Cathay General Bancorp Announces Net Income of $29.9 Million, or $0.35 Per Share, For the Second Quarter 2013

LOS ANGELES, July 17, 2013 /PRNewswire/ -- Cathay General Bancorp (the "Company"), (NASDAQ: CATY), the holding company for Cathay Bank (the "Bank"), today announced results for the second quarter of 2013.

FINANCIAL PERFORMANCE


Second Quarter


2013


2012

Net income

$29.9 million


$29.9 million

Net income available to common stockholders

$27.8 million


$25.7 million

Basic earnings per common share

$0.35


$0.33

Diluted earnings per common share

$0.35


$0.33

Return on average assets

1.15%


1.13%

Return on average total stockholders' equity

7.74%


7.72%

Efficiency ratio

53.53%


53.21%

SECOND QUARTER HIGHLIGHTS

  • Strong loan growth of $330 million, or 4.5%, to $7.69 billion at June 30, 2013, from $7.36 billion at March 31, 2013.
  • Conversion to a new core processing system on July 15, 2013.

"We are pleased with the loan growth of $330 million during the second quarter, which came from increases in commercial, commercial real estate and residential mortgage loans.  We continue to work on redeeming, subject to regulatory approval, the remaining preferred stock we issued to the U.S. Treasury under the TARP Capital Purchase Program," commented Dunson Cheng, Chairman of the Board, Chief Executive Officer, and President of the Company.

"We opened a new branch in Las Vegas, Nevada, on June 17, 2013, and expect to open our new West Covina, California branch before the end of the year.  We continue to look for sites for new branches in our footprint to better serve our customers," said Peter Wu, Executive Vice Chairman and Chief Operating Officer.

"We want to thank our employees for their contributions to our core system conversion. Over time, we expect that we will be able to achieve improved customer service, increased product functionality, as well as operational streamlining, with the new core system," concluded Dunson Cheng.

INCOME STATEMENT REVIEW

Net income available to common stockholders for the quarter ended June 30, 2013, was $27.8 million, an increase of $2.1 million, or 8.2%, compared to a net income available to common stockholders of $25.7 million for the same quarter a year ago.  Diluted earnings per share available to common stockholders for the quarter ended June 30, 2013, was $0.35 compared to $0.33 for the same quarter a year ago due primarily to increases in gains on sale of securities and decreases in other real estate owned ("OREO") expenses offset by increases in costs associated with debt redemption and the reversal for credit losses taken in 2012.

Return on average stockholders' equity was 7.74% and return on average assets was 1.15% for the quarter ended June 30, 2013, compared to a return on average stockholders' equity of 7.72% and a return on average assets of 1.13% for the same quarter a year ago.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $874,000, or 1.1%, to $80.0 million during the second quarter of 2013 compared to $79.1 million during the same quarter a year ago.  The increase was due primarily to the decrease in interest expense from time deposits and securities sold under agreements to repurchase offset by the decrease in interest income from investment securities.

The net interest margin, on a fully taxable-equivalent basis, was 3.30% for the second quarter of 2013, compared to 3.35% for the first quarter of 2013, and 3.24% for the second quarter of 2012.  The decrease in the interest expense on time deposits and securities sold under agreements to repurchase offset by decrease in earnings on investment securities and loans contributed to the increase in the net interest margin compared to the second quarter of 2012.  The net interest margin for the first quarter of 2013 was favorably impacted by a higher amount of interest recognized on payoff of loans that had been on nonaccrual status.

For the second quarter of 2013, the yield on average interest-earning assets was 4.16%, on a fully taxable-equivalent basis, the cost of funds on average interest-bearing liabilities was 1.11%, and the cost of interest bearing deposits was 0.63%.  In comparison, for the second quarter of 2012, the yield on average interest-earning assets was 4.39%, on a fully taxable-equivalent basis, the cost of funds on average interest-bearing liabilities was 1.45%, and the cost of interest bearing deposits was 0.80%. The interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, increased 11 basis points to 3.05% for the quarter ended June 30, 2013, from 2.94% for the same quarter a year ago, primarily for the reasons discussed above.

Provision for credit losses

There was no provision for credit losses for the second quarter of 2013 compared to a credit of $5.0 million in the second quarter of 2012.  The provision for credit losses was based on the review of the adequacy of the allowance for loan losses at June 30, 2013. The provision or reversal for credit losses represents the charge against or benefit toward current earnings that is determined by management, through a credit review process, as the amount needed to establish an allowance that management believes to be sufficient to absorb credit losses inherent in the Company's loan portfolio, including unfunded commitments.  The following table summarizes the charge-offs and recoveries for the periods indicated:


For the three months ended June 30,


For the six months ended June 30,


2013



2012


2013


2012


(In thousands)

Charge-offs:









  Commercial loans

$                  1,690



$                   2,133


$                4,380


$                   7,092

  Construction loans- residential

-



251


-


391

  Construction loans- other

-



-


-


735

  Real estate loans (1)

1,189



1,983


2,319


10,910

  Real estate- land loans

1,048



25


1,318


99

  Installment and other loans

-



-


-


25

     Total charge-offs 

3,927



4,392


8,017


19,252

Recoveries:









  Commercial loans

624



153


1,579


899

  Construction loans- residential

108



1,364


154


3,263

  Construction loans- other

833



227


866


1,885

  Real estate loans (1)

2,645



4,836


3,004


6,467

  Real estate- land loans

645



373


654


1,166

  Installment and other loans

11



-


11


3

     Total recoveries

4,866



6,953


6,268


13,683

Net (recoveries)/charge-offs

$                   (939)



$                  (2,561)


$                1,749


$                   5,569










(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), gains (losses) on loan sales, wire transfer fees, and other sources of fee income, was $20.4 million for the second quarter of 2013, an increase of $10.5 million, or 107%, compared to $9.9 million for the second quarter of 2012. The increase in non-interest income in the second quarter of 2013 was primarily due to an increase of $9.8 million from gains on sale of securities and an increase of $625,000 in commissions from wealth management.    

Non-interest expense

Non-interest expense increased $6.4 million, or 13.5%, to $53.7 million in the second quarter of 2013 compared to $47.3 million in the same quarter a year ago.  The efficiency ratio was 53.53% in the second quarter of 2013 compared to 53.21% for the same quarter a year ago.

Prepayment penalties increased to $10.1 million in the second quarter of 2013 compared to zero in the same quarter a year ago.  The Company prepaid securities sold under agreements to repurchase of $200.0 million in the second quarter of 2013.  Salaries and employee benefits increased $1.5 million, or 7.4%, in the second quarter of 2013 compared to the same quarter a year ago primarily due to the hiring of new employees as well as an increase in the number of temporary employees assisting in the core system conversion.  Professional expense increased $1.7 million to $6.9 million in the second quarter of 2013 compared to $5.2 million in the same quarter a year ago primarily due to higher legal collection expenses of $738,000 and higher consulting expenses of $1.1 million, of which $0.7 million related to the core system conversion.  Offsetting the above increases were a $7.3 million decrease in OREO expenses.  Decreases in OREO writedowns of $5.6 million and OREO operating expenses of $1.4 million contributed primarily to the decrease in OREO expenses.

Income taxes

The effective tax rate for the second quarter of 2013 was 35.7% compared to 35.8% in the second quarter of 2012.  The effective tax rate includes the impact of the utilization of low income housing tax credits and the recognition of other tax credits.

BALANCE SHEET REVIEW

Gross loans were $7.69 billion at June 30, 2013, an increase of $265.2 million, or 3.6%, from $7.43 billion at December 31, 2012, primarily due to an increase of $141.1 million, or 3.7%, in commercial mortgage loans, an increase of $83.7 million, or 3.9%, in commercial loans and an increase of $78.5 million, or 6.8%, in residential mortgage loans offset by a decrease of $27.3 million, or 15.1%, in construction loans and a decrease of $11.0 million, or 5.7%, in equity lines.  The changes in loan balances and composition from December 31, 2012, are presented below:

Type of Loans

June 30, 2013


December 31, 2012


%Change


(Dollars in thousands)



Commercial loans

$   2,210,761


$           2,127,107


4

Residential mortgage loans

1,224,692


1,146,230


7

Commercial mortgage loans

3,909,559


3,768,452


4

Equity lines

182,855


193,852


(6)

Real estate construction loans

153,663


180,950


(15)

Installment & other loans

12,843


12,556


2







Gross loans

$  7,694,373


$           7,429,147


4







Allowance for loan losses

(179,733)


(183,322)


(2)

Unamortized deferred loan fees

(11,685)


(10,238)


14







Total loans, net

$   7,502,955


$           7,235,587


4

Total deposits were $7.71 billion at June 30, 2013, an increase of $327.3 million, or 4.4%, from $7.38 billion at December 31, 2012, primarily due to a $172.3 million, or 26.8%, increase in time deposits under $100,000, a $95.1 million, or 3.0%, increase in time deposits of $100,000 or more, a $77.7 million, or 6.1%, increase in non-interest bearing demand deposits, and a $36.7 million, or 6.2%, increase in NOW deposits,  offset by a $65.5 million, or 5.5%, decrease in money market deposits.  The changes in deposit balances and composition from December 31, 2012, are presented below:

Deposits

June 30, 2013


December 31, 2012


% Change


(Dollars in thousands)



Non-interest-bearing demand deposits

$ 1,347,134


$ 1,269,455


6

NOW deposits

629,858


593,133


6

Money market deposits

1,121,290


1,186,771


(6)

Savings deposits

484,704


473,805


2

Time deposits under $100,000

816,539


644,191


27

Time deposits of $100,000 or more

3,310,996


3,215,870


3

Total deposits

$ 7,710,521


$ 7,383,225


4

ASSET QUALITY REVIEW

At June 30, 2013, total non-accrual loans, excluding loans held for sale, were $95.6 million, a decrease of $27.2 million, or 22.2%, from $122.8 million at June 30, 2012, and a decrease of $8.3 million, or 8.0%, from $103.9 million at December 31, 2012.       

The allowance for loan losses was $179.7 million and the allowance for off-balance sheet unfunded credit commitments was $3.2 million at June 30, 2013, which represented the amount believed by management to be sufficient to absorb credit losses inherent in the loan portfolio, including unfunded commitments.  The allowance for credit losses, which is the sum of the allowances for loan losses and for off-balance sheet unfunded credit commitments, was $182.9 million at June 30, 2013, compared to $184.7 million at December 31, 2012, a decrease of $1.7 million, or 0.9%.  The allowance for credit losses represented 2.38% of period-end gross loans and 191.3% of non-performing loans at June 30, 2013.  The comparable ratios were 2.49% of period-end gross loans and 176.7% of non-performing loans at December 31, 2012.  The changes in the Company's non-performing assets and troubled debt restructurings at June 30, 2013, compared to December 31, 2012, and to June 30, 2012, are highlighted below:

(Dollars in thousands)

June 30, 2013


December 31, 2012


% Change


June 30, 2012


% Change

Non-performing assets










Accruing loans past due 90 days or more

$                           -


$                         630


(100)


$                         746


(100)

Non-accrual loans:










  Construction- residential loans

3,691


2,984


24


4,828


(24)

  Construction- non-residential loans

25,763


33,315


(23)


7,118


262

  Land loans

11,534


6,053


91


7,410


56

  Commercial real estate loans, excluding land loans

30,326


29,651


2


63,220


(52)

  Commercial loans

14,029


19,958


(30)


25,716


(45)

  Residential mortgage loans

10,270


11,941


(14)


14,530


(29)

Total non-accrual loans:

$                   95,613


$                  103,902


(8)


$                 122,822


(22)

Total non-performing loans

95,613


104,532


(9)


123,568


(23)

 Other real estate owned

49,141


46,384


6


74,463


(34)

Total non-performing assets

$                 144,754


$                 150,916


(4)


$                 198,031


(27)

Accruing  troubled  debt  restructurings (TDRs)

$                 115,464


$                 144,695


(20)


$                  153,249


(25)

Non-accrual loans held for sale

$                             -


$                           -


-


$                         500


(100)











Allowance for loan losses

$                  179,733


$                 183,322


(2)


$                 192,274


(7)

Allowance for off-balance sheet credit commitments

3,203


1,362


135


1,505


113

Allowance for credit losses

$                  182,936


$                  184,684


(1)


$                  193,779


(6)











Total gross loans outstanding, at period-end (1)

$                7,694,373


$              7,429,147


4


$              7,043,683


9











Allowance for loan losses to non-performing loans, at period-end (2)

187.98%


175.37%




155.60%



Allowance for loan losses to gross loans, at period-end (1)

2.34%


2.47%




2.73%



Allowance for credit losses to gross loans, at period-end (1)

2.38%


2.49%




2.75%



(1) Excludes loans held for sale at period-end.










(2) Excludes non-accrual loans held for sale at period-end.










Troubled debt restructurings on accrual status totaled $115.5 million at June 30, 2013, compared to $144.7 million at December 31, 2012.  These loans are classified as troubled debt restructurings as a result of granting a concession to borrowers.  Although these loan modifications are considered troubled debt restructurings under Accounting Standard Codification 310-40 and Accounting Standard Update 2011-02, these loans have been performing under the restructured terms and have demonstrated sustained performance under the modified terms.  The sustained performance considered by management includes the periods prior to the modification if the prior performance met or exceeded the modified terms as well as cash paid to set up interest reserves.    

The ratio of non-performing assets to total assets was 1.4% at June 30, 2013, compared to 1.4% at December 31, 2012.  Total non-performing assets decreased $6.1 million, or 4.1%, to $144.8 million at June 30, 2013, compared to $150.9 million at December 31, 2012, primarily due to a $8.3 million, or 8.0%, decrease in non-accrual loans offset by a $2.8 million, or 5.9%, increase in OREO. 

CAPITAL ADEQUACY REVIEW

At June 30, 2013, the Company's Tier 1 risk-based capital ratio of 16.15%, total risk-based capital ratio of 17.92%, and Tier 1 leverage capital ratio of 13.40%, 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 6%, 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%. At December 31, 2012, the Company's Tier 1 risk-based capital ratio was 17.36%, total risk-based capital ratio was 19.12%, and Tier 1 leverage capital ratio was 13.82%.

YEAR-TO-DATE REVIEW

Net income attributable to common stockholders was $51.5 million, an increase of $1.0 million, or 1.9%, compared to net income attributable to common stockholders of $50.5 million for the same period a year ago due primarily to increases in gains on sale of securities, decreases in OREO expenses, and increases in commissions from wealth management, offset by decreases in the reversal for credit losses, increases in prepayment penalties on the prepayment of securities sold under an agreement to repurchase, increases in salaries and incentive compensation expense, increases in consulting expense, and increases in legal and collection expense.  Diluted earnings per share was $0.65 compared to $0.64 per share for the same period a year ago.  The net interest margin for the six months ended June 30, 2013, increased 5 basis points to 3.33% compared to 3.28% for the same period a year ago.

Return on average stockholders' equity was 7.47% and return on average assets was 1.13% for the six months ended June 30, 2013, compared to a return on average stockholders' equity of 7.67% and a return on average assets of 1.12% for the same period of 2012.  The efficiency ratio for the six months ended June 30, 2013, was 52.64% compared to 53.35% for the same period a year ago.

CONFERENCE CALL

Cathay General Bancorp will host a conference call this afternoon to discuss its second quarter 2013 financial results. The call will begin 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 1-877-280-4960 and enter Participant Passcode 94354175. A listen-only live Webcast of the call will be available at www.cathaygeneralbancorp.com and a recorded version is scheduled to be available for replay for 12 months after the call.

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 31 branches in California, eight branches in New York State, one in Massachusetts, two in Texas, three in Washington State, three in the Chicago, Illinois area, one in New Jersey, one in Nevada, one in Hong Kong, and a representative office in Shanghai and in Taipei. Cathay Bank's website is found at http://www.cathaybank.com. Cathay General Bancorp's website is found at http://www.cathaygeneralbancorp.com.  Information set forth on such websites is not incorporated into this press release.

FORWARD-LOOKING STATEMENTS AND OTHER NOTICES

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 U.S. and international business and economic conditions; credit risks of lending activities and deterioration in asset or credit quality; potential supervisory action by federal supervisory authorities; increased costs of compliance and other risks associated with changes in regulation and the current regulatory environment, including the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), and the potential for substantial changes in the legal, regulatory, and enforcement framework and oversight applicable to financial institutions in reaction to recent adverse financial market events, including changes pursuant to the Dodd-Frank Act; potential goodwill impairment; liquidity risk; fluctuations in interest rates; inflation and deflation; risks associated with acquisitions and the expansion of our business into new markets; real estate market conditions and the value of real estate collateral; environmental liabilities; our ability to compete with larger competitors; the possibility of higher capital requirements, including implementation of the Basel III capital standards of the Basel Committee; our ability to retain key personnel; successful management of reputational risk; natural disasters and geopolitical events; general economic or business conditions in California, Asia, and other regions where Cathay Bank has operations; restrictions on compensation paid to our executives as a result of our participation in the TARP Capital Purchase Program; failures, interruptions, or security breaches of our information systems; our ability to adapt our systems to technological changes, including successfully implementing our core system conversion; adverse results in legal proceedings; 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; successfully raising additional capital, if needed, and the resulting dilution of interests of holders of our common stock; and the soundness of other financial institutions.

These and other factors are further described in Cathay General Bancorp's Annual Report on Form 10-K for the year ended December 31, 2012 (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, which speak to the date of this press release. Cathay General Bancorp has no intention and undertakes no obligation to update any forward-looking statement or to publicly announce any revision of any forward-looking statement to reflect future developments or events, except as required by law.

Cathay General Bancorp's filings with the SEC are available at the website maintained by the SEC at http://www.sec.gov, or by request directed to Cathay General Bancorp, 9650 Flair Drive, El Monte, California 91731, Attention: Investor Relations, (626) 279-3286.

 

CATHAY GENERAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)




Three months ended June 30,




Six months ended June 30,

(Dollars in thousands, except per share data)


2013


2012


% Change


2013


2012

% Change













FINANCIAL PERFORMANCE












Net interest income before provision for credit losses    


$          79,994


$          79,120


1


$        160,126


$          159,771

0

Provision/(reversal) for credit losses


-


(5,000)


(100)


-


(9,000)

(100)

Net interest income after provision for credit losses


79,994


84,120


(5)


160,126


168,771

(5)

Non-interest income


20,361


9,852


107


35,242


18,683

89

Non-interest expense


53,716


47,342


13


102,844


95,213

8

Income before income tax expense


46,639


46,630


0


92,524


92,241

0

Income tax expense


16,573


16,619


(0)


33,460


33,166

1

Net income


30,066


30,011


0


59,064


59,075

(0)

  Net income attributable to noncontrolling interest


150


150


-


301


301

-

Net income attributable to Cathay General Bancorp


$          29,916


$          29,861


0


$          58,763


$             58,774

(0)

Dividends on preferred stock and noncash charge from repayment

(2,067)


(4,121)


(50)


(7,251)


(8,238)

(12)

Net income attributable to common stockholders


$          27,849


$          25,740


8


$          51,512


$             50,536

2













Net income attributable to common stockholders per common share:










Basic


$              0.35


$              0.33


6


$              0.65


$                 0.64

2

Diluted


$              0.35


$              0.33


6


$              0.65


$                 0.64

2













Cash dividends paid per common share  


$              0.01


$              0.01


-


$              0.02


$                 0.02

-

























SELECTED RATIOS












Return on average assets


1.15%


1.13%


2


1.13%


1.12%

1

Return on average total stockholders' equity


7.74%


7.72%


0


7.47%


7.67%

(3)

Efficiency ratio


53.53%


53.21%


1


52.64%


53.35%

(1)

Dividend payout ratio


2.64%


2.64%


-


2.68%


2.68%

-

























YIELD ANALYSIS (Fully taxable equivalent)












Total interest-earning assets


4.16%


4.39%


(5)


4.21%


4.47%

(6)

Total interest-bearing liabilities


1.11%


1.45%


(23)


1.15%


1.48%

(22)

Net interest spread


3.05%


2.94%


4


3.06%


2.99%

2

Net interest margin


3.30%


3.24%


2


3.33%


3.28%

2





























































CAPITAL RATIOS


June 30, 2013


June 30, 2012


December 31, 2012


Well Capitalized Requirements


Minimum Regulatory Requirements


Tier 1 risk-based capital ratio


16.15%


16.91%


17.36%


6.0%


4.0%


Total risk-based capital ratio


17.92%


18.82%


19.12%


10.0%


8.0%


Tier 1 leverage capital ratio


13.40%


13.30%


13.82%


5.0%


4.0%




.










                                                                                                        

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except share and per share data)


June 30, 2013


December 31, 2012


% change








Assets







Cash and due from banks


$                                        133,003


$                                        144,909


(8)

Short-term investments and interest bearing deposits


139,840


411,983


(66)

Securities held-to-maturity (market value of $823,906 in 2012)


-


773,768


(100)

Securities available-for-sale (amortized cost of $2,044,312 in 2013 and







    $1,290,676 in 2012)


2,018,305


1,291,480


56

Trading securities


4,816


4,703


2

Loans


7,694,373


7,429,147


4

Less:  Allowance for loan losses


(179,733)


(183,322)


(2)

 Unamortized deferred loan fees, net


(11,685)


(10,238)


14

 Loans, net


7,502,955


7,235,587


4

Federal Home Loan Bank stock


32,918


41,272


(20)

Other real estate owned, net


49,141


46,384


6

Affordable housing investments, net


87,456


85,037


3

Premises and equipment, net


102,611


102,613


(0)

Customers' liability on acceptances


23,084


41,271


(44)

Accrued interest receivable


26,374


26,015


1

Goodwill


316,340


316,340


-

Other intangible assets, net


4,113


6,132


(33)

Other assets


162,279


166,595


(3)








Total assets


$                                   10,603,235


$                                   10,694,089


(1)








Liabilities and Stockholders' Equity







Deposits







Non-interest-bearing demand deposits


$                                     1,347,134


$                                     1,269,455


6

Interest-bearing deposits:







NOW deposits


629,858


593,133


6

Money market deposits


1,121,290


1,186,771


(6)

Savings deposits


484,704


473,805


2

Time deposits under $100,000


816,539


644,191


27

Time deposits of $100,000 or more


3,310,996


3,215,870


3

Total deposits


7,710,521


7,383,225


4








Securities sold under agreements to repurchase


950,000


1,250,000


(24)

Advances from the Federal Home Loan Bank


126,200


146,200


(14)

Other borrowings for affordable housing investments


19,190


18,713


3

Long-term debt


171,136


171,136


-

Acceptances outstanding


23,084


41,271


(44)

Other liabilities


63,682


54,040


18

Total liabilities


9,063,813


9,064,585


(0)

     Commitments and contingencies


-


-


-

Stockholders' Equity







Preferred stock, 10,000,000 shares authorized, 129,000 issued







and outstanding at June 30, 2013, and 258,000 issued 







and outstanding at December 31, 2012


128,178


254,580


(50)

Common stock, $0.01 par value, 100,000,000 shares authorized,







83,091,449 issued and 78,883,884 outstanding at June 30, 2013, and







82,985,853 issued and 78,778,288 outstanding at December 31, 2012


831


830


0

Additional paid-in-capital


770,847


768,925


0

Accumulated other comprehensive (loss)/income, net


(15,072)


465


(3,341)

Retained earnings


771,927


721,993


7

Treasury stock, at cost (4,207,565 shares at June 30, 2013, 







     and at December 31, 2012)


(125,736)


(125,736)


-








Total Cathay General Bancorp stockholders' equity


1,530,975


1,621,057


(6)

Noncontrolling interest


8,447


8,447


-

Total equity


1,539,422


1,629,504


(6)

Total liabilities and equity


$                                   10,603,235


$                                   10,694,089


(1)








Book value per common share


$17.56


$17.12


3

Number of common shares outstanding


78,883,884


78,778,288


0

 

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




Three months ended June 30,


Six months ended June 30,



2013

2012


2013

2012



(In thousands, except share and per share data)

INTEREST AND  DIVIDEND INCOME







Loan receivable, including loan fees


$                         87,879

$                    88,761


$           176,719

$            179,462

Investment securities- taxable


12,332

17,166


24,118

34,889

Investment securities- nontaxable


28

1,039


995

2,091

Federal Home Loan Bank stock


342

67


592

133

Federal funds sold and securities 







purchased under agreements to resell


-

11


-

16

Deposits with banks


281

537


489

1,125








Total interest and dividend income


100,862

107,581


202,913

217,716








INTEREST EXPENSE







Time deposits of $100,000 or more


6,822

8,642


13,579

18,182

Other deposits


2,993

3,868


5,759

7,784

Securities sold under agreements to repurchase


9,984

14,598


21,376

29,253

Advances from Federal Home Loan Bank


145

69


225

122

Long-term debt


924

1,284


1,848

2,604








Total interest expense


20,868

28,461


42,787

57,945








Net interest income before provision for credit losses


79,994

79,120


160,126

159,771

Provision/(reversal) for credit losses


-

(5,000)


-

(9,000)








Net interest income after provision for credit losses


79,994

84,120


160,126

168,771








NON-INTEREST INCOME







Securities gains, net


12,177

2,374


18,469

4,589

Letters of credit commissions


1,449

1,619


2,910

3,145

Depository service fees


1,485

1,383


2,959

2,772

Other operating income


5,250

4,476


10,904

8,177








Total non-interest income


20,361

9,852


35,242

18,683








NON-INTEREST EXPENSE







Salaries and employee benefits


21,588

20,097


44,441

39,975

Occupancy expense


3,510

3,489


7,154

7,073

Computer and equipment expense


2,366

2,391


5,042

4,854

Professional services expense


6,854

5,209


12,671

9,951

FDIC and State assessments


1,981

1,971


3,719

4,460

Marketing expense


1,169

1,483


1,606

2,889

Other real estate owned (income)/expense


(264)

7,061


359

11,754

Operations of affordable housing investments 


2,023

1,951


3,718

3,911

Amortization of core deposit intangibles


1,338

1,404


2,734

2,861

Cost associated with debt redemption


10,051

-


15,696

2,750

Other operating expense


3,100

2,286


5,704

4,735








Total non-interest expense


53,716

47,342


102,844

95,213








Income before income tax expense


46,639

46,630


92,524

92,241

Income tax expense


16,573

16,619


33,460

33,166

Net income


30,066

30,011


59,064

59,075

     Less: net income attributable to noncontrolling interest


150

150


301

301

Net income attributable to Cathay General Bancorp


29,916

29,861


58,763

58,774








Dividends on preferred stock and noncash charge from repayment


(2,067)

(4,121)


(7,251)

(8,238)

Net income attributable to common stockholders


$                         27,849

$                    25,740


$             51,512

$              50,536








Net income attributable to common stockholders per common share:







Basic


$                             0.35

$                        0.33


$                 0.65

$                  0.64

Diluted


$                             0.35

$                        0.33


$                 0.65

$                  0.64








Cash dividends paid per common share


$                             0.01

$                        0.01


$                 0.02

$                  0.02

Basic average common shares outstanding


78,869,089

78,710,279


78,832,530

78,694,462

Diluted average common shares outstanding


78,899,906

78,712,172


78,857,758

78,701,152

 

CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)



For the three months ended,


(In thousands)

June 30, 2013


June 30, 2012


March 31, 2013










Interest-earning assets

Average Balance

Average Yield/Rate (1) (2)


Average Balance

Average Yield/Rate (1) (2)


Average Balance

Average Yield/Rate (1) (2)

Loans (1)

$    7,441,872

4.74%


$    6,938,638

5.15%


$    7,386,866

4.88%

Taxable investment securities 

2,050,533

2.41%


2,353,629

2.93%


2,006,091

2.38%

Tax-exempt investment securities  (2)

11,051

1.56%


131,085

4.91%


124,182

4.86%

FHLB stock

35,186

3.90%


49,197

0.54%


41,041

2.47%

Federal funds sold and securities purchased









under agreements to resell

-

-


30,989

0.14%


-

-

Deposits with banks

191,255

0.59%


400,372

0.54%


196,615

0.43%










Total interest-earning assets

$    9,729,897

4.16%


$    9,903,910

4.39%


$    9,754,795

4.26%










Interest-bearing liabilities









Interest-bearing demand deposits

$       622,998

0.16%


$       493,800

0.15%


$       600,110

0.16%

Money market deposits

1,137,452

0.56%


1,019,393

0.57%


1,164,125

0.55%

Savings deposits

513,781

0.08%


446,147

0.09%


466,952

0.08%

Time deposits

3,974,923

0.80%


4,312,129

1.01%


3,878,847

0.80%

Total interest-bearing deposits

$     6,249,154

0.63%


$     6,271,469

0.80%


$     6,110,034

0.63%

Securities sold under agreements to repurchase

1,042,308

3.84%


1,400,000

4.19%


1,197,222

3.86%

Other borrowed funds

70,836

0.82%


39,368

0.70%


48,807

0.66%

Long-term debt

171,136

2.17%


171,136

3.02%


171,136

2.19%

Total interest-bearing liabilities

7,533,434

1.11%


7,881,973

1.45%


7,527,199

1.18%










Non-interest-bearing demand deposits

1,278,311



1,110,988



1,221,552











Total deposits and other borrowed funds

$     8,811,745



$     8,992,961



$     8,748,751











Total average assets

$   10,442,747



$   10,636,617



$   10,464,464


Total average equity

$     1,559,276



$     1,563,394



$     1,632,773





















For the six months ended,




(In thousands)

June 30, 2013


June 30, 2012












Interest-earning assets

Average Balance

Average Yield/Rate (1) (2)


Average Balance

Average Yield/Rate (1) (2)




Loans and leases (1)

$     7,414,521

4.81%


$     6,968,112

5.18%




Taxable investment securities 

2,028,435

2.40%


2,338,397

3.00%




Tax-exempt investment securities  (2)

67,304

4.59%


132,090

4.90%




FHLB stock

38,097

3.13%


50,912

0.52%




Federal funds sold and securities purchased









under agreements to resell

-

-


26,896

0.12%




Deposits with banks

193,920

0.51%


333,765

0.68%













Total interest-earning assets

$     9,742,277

4.21%


$     9,850,172

4.47%













Interest-bearing liabilities









Interest-bearing demand deposits

$        611,617

0.16%


$        479,861

0.15%




Money market deposits

1,150,715

0.56%


997,751

0.57%




Savings deposits

490,496

0.08%


435,172

0.08%




Time deposits

3,927,151

0.80%


4,353,615

1.04%




Total interest-bearing deposits

$     6,179,979

0.63%


$     6,266,399

0.83%




Securities sold under agreements to repurchase

1,119,337

3.85%


1,400,000

4.20%




Other borrowed funds

59,883

0.76%


34,743

0.71%




Long-term debt

171,136

2.18%


171,136

3.06%




Total interest-bearing liabilities

7,530,335

1.15%


7,872,278

1.48%













Non-interest-bearing demand deposits

1,250,088



1,091,188














Total deposits and other borrowed funds

$     8,780,423



$     8,963,466














Total average assets

$   10,453,545



$   10,593,893





Total average equity

$     1,595,821



$     1,549,184





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




(2) The average yield has been adjusted to a fully taxable-equivalent basis for certain securities of states and political subdivisions and other securities held using a statutory Federal income tax rate of 35%.


SOURCE Cathay General Bancorp



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