Cathay General Bancorp Reports Fourth Quarter Results; Nonaccrual Portfolio Loans Down 22%, Other Real Estate Owned Down 19%

Jan 28, 2010, 16:30 ET from Cathay General Bancorp

LOS ANGELES, Jan. 28 /PRNewswire-FirstCall/ -- Cathay General Bancorp (the "Company") (Nasdaq: CATY), the holding company for Cathay Bank (the "Bank"), today announced results for the fourth quarter of 2009.

FINANCIAL PERFORMANCE

    
    
                   Three months ended December 31,   Year ended December 31,
                   -------------------------------   -----------------------
                        2009           2008            2009           2008
                        ----           ----            ----           ----
    Net (loss)/
     Income       ($35.3) million ($2.9) million ($67.4) million $50.5 million
    Net (loss)/
     income
     attributable
     to common
     stockholders ($39.4) million ($4.0) million ($83.7) million $49.4 million
    (Loss)/basic
     earnings per
     common share      ($0.64)        ($0.08)         ($1.59)         $1.00
    (Loss)/ diluted
     earnings per
     common share      ($0.64)        ($0.08)         ($1.59)         $1.00
    Return on
     average assets     -1.19%         -0.10%          -0.58%          0.47%
    Return on average
     total
     stockholders'
     equity            -10.45%         -1.06%          -5.20%          4.95%
    Efficiency ratio    64.25%         42.24%          50.65%         43.52%

FOURTH QUARTER HIGHLIGHTS

  • Nonaccrual portfolio loans down 22% - Total nonaccrual portfolio loans, excluding $54.8 million of nonaccrual loans held for sale, decreased by 22.2%, or $79.9 million, to $280.6 million at December 31, 2009, compared to $360.5 million at September 30, 2009.  
  • Other real estate owned ("OREO") decreased 19% – OREO decreased $16.8 million, or 19.1%, during the fourth quarter of 2009.  
  • Allowance for credit losses strengthened – Total allowance for credit losses increased to $217.1 million, or 3.15%, of total loans, excluding loans held for sale, at December 31, 2009, compared to 2.73% of total loans at September 30, 2009.
  • Capital strengthened – During the fourth quarter of 2009, the Company raised $88.7 million in additional capital through the sale of 10.4 million shares of common stock through its stock offering on October 13, 2009, and its new At-the-Market common stock issuance program which commenced on November 23, 2009.

FULL YEAR HIGHLIGHTS

  • In 2009, the Company raised $120.5 million in additional capital through the sale of 13.9 million shares of common stock.
  • Total deposits increased by $668.3 million, or 9.8%, to $7.5 billion at December 31, 2009, from $6.8 billion at December 31, 2008.  

"In the fourth quarter, we have taken several steps to improve our bank's risk profile and strengthen our capital base. Our nonaccruals continue to decrease during the fourth quarter and we are committed to continue to aggressively dispose of problem assets during 2010.  We recorded a provision for credit losses during the fourth quarter of $91 million which increased our allowance for credit losses to 3.15% of total loans," commented Dunson Cheng, Chairman of the Board, Chief Executive Officer, and President of the Company.

"During 2009, we had solid growth in total deposits, which increased by $668 million, or 10%, which helped us to improve our net loan to deposit ratio to 90% at December 31, 2009.  We are especially pleased that our core deposits in 2009 increased $527.4 million, or 20%, to $3.2 billion at December 31, 2009," said Peter Wu, Executive Vice Chairman and Chief Operating Officer.

"As part of our ongoing evaluation of our capital levels and needs during this challenging economic period, we raised additional new capital of $88.7 million during the fourth quarter.  We intend to raise additional capital shortly to provide the Company with additional capital to take advantage of any new business opportunities and to continue to strengthen our balance sheet.  Our focus continues to be managing through this challenging credit cycle, continuing our momentum in resolving problem assets in 2010 and maintaining strong liquidity," concluded Dunson Cheng.

INCOME STATEMENT REVIEW

Net loss attributable to common stockholders for the three month ended December 31, 2009 was $39.4 million, an increased loss of $35.4 million, compared to net loss attributable to common stockholders of $4.0 million for the same period a year ago.  Loss per share for the three months ended December 31, 2009, was $0.64 compared to loss of $0.08 per share for the same period a year ago due primarily to increases in the provision for credit losses, lower net interest income and higher provision for OREO write-downs.

Return on average stockholders' equity was negative 10.45% and return on average assets was negative 1.19% for the three months ended December 31, 2009, compared to a return on average stockholders' equity of negative 1.06% and a return on average assets of negative 0.10% for the same period of 2008.

Net interest income before provision for credit losses

Net interest income before provision for credit losses decreased to $73.8 million during the fourth quarter of 2009, a decline of $487,000, or 0.7%, compared to $74.2 million during the same quarter a year ago.  The decrease was due primarily to the increases in interest expense paid for securities sold under agreements to repurchase.

The net interest margin, on a fully taxable-equivalent basis, was 2.65% for both the fourth quarter of 2009 and the third quarter of 2009 and was impacted during the fourth quarter by the substantial amount of short term liquidity which has been redeployed in securities towards the end of the fourth quarter.  The net interest margin decreased 20 basis points from 2.85%, on a fully taxable-equivalent basis, in the fourth quarter of 2008. The decrease in net interest margin from corresponding quarter of the prior year primarily resulted from increases in non-accrual loans and the increase in the borrowing rate on our long term repurchase agreements and other borrowed funds.  The majority of our variable rate loans contain interest rate floors, which help limit the impact of the record low level of the prime interest rate.

For the fourth quarter of 2009, the yield on average interest-earning assets was 4.66%, on a fully taxable-equivalent basis, the cost of funds on average interest-bearing liabilities equaled 2.35%, and the cost of interest bearing deposits was 1.63%.  In comparison, for the fourth quarter of 2008, the yield on average interest-earning assets was 5.57%, on a fully taxable-equivalent basis, cost of funds on average interest-bearing liabilities equaled 3.10%, and the cost of interest bearing deposits was 2.72%. 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, decreased 16 basis points to 2.31% for the fourth quarter ended December 31, 2009, from 2.47% for the same quarter a year ago, primarily due to the reasons discussed above.

The cost of deposits, including demand deposits, decreased 17 basis points to 1.45% in the fourth quarter of 2009 compared to 1.62% in the third quarter of 2009 and decreased 97 basis points from 2.42% in the fourth quarter of 2008 due primarily to the decrease in the rates paid on certificates of deposit upon renewal and for core deposits as a result of the decline in market interest rates.

Provision for credit losses

The provision for credit losses was $91.0 million for the fourth quarter of 2009 compared to $76.0 million for the third quarter of 2009 and compared to $62.9 million in the fourth quarter of 2008.  The provision for credit losses was based on the review of the adequacy of the allowance for loan losses at December 31, 2009. The provision for credit losses represents the charge against 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 as indicated:

    
    
                              For the three months       For the year
                               ended December 31,      ended December 31,
                              --------------------     ------------------
    (In thousands)               2009       2008       2009         2008
                                 ----       ----       ----         ----
    Charge-offs:
      Commercial loans          $9,713     $4,015    $59,370      $12,932
      Construction loans-
       residential              12,612     12,414     71,147       20,653
      Construction loans-
       other                    11,394          -     22,128            -
      Real estate loans (1)     26,381      4,738     52,931        5,291
      Real estate- land loans    9,368      9,213     16,967        9,553
      Installment and
       other loans                   -        254          4          254
                               -------    -------    -------      -------
         Total charge-offs(2)   69,468     30,634    222,547       48,683
                               -------    -------    -------      -------
    Recoveries:                                  
      Commercial loans             381        116        904        1,750
      Construction loans-
       residential                 367          -      1,140           83
      Real estate loans (1)        415          -        461            -
      Real estate- land loans        6          -        692            -
      Installment and other loans    2          -         21           16
                               -------    -------    -------      -------
         Total recoveries        1,171        116      3,218        1,849
                               -------    -------    -------      -------
    Net Charge-offs            $68,297    $30,518   $219,329      $46,834
                               =======    =======    =======      =======
    
    (1) Real estate loans includes commercial mortgage loans, residential
        mortgage loans and equity lines.
    (2) Total charge-offs for the fourth quarter of 2009 included charge-offs
        of $19.3 million recorded upon the transfer of loans to loans held for
        sale.

Total charge-offs of $69.5 million for the fourth quarter of 2009 included $24.0 million of charge-offs on 17 construction loans, $25.4 million of charge-offs on 29 commercial real estate loans, $9.7 million on 21 commercial loans, $9.4 million of charge-offs on eight land loans and $942,000 charge-offs on residential mortgage loans.  Net loan charge-offs remained high in the fourth quarter as a result of the continuing weak economy and the charge-offs related to the transfer of certain loans to held for sale status.

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 $8.3 million for the fourth quarter of 2009, a decrease of $3.3 million compared to the non-interest income of $11.6 million for the fourth quarter of 2008. The decrease in non-interest income was primarily due to a decrease in securities gains from $7.0 million in the fourth quarter of 2008 to $3.3 million in the fourth quarter of 2009.  In addition, the net loss for interest rate swaps increased $1.0 million and venture capital income decreased $272,000 in the fourth quarter of 2009.  Offsetting the above non-interest income decreases were a $1.0 million decrease in other-than-temporary impairment write-down of the Company's investment in the common stock of Broadway Financial Corporation during 2008 and a $730,000 increase in gains on sale of loans.

Non-interest expense

Non-interest expense increased $16.5 million, or 45.4%, to $52.7 million in the fourth quarter of 2009 compared to $36.2 million in the same quarter a year ago.  The efficiency ratio was 64.25% in the fourth quarter of 2009 compared to 42.24% for the same period a year ago due primarily to higher OREO expenses in the fourth quarter of 2009 and higher securities gains recorded in the same quarter a year ago.

OREO expense increased $12.8 million to $15.9 million in the fourth quarter of 2009 from $3.1 million in the same quarter a year ago primarily due to write-downs required as a result of continued decline in real estate values and expense resulting from increased OREO holdings.

Professional service expense increased $3.3 million to $6.4 million in the fourth quarter of 2009 compared with $3.1 million in the same quarter a year ago due mainly to increases in legal expenses, professional expenses, and collection expenses.  FDIC and State assessments increased $2.4 million to $4.0 million in the fourth quarter of 2009 from $1.6 million in the same quarter a year ago due to a higher assessment rate and higher deposit balances.  Occupancy expense increased $665,000 primarily due to our new administrative offices at 9650 Flair Drive, El Monte which opened in January 2009.  Offsetting the above described increases were decreases of $1.6 million in salaries and employee benefits due primarily to a $751,000 decrease in option compensation expense, a $407,000 decrease in salaries, and a $231,000 decrease in bonus accruals and decreases of $727,000 in marketing expense.

Income taxes

The tax benefit for the fourth quarter of 2009 resulted from the pretax loss for the quarter and the utilization of low income housing tax credits.

BALANCE SHEET REVIEW

Total assets were $11.6 billion at both December 31, 2009 and December 31, 2008. Securities held-to-maturity increased $635.0 million and short-term investment and interest bearing deposits increased $229.7 million offset primarily by a $518.4 million decrease in gross loans and by a $201.0 million decrease in securities purchased under agreement to resell.

The changes in the loan composition from December 31, 2008, are presented below:

    
    
    Type of Loans:           December 31, 2009  December 31, 2008  % Change
    --------------           -----------------  -----------------  --------
                                     (Dollars in thousands)
    
    Commercial                   $1,307,880        $1,620,438        (19)
    Residential mortgage            682,291           622,741         10
    Commercial mortgage           4,065,155         4,132,850         (2)
    Equity lines                    195,975           168,756         16
    Real estate construction        626,087           913,168        (31)
    Installment                      13,390            11,340         18
    Other                             8,364             3,075        172
                                 ----------        ----------
      Gross loans and leases     $6,899,142        $7,472,368         (8)
    
    Allowance for loan
     losses                        (211,889)         (122,093)        74
    Unamortized deferred
     loan fees                       (8,339)          (10,094)       (17)
                                 ----------        ----------
      Total loans and leases,
       net                       $6,678,914        $7,340,181         (9)
                                 ----------        ----------
    Loans held for sale             $54,826                $-        100
                                 ----------        ----------

Total deposits were $7.5 billion at December 31, 2009, an increase of $668.3 million, or 9.8%, from $6.8 billion at December 31, 2008, primarily due to increases of $283.7 million, or 43.0%, in money market deposits, increases of $253.4 million, or 7.8%, in time deposits of $100,000 or more, and increases of $134.1 million, or 18.4%, in non-interest-bearing deposits offset by decreases of $114.5 million, or 7.0%, in time deposits under $100,000. The changes in the deposit composition from December 31, 2008, are presented below:

    
    
    Deposits                 December 31, 2009  December 31, 2008   % Change
    --------                 -----------------  -----------------   --------
                                     (Dollars in thousands)
    
    Non-interest-bearing demand    $864,551          $730,433         18
    NOW                             337,304           257,234         31
    Money market                    943,164           659,454         43
    Savings                         347,724           316,263         10
    Time deposits under $100,000  1,529,954         1,644,407         (7)
    Time deposits of $100,000
     or more                      3,482,343         3,228,945          8
                                  ---------         ---------
      Total deposits             $7,505,040        $6,836,736         10
                                 ==========        ==========

ASSET QUALITY REVIEW

At December 31, 2009, total non-accrual portfolio loans, excluding non-accrual loans held for sale, were $280.6 million, a decrease of $79.9 million, or 22.2%, from $360.5 million at September 30, 2009 and an increase of $99.4 million, or 54.9%, from $181.2 million at December 31, 2008.  A summary of non-accrual loans by collateral type as of December 31, 2009 is shown below:

    
    
                                       No. of  Other   No. of        No. of
    Collateral Type        California  Loans   States  Loans  Total  Loans
                           ----------  ------  ------  -----  -----  ------
                       (Dollars in thousands except no. of loans)
    Non-accrual portfolio
     loans                          
      Commercial real
       estate                $82,106     22   $30,667    25  $112,773    47
      Commercial              22,873     31     3,697     9    26,570    40
      Construction-
       residential            50,322      9     4,168     4    54,490    13
      Construction-
       non-residential        35,972      8       825     1    36,797     9
      Residential mortgage     6,922     25     2,556    11     9,478    36
      Land                    20,706     14    19,828     6    40,534    20
                            --------    ---  --------   ---  --------   ---
         Total non-accrual
          portfolio
          loans             $218,901    109   $61,741    56  $280,642   165
                            --------    ---  --------   ---  --------   ---
    Non-accrual loans
     held for sale           $25,628      6   $29,198     4   $54,826    10
                            --------    ---  --------   ---  --------   ---

Included in nonaccrual commercial real estate loans is a loan with an outstanding balance of $47.6 million to a borrower who filed for bankruptcy in March 2009.  While the loan is on non-accrual at December 31, 2009, management believes that the value and cash flow of the underlying real estate collateral is sufficient for a full collection of principal and interest.  Nonaccrual loans also include those troubled debt restructurings that do not qualify for accrual status.

At December 31, 2009, non-accrual loans held for sale of $54.8 million comprised of a $15.6 million residential construction loan which is expected to be sold in February, 2010, $11.7 million for seven commercial real estate loans, a $1.5 million construction loan, and $26.0 million for a commercial real estate loan which was sold on December 30, 2009.  The sale of the $26.0 million commercial real estate loan will be recognized for financial reporting purposes during the first quarter of 2010 when the cash portion of the purchase price is received.  Total charge-offs of $19.3 million were recorded during the fourth quarter of 2009 upon the transfer of loans to held for sale.  During the fourth quarter, eight loans were sold for $22.0 million.

At December 31, 2009, total residential construction loans were $227.0 million of which $7.4 million were in the Central Valley in California and $12.3 million were in San Bernardino and Riverside counties in California. At December 31, 2009, total land loans were $184.6 million of which $9.3 million were in San Bernardino, Riverside, and Imperial counties, $2.5 million were in the Central Valley and $19.8 million in the state of Nevada.

Troubled debt restructurings on accrual status totaled $55.0 million at December 31, 2009 and were comprised of 14 loans.  These loans are classified as troubled debt restructurings as a result of granting a concession to borrowers.  The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the loan balance or accrued interest, or extension of the maturity date.  Although these loan modifications are considered Statement 15 troubled debt restructurings, the loans have performed 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.

At December 31, 2009, other real estate owned totaled $71.0 million which was $16.8 million, or 19.1%, lower compared to $87.8 million at September 30, 2009, but increased $10.0 million, or 16.4%, from $61.0 million at December 31, 2008.  At December 31, 2009, $51.6 million of OREO was located in California, $12.7 million of OREO was located in Texas, $4.3 million of OREO was located in the state of Washington, and $2.4 million was located in all other states.

The ratio of non-performing assets, excluding non-accrual loans held for sale, to total assets was 3.0% at December 31, 2009, compared to 2.2% at December 31, 2008, and compared to 4.0% at September 30, 2009.  Total non-performing portfolio assets decreased $113.1 million, or 24.3%, to $351.7 million at December 31, 2009, compared with $464.8 million at September 30, 2009, primarily due to a $79.9 million decrease in non-accrual loans, a $16.8 million decrease in OREO and a $16.5 million decrease in 90 days or more past due still accruing loans.  Total non-performing portfolio assets increased $99.8 million, or 39.6%, to $351.7 million at December 31, 2009, compared with $251.8 million at December 31, 2008, primarily due to a $99.4 million increase in non-accrual loans and a $10.0 million increase in OREO.

The allowance for loan losses was $211.9 million and the allowance for off-balance sheet unfunded credit commitments was $5.2 million at December 31, 2009, and represented the amount that the Company believes to be sufficient to absorb credit losses inherent in the Company's loan portfolio.  The allowance for credit losses, the sum of allowance for loan losses and for off-balance sheet unfunded credit commitments, was $217.1 million at December 31, 2009, compared to $129.4 million at December 31, 2008, an increase of $87.7 million, or 67.7%.  The allowance for credit losses represented 3.15% of period-end gross loans, excluding loans held for sale, and 77.4% of non-performing portfolio loans at December 31, 2009.  The comparable ratios were 1.73% of period-end gross loans and 68.9% of non-performing loans at December 31, 2008.  Results of the changes from December 31, 2008 and September 30, 2009, to December 31, 2009, of the Company's non-performing assets and troubled debt restructurings are highlighted below:

    
    
     (Dollars
     in thousands)       December 31, September 30,   %    December 31,   %
                             2009         2009      Change     2008     Change
                            ------       ------     ------    ------    ------
    Non-performing assets                      
    Accruing loans past
     due 90 days or more       $-       $16,507     (100)     $6,733    (100)
                                                 
    Non-accrual
     portfolio loans:                          
      Construction-
       residential         54,490        96,329      (43)    100,169     (46)
      Construction-
       non-residential     36,797        35,201        5      22,012      67
      Land                 40,534        27,258       49      12,608     221
      Commercial real
       estate, excluding
       land               112,774       164,967      (32)     19,733     471
      Commercial           26,570        25,479        4      20,904      27
      Residential
       mortgage             9,478        11,271      (16)      5,776      64
                         --------      --------      ----   --------     ----
    Total non-accrual
     loans:              $280,643      $360,505      (22)   $181,202      55
                         --------      --------      ----   --------     ----
      Total
       non-performing
       loans              280,643       377,012      (26)    187,935      49
           Other real
            estate owned
            and other
            assets         71,014        87,769      (19)     63,892      11
                         --------      --------      ----   --------     ----
      Total
       non-performing
       assets            $351,657      $464,781      (24)   $251,827      40
                         --------      --------      ----   --------     ----
    Performing troubled
     debt restructurings  $54,992       $59,400       (7)       $924   5,852
    Non-accrual loans
     held for sale        $54,826             -      100          $-     100
                                                 
    Allowance for loan
     losses              $211,889      $189,370       12    $122,093      74
    Allowance for
     off-balance sheet
     credit commitments     5,207         5,023        4       7,332     (29)
                         --------      --------      ----   --------     ----
    Allowance for
     credit losses       $217,096      $194,393       12    $129,425      68
                         ========      ========      ====   ========     ====
    Total gross loans
     outstanding at
     period-end (1)    $6,899,142    $7,115,582       (3) $7,472,368      (8)
    
    Allowance for loan
     losses to
     non-performing
     loans, at
     period-end (2)         75.50%        50.23%               64.97%        
    
    Allowance for
     loan losses to
     gross loans, at
     period-end (1)          3.07%         2.66%                1.63%      
    
    Allowance for credit
     losses to
     non-performing loans,
     at period-end (2)      77.36%        51.56%               68.87%      
    
    Allowance for
     credit losses to
     gross loans, at
     period-end (1)          3.15%         2.73%                1.73%      
    
    (1) Excludes loans held for sale, at period-end.
    (2) Excludes non-accrual loans held for sale at period-end.

CAPITAL ADEQUACY REVIEW

At December 31, 2009, the Tier 1 risk-based capital ratio of 13.55%, total risk-based capital ratio of 15.43%, and Tier 1 leverage capital ratio of 9.64%, 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, 2008, the Company's Tier 1 risk-based capital ratio was 12.12%, the total risk-based capital ratio was 13.94%, and Tier 1 leverage capital ratio was 9.79%.

During the fourth quarter of 2009, the Company raised additional capital of $88.7 million from the sale of approximately 10.4 million shares of common stock; $76.0 million from its stock offering on October 13, 2009 at $9.25 per share for 8,756,756 shares and $12.3 million from 1,623,100 shares from its new At-the-Market common stock issuance program which commenced on November 23, 2009.

YEAR-TO-DATE REVIEW

Net loss attributable to common stockholders for the year ended December 31, 2009, was $83.7 million, a $133.1 million decrease in income compared to net income attributable to common stockholders of $49.4 million for the year ended December 31, 2008.  Loss per share was $1.59 for the year ended December 31, 2009, compared to earnings of $1.00 per diluted share for year ended December 31, 2008, due primarily to increases in the provision for loan losses, lower net interest income and higher provision for OREO write-downs.  The net interest margin for the year of 2009 decreased 33 basis points to 2.62% compared to 2.95% for the year of 2008.

Return on average stockholders' equity was negative 5.20% and return on average assets was negative 0.58% for the year of 2009 compared to a return on average stockholders' equity of 4.95% and a return on average assets of 0.47% for the year of 2008.  The efficiency ratio for the year of 2009 was 50.65% compared to 43.52% for the year of 2008.

CONFERENCE CALL

Cathay General Bancorp will host a conference call this afternoon to discuss its fourth-quarter and year-end 2009 financial results. The call will begin at 3:00 p.m. PDT. Analysts and investors may dial in and participate in the question-and-answer session. To access the call, please dial 1-866-202-4683 and enter Participant Passcode 19183671. A listen-only live Webcast of the call will be available at www.cathaygeneralbancorp.com and a recorded version will 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 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

The information contained in this press release is not intended as a solicitation to buy Cathay General Bancorp stock or any other securities and is provided for information only. 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," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "shall," "should," "will," "predicts," "potential," "continue," and variations of these words and similar expressions. Forward-looking statements are based on estimates, beliefs, projections, and assumptions 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: significant volatility and deterioration in the credit and financial markets; adverse changes in general economic conditions; the effects of the Emergency Economic Stabilization Act, the American Recovery and Reinvestment Act, and the Troubled Asset Relief Program (TARP) and any changes or amendments thereto; deterioration in asset or credit quality; the availability of capital; the impact of any goodwill impairment that may be determined; acquisitions of other banks, if any; fluctuations in interest rates; the soundness of other financial institutions; expansion into new market areas; earthquakes, wildfires, or other natural disasters; competitive pressures; changes in laws, regulations, and accounting rules, or their interpretations; legislative, judicial, or regulatory actions and developments against us; and general economic or business conditions in California and other regions where Cathay Bank has operations, including, but not limited to, adverse changes in economic conditions resulting from the continuation or worsening of the current economic downturn.

These and other factors are further described in Cathay General Bancorp's Current Report on Form 8-K filed on November 23, 2009, (Item 8.01 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              Twelve months
    (Dollars in              ended December 31,         ended December 31,
     thousands,           ------------------------   ----------------------- 
     except                                   %                          %
     per share data)      2009      2008    Change   2009     2008    Change
                          ----      ----    ------   ----     ----    ------
    FINANCIAL
     PERFORMANCE
    
    Net interest
     income before
     provision
     for credit
     losses             $73,755   $74,242     (1) $282,692  $295,147      (4)
      Provision for
       credit losses     91,000    62,900     45   307,000   106,700     188
                        -------    ------   ----   -------   -------    ----
        Net interest
         (loss)/income
         after provision
         for credit
         losses         (17,245)   11,342   (252)  (24,308)  188,447    (113)
      Non-interest
       income/(loss)      8,272    11,577    (29)   78,654    18,907     316
      Non-interest
       expense           52,701    36,247     45   183,037   136,676      34
                        -------    ------   ----   -------   -------    ----
      (Loss)/income
       before income
       tax (benefit)/
       expense          (61,674)  (13,328)   363  (128,691)   70,678    (282)
      Income tax
       (benefit)/
       expense          (26,550)  (10,579)   151   (61,912)   19,554    (417)
                        -------    ------   ----   -------   -------    ----
      Net (loss)/
       income           (35,124)   (2,749) 1,178   (66,779)   51,124    (231)
        Net (loss)/
         income
         attributable
         to
         noncontrolling
         interest          (154)     (151)     2      (611)     (603)      1
                        -------    ------   ----   -------   -------    ----
      Net (loss)/
       income
       attributable
       to Cathay
       General
       Bancorp          (35,278)   (2,900) 1,116   (67,390)   50,521    (233)
                        -------    ------   ----   -------   -------    ----
      Dividends on
       preferred
       stock             (4,089)   (1,140)   259   (16,338)   (1,140)  1,333
                        -------    ------   ----   -------   -------    ----
      Net (loss)/
       income
       available to
       common
       stockholders    $(39,367)  $(4,040)   874  $(83,728)  $49,381    (270)
                        =======    ======   ====   =======   =======    ====
    
      Net (loss)/
       income
       available to
       common
       stockholders
       per common
       share:
         Basic           $(0.64)   $(0.08)   700    $(1.59)    $1.00    (259)
         Diluted         $(0.64)   $(0.08)   700    $(1.59)    $1.00    (259)
                                
    Cash dividends
     paid per
     common share        $0.010    $0.105    (90)   $0.205    $0.420     (51)
    =========================================================================
                                
    SELECTED RATIOS
                                
      Return on
       average assets     -1.19%    -0.10% 1,090     -0.58%     0.47%   (223)
      Return on
       average total
       stockholders'
       equity            -10.45%    -1.06%   886     -5.20%     4.95%   (205)
      Efficiency
       ratio              64.25%    42.24%    52     50.65%    43.52%     16
      Dividend payout
       ratio                n/m        nm    n/m       n/m     41.07%    n/m 
    
    * n/m-not meaningful
    =========================================================================
    
    YIELD ANALYSIS
     (Fully taxable
     equivalent)
    
      Total
       interest-
       earning
       assets              4.66%     5.57%   (16)     4.90%     5.89%    (17)
      Total
       interest-
       bearing
       liabilities         2.35%     3.10%   (24)     2.63%     3.35%    (21)
      Net interest
       spread              2.31%     2.47%    (6)     2.27%     2.54%    (11)
      Net interest
       margin              2.65%     2.85%    (7)     2.62%     2.95%    (11)
    =========================================================================
    
    CAPITAL RATIOS
                                                       Well        Minimum
            December 31, December 31, September 30, Capitalized   Regulatory
               2009         2008          2009      Requirements Requirements
              ------       ------        ------     ------------ ------------
      Tier 1
       risk-
       based
       capital
       ratio    13.55%     12.12%        12.63%         6.0%          4.0%
      Total
       risk-
       based
       capital
       ratio    15.43%     13.94%        14.49%        10.0%          8.0%
      Tier 1
       leverage
       capital
       ratio     9.64%      9.79%         9.29%         5.0%          4.0%
    =========================================================================
    
    
                                CATHAY GENERAL BANCORP
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                      (Unaudited)
    
    (In thousands, except share            December 31,   December 31,   %
     and per share data)                      2009           2008      change
                                             ------         ------     ------
    Assets
    Cash and due from banks                 $100,124       $84,818       18
    Short-term investments and
     interest bearing deposits               254,726        25,000      919
    Securities purchased under
     agreements to resell                          -       201,000     (100)
    Securities held-to-maturity              635,015             -      100
    Securities available-for-sale
     (amortized cost of $2,916,491
     in 2009 and $3,043,566 in 2008)       2,915,099     3,083,817       (5)
    Trading securities                            18            12       50
    Loans held for sale                       54,826             -      100
    Loans                                  6,899,142     7,472,368       (8)
      Less:  Allowance for loan losses      (211,889)     (122,093)      74
             Unamortized deferred
              loan fees, net                  (8,339)      (10,094)     (17)
                                         -----------   -----------     
             Loans, net                    6,678,914     7,340,181       (9)
    Federal Home Loan Bank stock              71,791        71,791        -
    Other real estate owned, net              71,014        61,015       16
    Affordable housing investments, net       95,853       103,562       (7)
    Premises and equipment, net              108,635       104,107        4
    Customers' liability on acceptances       26,554        39,117      (32)
    Accrued interest receivable               35,982        43,603      (17)
    Goodwill                                 316,340       319,557       (1)
    Other intangible assets, net              23,157        29,246      (21)
    Other assets                             200,184        75,813      164
                                         -----------   -----------     
      Total assets                       $11,588,232   $11,582,639        0
                                         ===========   ===========     
    Liabilities and Stockholders'
     Equity            
    Deposits                                        
      Non-interest-bearing demand
       deposits                             $864,551      $730,433       18
      Interest-bearing deposits:                    
        NOW deposits                         337,304       257,234       31
        Money market deposits                943,164       659,454       43
        Savings deposits                     347,724       316,263       10
        Time deposits under $100,000       1,529,954     1,644,407       (7)
        Time deposits of $100,000 or more  3,482,343     3,228,945        8
                                         -----------   -----------     
        Total deposits                     7,505,040     6,836,736       10
                                         -----------   -----------     
    Federal funds purchased                        -        52,000     (100)
    Securities sold under agreements
     to repurchase                         1,557,000     1,610,000       (3)
    Advances from the Federal
     Home Loan Bank                          929,362     1,449,362      (36)
    Other borrowings from
     financial institutions                    7,212             -      100
    Other borrowings for affordable
     housing investments                      19,320        19,500       (1)
    Long-term debt                           171,136       171,136        -
    Acceptances outstanding                   26,554        39,117      (32)
    Other liabilities                         59,864       103,401      (42)
                                         -----------   -----------     
      Total liabilities                   10,275,488    10,281,252       (0)
                                         -----------   -----------     
        Commitments and contingencies              -             -        -
                                         -----------   -----------     
    Stockholders' Equity                            
      Preferred stock, 10,000,000
       shares authorized, 258,000 issued            
       and outstanding in 2009 and 2008      243,967       240,554        1
      Common stock, $0.01 par value,
       100,000,000 shares authorized,
       67,667,155 issued and 63,459,590
       outstanding at December 31, 2009
       and 53,715,815 issued and
       49,508,250 outstanding at
       December 31, 2008                         677           537       26
      Additional paid-in-capital             634,623       508,613       25
      Accumulated other comprehensive
       income, net                              (875)       23,327     (104)
      Retained earnings                      551,588       645,592      (15)
      Treasury stock, at cost (4,207,565
       shares in 2009 and in 2008)          (125,736)     (125,736)       -
                                         -----------   -----------     
      Total Cathay General Bancorp
       stockholders' equity                1,304,244     1,292,887        1
                                         -----------   -----------     
      Noncontrolling interest                  8,500         8,500        -
                                         -----------   -----------     
      Total equity                         1,312,744     1,301,387        1
                                         -----------   -----------     
      Total liabilities and equity       $11,588,232   $11,582,639        0
                                         ===========   ===========     
    Book value per common stock share         $16.49        $20.90      (21)
    Number of common stock shares
     outstanding                          63,459,590    49,508,250       28
    
    
                               CATHAY GENERAL BANCORP
                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
    
                               Three months ended        Twelve months ended
                                    December 31,             December 31,
                                ------------------       -------------------
                                 2009        2008         2009        2008
                                ------      ------       ------      ------
                              (In thousands, except share and per share data)
    INTEREST AND DIVIDEND INCOME
    Loan receivable,
     including loan fees        $99,599    $110,336    $401,831    $452,216
    Investment securities-
     taxable                     29,835      31,383     123,939     115,890
    Investment securities-
     nontaxable                     168         276         788       1,250
    Federal Home Loan Bank stock      -         616         149       3,301
    Agency preferred stock                        -           -       1,621
    Federal funds sold and
     securities purchased under
     agreements to resell            13       2,723       1,351      15,017
    Deposits with banks             423         133         673         656
                                -------     -------     -------     -------
    Total interest and
     dividend income            130,038     145,467     528,731     589,951
                                -------     -------     -------     -------
    INTEREST EXPENSE                   
    Time deposits of
     $100,000 or more            18,012      24,895      83,349     111,293
    Other deposits               10,011      16,898      50,207      66,417
    Securities sold under
     agreements to repurchase    16,655      15,843      65,182      60,559
    Advances from Federal
     Home Loan Bank              10,661      11,283      42,442      46,512
    Long-term debt                  944       2,201       4,835       9,090
    Short-term borrowings             -         105          24         933
                                -------     -------     -------     -------
    Total interest expense       56,283      71,225     246,039     294,804
                                -------     -------     -------     -------
    Net interest income
     before provision for
     credit losses               73,755      74,242     282,692     295,147
    Provision for credit
     losses                      91,000      62,900     307,000     106,700
                                -------     -------     -------     ------- 
    Net interest (loss)/income
     after provision for
     loan losses                (17,245)     11,342     (24,308)    188,447
                                -------     -------     -------     -------
    NON-INTEREST INCOME                
    Securities gains
     (losses), net                3,325       7,009      55,644      (5,971)
    Letters of credit
     commissions                  1,057       1,332       4,216       5,613
    Depository service fees       1,266       1,105       5,206       4,741
    Other operating income        2,624       2,131      13,588      14,524
                                -------     -------     -------     -------
    Total non-interest income     8,272      11,577      78,654      18,907
                                -------     -------     -------     -------
    NON-INTEREST EXPENSE               
    Salaries and employee
     benefits                    14,426      15,983      60,795      66,626
    Occupancy expense             3,983       3,318      16,109      13,236
    Computer and equipment
     expense                      1,918       1,835       7,856       7,859
    Professional services
     expense                      6,407       3,121      16,428      12,011
    FDIC and State assessments    4,014       1,637      19,386       4,809
    Marketing expense               440       1,167       2,593       3,616
    Other real estate owned
     expense                     15,925       3,147      36,075       4,953
    Operations of affordable
     housing investments          2,083       2,036       7,338       7,397
    Amortization of core
     deposit intangibles          1,547       1,713       6,636       6,909
    Other operating expense       1,958       2,290       9,821       9,260
                                -------     -------     -------     -------
    Total non-interest expense   52,701      36,247     183,037     136,676
                                -------     -------     -------     -------
    (Loss)/income before
     income tax (benefit)/
     expense                    (61,674)    (13,328)   (128,691)     70,678
    Income tax (benefit)/
     expense                    (26,550)    (10,579)    (61,912)     19,554
                                -------     -------     -------     -------
    Net (loss)/income           (35,124)     (2,749)    (66,779)     51,124
         Less: net income
          attributable to
          noncontrolling
          interest                 (154)       (151)       (611)       (603)
                                -------     -------     -------     -------
    Net (loss)/income
     attributable to Cathay
     General Bancorp            (35,278)     (2,900)    (67,390)     50,521
                                -------     -------     -------     -------
    Dividends on
     preferred stock             (4,089)     (1,140)    (16,338)     (1,140)
                                -------     -------     -------     -------
    Net (loss)/income
     available to common
     stockholders              $(39,367)    $(4,040)   $(83,728)    $49,381
                                =======     =======     =======     =======
    Net (loss)/income
     available to common
     stockholders per common
     share:                            
         Basic                   $(0.64)     $(0.08)     $(1.59)      $1.00
         Diluted                 $(0.64)     $(0.08)     $(1.59)      $1.00
                                        
    Cash dividends paid per
     common share                $0.010      $0.105      $0.205      $0.420
    Basic average common
     shares outstanding      61,146,538  49,480,850  52,629,159  49,414,824
    Diluted average
     common shares
     outstanding             61,146,538  49,480,850  52,629,159  49,529,793
    
    
                           CATHAY GENERAL BANCORP
        AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION
                                 (Unaudited)
    
                                 For the three months ended,
                   -------------------------------------------------------
    (In thousands)    December 31,        December 31,      September 30,
                         2009                2008              2009
                   -----------------   ----------------   ----------------
                             Average            Average            Average
    Interest-                Yield/             Yield/             Yield/
    earning        Average    Rate     Average   Rate     Average   Rate
    assets         Balance   (1)(2)    Balance  (1)(2)    Balance  (1)(2)
                   -------   -------   -------  -------   -------  -------
    Loans and
     leases (1)    $7,056,871  5.60%  $7,500,351  5.85%  $7,211,971  5.48%
    Taxable
     investment
     securities     3,341,762  3.54%   2,625,517  4.76%   3,385,904  3.70%
    Tax-exempt
     investment
     securities (2)    15,324  6.68%      26,190  6.45%      18,590  5.48%
    FHLB stock         71,791  0.00%      68,235  3.59%      71,819  0.82%
    Federal funds
     sold and
     securities
     purchased               
     under
     agreements
     to resell         44,185  0.12%     155,326  6.97%     104,946  0.13%
    Deposits with
     banks            541,845  0.31%      19,471  2.72%      57,297  0.82%
                  -----------  ----- -----------  ----- -----------  -----
      Total
       interest-
       earning
       assets     $11,071,778  4.66% $10,395,090  5.57% $10,850,527  4.82%
                  -----------        -----------        -----------  -----
    Interest-
     bearing
     liabilities             
    Interest-
     bearing
     demand
     deposits        $333,583  0.32%    $260,558  0.48%    $310,047  0.40%
    Money market      996,423  1.30%     746,152  1.63%     967,839  1.54%
    Savings deposits  376,949  0.21%     331,329  0.25%     338,053  0.21%
    Time deposits   5,120,702  1.88%   4,777,558  3.18%   5,175,066  2.04%
                  -----------  ----- -----------  ----- -----------  -----
      Total
       interest-
       bearing
       deposits    $6,827,657  1.63%  $6,115,597  2.72%  $6,791,005  1.80%
    Federal funds
     purchased              -  0.00%      39,620  1.05%         163  0.45%
    Securities
     sold under
     agreements
     to repurchase  1,553,522  4.25%   1,555,217  4.05%   1,556,343  4.22%
    Other borrowed
     funds            953,545  4.44%   1,262,653  3.55%     957,558  4.42%
    Long-term debt    171,136  2.19%     171,136  5.12%     171,136  2.47%
                  -----------  ----- -----------  ----- -----------  -----
      Total
       interest-
       bearing
       liabilities  9,505,860  2.35%   9,144,223  3.10%   9,476,205  2.48%
    
    Non-interest-
     bearing demand
     deposits         851,664            759,038            783,826       
                  -----------        -----------        ----------- 
      Total deposits
       and other
       borrowed
       funds      $10,357,524         $9,903,261        $10,260,031      
                  -----------        -----------        ----------- 
    Total average
     assets       $11,790,703        $11,148,143        $11,626,640     
    Total average
     equity        $1,347,477         $1,102,248         $1,264,864
                  -----------        -----------        -----------
    
    
                                           For the twelve months ended,
                                       -----------------------------------
    (In thousands)                       December 31,       December 31,
                                             2009              2008
                                       ----------------   ----------------
                                                Average            Average
    Interest-                                   Yield/             Yield/
    earning                            Average   Rate     Average   Rate
    assets                             Balance  (1)(2)    Balance  (1)(2)
                                       -------  -------   -------  -------
    Loans and leases (1)            $7,266,254   5.53%  $7,214,689  6.27%  
    Taxable investment securities    3,216,516   3.85%   2,460,181  4.71%  
    Tax-exempt investment
     securities (2)                     18,996   6.38%      50,520  8.22%  
    FHLB stock                          71,798   0.21%      66,025  5.00%  
    Federal funds sold and
     securities purchased                     
    under agreements to resell          58,482   2.31%     234,896  6.39%  
    Deposits with banks                174,939   0.38%      14,631  4.48%  
                                   -----------   ----- -----------  -----
       Total interest-earning
        assets                     $10,806,985   4.90% $10,040,942  5.89%
                                   -----------         -----------  
    Interest-bearing liabilities              
    Interest-bearing demand deposits  $295,770   0.36%    $255,185  0.61%  
    Money market deposits              890,427   1.49%     736,739  1.84%  
    Savings deposits                   338,781   0.24%     334,222  0.36%  
    Time deposits                    5,084,309   2.33%   4,530,923  3.56% 
                                   -----------   ----- -----------  ----- 
       Total interest-bearing
        deposits                    $6,609,287   2.02%  $5,857,069  3.03%  
    Federal funds purchased              8,392   0.27%      40,128  2.25%  
    Securities sold under
     agreements to repurchase        1,562,447   4.17%   1,554,023  3.90%  
    Other borrowed funds               997,277   4.26%   1,177,869  3.95%  
    Long-term debt                     171,136   2.83%     171,136  5.31%
                                   -----------   ----- -----------  ----- 
       Total interest-bearing
        liabilities                  9,348,539   2.63%   8,800,225  3.35%  
                                               
    Non-interest-bearing
     demand deposits                   781,391             772,982         
                                   -----------         -----------          
       Total deposits and other
        borrowed funds             $10,129,930          $9,573,207         
                                   -----------         -----------        
    Total average assets           $11,544,807         $10,736,130        
    Total average equity            $1,303,375          $1,036,789         
                                   -----------         -----------
    
    (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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