

 

119,136

4.85

%

Total interest-bearing liabilities

 

15,891,052

2.94

%

 

14,071,369

0.53

%

  Non-interest-bearing demand deposits

 

3,741,982

 

4,403,195

Total deposits and other borrowed funds

$

19,633,034

$

18,474,564

  Total average assets

$

22,503,115

$

21,203,918

Total average equity

$

2,586,548

$

2,450,650

(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

September 30, 2023

June 30, 2023

September 30, 2022

(In thousands) (Unaudited)

Stockholders' equity (a)

$

2,638,736

 

$

2,602,671

 

$

2,419,559

 

Less: Goodwill

 

(375,696

)

 

(375,696

)

 

(375,696

)

Other intangible assets (1)

 

(4,725

)

 

(4,992

)

 

(6,948

)

Tangible equity (b)

$

2,258,315

 

$

2,221,983

 

$

2,036,915

 

  Total assets (c)

$

22,844,529

 

$

23,028,438

 

$

21,890,131

 

Less: Goodwill

 

(375,696

)

 

(375,696

)

 

(375,696

)

Other intangible assets (1)

 

(4,725

)

 

(4,992

)

 

(6,948

)

Tangible assets (d)

$

22,464,108

 

$

22,647,750

 

$

21,507,487

 

  Number of common shares outstanding (e)

 

72,586,992

 

 

72,563,169

 

 

73,411,960

 

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

 

11.55

%

 

11.30

%

 

11.05

%

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

 

10.05

%

 

9.81

%

 

9.47

%

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

$

31.11

 

$

30.62

 

$

27.75

 

 

Three months ended

 

Nine months ended

September 30, 2023

 

June 30, 2023

 

September 30, 2022

 

September 30, 2023

September 30, 2022

(In thousands) (Unaudited)

Net Income

$

82,371

 

$

93,220

 

$

99,035

 

$

271,598

 

$

263,041

 

Add: Amortization of other intangibles (1)

 

270

 

 

570

 

 

250

 

 

1,031

 

 

724

 

Tax effect of amortization adjustments (2)

 

(80

)

 

(169

)

 

(74

)

 

(306

)

 

(215

)

Tangible net income (f)

$

82,561

 

$

93,621

 

$

99,211

 

$

272,323

 

$

263,550

 

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

 

14.62

%

 

16.85

%

 

19.48

%

 

16.08

%

 

17.25

%

(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/20231023967763/en/

Heng W. Chen (626) 279-3652