LOS ANGELES, July 24 CA-Cathay-General-2Q
LOS ANGELES, July 24 /PRNewswire-FirstCall/ -- Cathay General Bancorp (the
"Company") (Nasdaq: CATY), the holding company for Cathay Bank (the "Bank"),
today announced preliminary results for the second quarter of 2008. See
"Goodwill Evaluation" section below for the status of this evaluation which
has not been completed and which may result in a non-cash goodwill impairment
charge.
FINANCIAL PERFORMANCE
Second Quarter 2008 Second Quarter 2007
Net income $19.2 million$30.6 million
Basic earnings per share $0.39$0.60
Diluted earnings per share $0.39$0.60
Return on average assets0.73%1.40%
Return on average stockholders' equity 7.66% 13.13%
Efficiency ratio 41.52% 39.06%
SECOND QUARTER HIGHLIGHTS
-- Second quarter earnings of $19.2 million decreased $11.4 million, or
37.1%, compared to the same quarter a year ago. Included in the results was a
non-cash after-tax charge of $3.4 million, or $0.07 per diluted share, for
"other-than-temporary impairment" on agency preferred securities. Earnings for
the second quarter of 2008 excluding the $3.4 million impairment charge
decreased $8.0 million, or 26.1%, compared to the same quarter a year ago.
-- Fully diluted earnings per share was $0.39, a 35.0% decrease from the
same quarter a year ago. Fully diluted earnings per share excluding the
$3.4 million impairment charge was $0.46, a 23.3% decrease from the same
quarter a year ago.
-- Return on average assets was 0.73% for the quarter ended June 30, 2008,
compared to 1.07% for the quarter ended March 31, 2008 and compared to 1.40%
for the same quarter a year ago. Return on average assets excluding the
$3.4 million impairment charge was 0.86% for the quarter ended June 30, 2008.
-- Return on average stockholders' equity was 7.66% for the quarter ended
June 30, 2008, compared to 10.99% for the quarter ended March 31, 2008, and
compared to 13.13% for the same quarter a year ago. Return on average
stockholders' equity excluding the $3.4 million impairment charge was 9.01%
for the quarter ended June 30, 2008.
-- Gross loans increased by $408.9 million, or 5.9%, for the quarter to
$7.3 billion at June 30, 2008, from $6.9 billion at March 31, 2008.
-- Total deposits increased by $453.5 million, or 7.2%, for the quarter to
$6.7 billion at June 30, 2008, from $6.3 billion at March 31, 2008.
-- The Company's total risk-based capital ratio increased to 11.02% at
June 30, 2008 compared to 10.88% at March 31, 2008, as the Company remained
well capitalized for both periods.
"We are pleased with the strong operating results for the second quarter
of 2008. With the continued slowdown in residential construction and
development, we recorded a provision for credit losses during the second
quarter of $20.5 million which increased our reserve for credit losses to
1.23% of total loans. However, net chargeoffs during the second quarter
remained low at $2.5 million or 0.14% of average loans," commented Dunson
Cheng, Chairman of the Board, Chief Executive Officer, and President of the
Company.
"We generated strong deposit growth during the second quarter in all major
deposit categories as customers recognized the Bank's financial strength and
stability. We also were pleased to see the solid growth in deposits in many
new branches such as those in the Dallas, Chicago, and Seattle areas, and in
Hong Kong," said Peter Wu, Executive Vice Chairman and Chief Operating
Officer.
"Our capital ratios increased during the second quarter even as we
achieved record loan originations. Our dividend payout ratio on an operating
basis excluding the other-than-temporary impairment charge on agency preferred
stock was only 23%. As we have demonstrated through many recessions before, by
remaining vigilant on credit quality while serving our loyal customers, we are
optimistic that we shall emerge from this slowdown stronger and better
positioned in our marketplace," concluded Dunson Cheng.
INCOME STATEMENT REVIEW
Net interest income before provision for credit losses
Net interest income before provision for credit losses decreased to
$72.1 million during the second quarter of 2008, a decline of $4.4 million, or
5.7%, compared to the $76.5 million during the same quarter a year ago. The
decrease was due primarily to the decline in the net interest margin which was
partially offset by strong growth in loans and investment securities.
The net interest margin, on a fully taxable-equivalent basis, was
2.94% for the second quarter of 2008. The net interest margin decreased
22 basis points from 3.16% in the first quarter of 2008 and decreased 84 basis
points from 3.78% in the second quarter of 2007. The decrease in the net
interest margin from prior quarters primarily resulted from the lag in the
downward repricing of certificates of deposit to follow the decreases in the
prime rate, a change in the mix of investment securities, and the increase in
the borrowing rate on our long term repurchase agreements.
For the second quarter of 2008, the yield on average interest-earning
assets was 5.86% on a fully taxable-equivalent basis, and the cost of funds on
average interest-bearing liabilities equaled 3.34%. In comparison, for the
second quarter of 2007, the yield on average interest-earning assets was
7.39% and cost of funds on average interest-bearing liabilities equaled 4.22%.
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 65 basis points to 2.52% for the quarter ended June 30,
2008, from 3.17% for the same quarter a year ago, primarily due to the reasons
discussed above.
Provision for credit losses
The provision for credit losses was $20.5 million for the second quarter
of 2008 compared to $2.1 million for the second quarter of 2007 and
$7.5 million for the first quarter of 2008. The provision for credit losses
was based on the review of the adequacy of the allowance for loan losses at
June 30, 2008. The provision for credit losses represents the charge or credit
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. The following table summarizes the charge-offs and recoveries
for the quarters as indicated:
For the three months For the six months
ended June 30,ended June 30,
(In thousands)2008 2007 2008 2007
Charge-offs:
Commercial loans $1,870 $2,712 $2,121 $5,742
Construction loans 879 --5,009 190
Real estate loans207 57 721 118
Installment and other
loans--1 --1
Total charge-offs2,9562,7707,8516,051
Recoveries:
Commercial loans 380 302 5672,773
Construction loans83 190 83 190
Real estate loans -- 202 -- 202
Installment and other
loans 8 19 12 25
Total recoveries 471 713 6623,190
Net Charge-offs $2,485 $2,057 $7,189 $2,861
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
$9.2 million for the second quarter of 2008, an increase of $3.0 million, or
48.9%, compared to the non-interest income of $6.2 million for the second
quarter of 2007. Net gains of $2.3 million from sale of securities were
comprised of $8.16 million of gains from sales of agency mortgage backed
securities which were partially offset by the $5.83 million
"other-than-temporary impairment" charge on agency preferred stock, which had
a carrying value of $30.3 million after the impairment write-down.
Depository service fees increased $138,000, or 13.3%, to $1.2 million in
the second quarter of 2008 from $1.0 million in the same quarter a year ago,
primarily due to the $111,000 increase in demand deposit account analysis
charges.
Other operating income increased $601,000, or 16.3%, to $4.3 million in
the second quarter of 2008 from $3.7 million in the same quarter a year ago,
primarily due to higher gains from foreign currency and exchange transactions
of $1.6 million, which amount was partially offset by decreases in venture
capital income of $405,000 and in wealth management commissions of $252,000.
Non-interest expense
Non-interest expense increased $1.5 million, or 4.6%, to $33.8 million in
the second quarter of 2008 compared to $32.3 million in the same quarter a
year ago. The efficiency ratio was 41.52% for the second quarter of 2008
compared to 39.06% in the year ago quarter and 39.11% for the first quarter of
2008.
Federal Deposit Insurance Corporation ("FDIC") and State assessments
increased to $1.5 million in the second quarter of 2008 from $261,000 in the
same quarter a year ago as a result of the utilization of the remaining credit
for prior years' FDIC insurance premiums. Professional service expense
increased $552,000, or 21.7%, primarily due to increases in information
technology consulting expenses of $429,000 and appraisal expenses of $204,000.
Other real estate owned expense increased $624,000 due to increases in other
real estate owned transactions. Offsetting the above overall increases were
decreases of $621,000 in computer and equipment expense due primarily to the
decrease in software license fees, $478,000 in salaries and employee benefits
as a result of lower current year bonus accrual, and $243,000 in recruiting,
printing and supply, and travel expenses in the second quarter of 2008
compared to the same quarter a year ago.
Goodwill Evaluation
As a result of ongoing volatility in the financial services industry, the
Company's market capitalization has decreased to a level below book value as
of June 30, 2008 which may make it necessary for the Company to perform an
interim goodwill impairment test. The Company is in the process of
determining whether a goodwill impairment charge, if any, is required as of
June 30, 2008. The Company expects to complete this goodwill impairment
assessment prior to the filing of its Form 10-Q for the second quarter. If a
charge is required, the current results will be correspondingly adjusted and
reported in the Form 10-Q. Although any goodwill impairment charge will
reduce reported earnings, it will be non-cash in nature and thus will not
affect the Company's capital ratios.
Income taxes
The effective tax rate was 28.9% for the second quarter of 2008, compared
to 36.7% for the same quarter a year ago and 36.2% for the full year 2007.
The lower effective tax rate for the second quarter of 2008 was due to a
reduction during the second quarter in the projected taxable income for the
remainder of 2008 and increases in low income housing tax credits in 2008
compared to 2007.
Reconciliation of Reported Earnings to Earnings Excluding the Impairment
Charge
Three months ended Six months ended
June 30,June 30,
2008 20072008 2007
(Dollars in thousands,
except share and per share data)
Net income as reported $19,231$30,581$46,530$60,547
Add: Other-than-temporary
impairment writedown 5,830 -- 5,830 --
Less: Tax benefit for non-cash
other-than-temporary
impairment writedown (2,451)-- (2,451)--
Earnings excluding the
impairment charge $22,610$30,581$49,909$60,547
Basic average common
shares outstanding 49,389,522 50,558,218 49,367,903 51,118,374
Diluted average
common shares
outstanding 49,429,348 51,158,029 49,480,439 51,723,487
Earnings per share as
reported:
Basic 0.39 0.60 0.94 1.18
Dilutive0.39 0.60 0.94 1.17
Earnings per share excluding
the impairment charge
Basic 0.46 0.60 1.01 1.18
Dilutive0.46 0.60 1.01 1.17
Return on average assets
As reported 0.73% 1.40% 0.90% 1.42%
Excluding the impairment charge 0.86% 1.40% 0.96% 1.42%
Return on average
stockholders' equity
As reported 7.66% 13.13% 9.32% 13.00%
Excluding the impairment charge 9.01% 13.13% 9.99% 13.00%
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
(Dollars in thousands)
Total revenues as reported $81,289$82,659 $163,003 $161,295
Add: Other-than-temporary
impairment writedown 5,830 -- 5,830 --
Total revenues excluding
the impairment charge $87,119$82,659 $168,833 $161,295
Total non-interest expenses
reported$33,754$32,285$65,710$62,514
Efficiency ratio
As reported41.52% 39.06% 40.31% 38.76%
Excluding the impairment
charge38.74% 39.06% 38.92% 38.76%
BALANCE SHEET REVIEW
Total assets increased by $409.4 million, or 3.9%, to $10.8 billion at
June 30, 2008, from year-end 2007 of $10.4 billion. The increase in total
assets was represented primarily by increases in available-for-sale
securities of $185.7 million, or 7.9%, and increases in loans of
$644.1 million, or 9.6% offset by decreases of $366.1 million in reverse
repurchase agreements.
The growth of gross loans to $7.3 billion as of June 30, 2008, from
$6.7 billion as of December 31, 2007, represents an increase of
$644.1 million, or 9.6%, primarily due to increases in commercial mortgage
loans and commercial loans.
The changes in the loan composition from December 31, 2007, are presented
below:
Type of Loans: June 30,December 31, % Change
2008 2007
(Dollars in thousands)
Commercial$1,584,280 $1,435,861 10
Residential mortgage 609,132 555,703 10
Commercial mortgage4,111,0193,762,6899
Equity lines 147,593 108,004 37
Real estate construction 860,490 799,2308
Installment 11,145 15,099 (26)
Other 4,0657,059 (42)
Gross loans and leases $7,327,724 $6,683,645 10
Allowance for loan losses(84,856) (64,983) 31
Unamortized deferred loan fees (10,165) (10,583) (4)
Total loans and leases, net $7,232,703 $6,608,0799
At June 30, 2008, total deposits were $6.7 billion, an increase of
$463.7 million, or 7.4%, from $6.3 billion at December 31, 2007. In the
second quarter of 2008, time deposits of $100,000 or more increased
$233.8 million, or 8.0% and time deposit under $100,000 increased
$113.4 million, or 8.7%. The changes in the deposit composition from December
31, 2007, are presented below:
DepositsJune 30, December 31, % Change
2008 2007
(Dollars in thousands)
Non-interest-bearing demand $818,776 $785,3644
NOW 261,005 231,583 13
Money market 732,410 681,7837
Savings 334,328 331,3161
Time deposits under $100,000 1,424,6921,311,2519
Time deposits of $100,000 or more 3,170,8312,937,0708
Total deposits $6,742,042 $6,278,3677
At June 30, 2008, brokered deposits which are included in time deposits
under $100,000 increased to $788.1 million, a $155.5 million increase from
$632.6 million at December 31, 2007.
Advances from Federal Home Loan Bank decreased $258.5 million to
$1.1 billion at June 30, 2008, from $1.4 billion at December 31, 2007.
Securities sold under agreement to repurchase increased to $1.6 billion at
June 30, 2008, compared to $1.4 billion at December 31, 2007.
ASSET QUALITY REVIEW
During the second quarter of 2008, total non-accrual loans increased by
$24.4 million. The new non-accruals included two mixed use land loans in the
Inland Empire totaling $13.2 million, a $6.6 million condo construction loan
in Orange County for which a discounted payoff is expected in August, 2008, a
$3.7 million commercial loan to a distributor, a $2.9 million single family
residential mortgage in Los Altos, California, a $2.6 million land loan zoned
for apartments in Seattle, Washington, other commercial real estate loans
totaling $3.4 million, commercial loans totaling $1.3 million, and residential
mortgage loans of $0.2 million. During the second quarter, charge-offs of
non-accrual loans totaled $3.0 million including a $1.5 million charge-off to
the principal related to the mixed use land loans in the Inland Empire and a
$0.9 million charge-off related to the Orange County condo construction loan.
At June 30, 2008, total residential construction loans were $429.0 million of
which $18.7 million were in San Bernardino and Riverside counties in
California and $20.6 million were in the Central Valley in California.
Residential construction loans of $4.8 million in the Central Valley were on
non-accrual status as of June 30, 2008. At June 30, 2008, total land loans
were $237.5 million of which $42.9 million were in San Bernardino and
Riverside counties and $1.8 million were in Central Valley. Land loans of
$13.2 million in Riverside County were on non-accrual status as of June 30,
2008.
At June 30, 2008, total non-accrual loans of $73.0 million were comprised
of nine construction loans totaling $26.7 million, seven land loans totaling
$22.3 million, fourteen commercial real estate loans totaling $11.5 million,
fourteen commercial loans totaling $8.2 million and eight residential mortgage
loans totaling $4.3 million. The $26.7 million of construction loans were
comprised of a $6.6 million condo construction loan in Orange County, a
$5.0 million town house construction loan in Los Angles County, a $4.0 million
construction loan in the Central Valley, a $3.2 million land development loan
in Los Angeles County, a $2.6 million condo construction loan in Boston,
Massachusetts, a $2.6 million for a condo construction loans in San Diego
County, a $1.4 million residential construction loan in Texas and two
additional residential construction loans totaling $1.3 million. The
$11.5 million of non-accrual commercial real estate loans were comprised of
$2.3 million in loans secured by multi-family residences, a $2.2 million loan
secured by a motel in Texas, a $2.1 million loan secured by an office building
in San Jose, California, a $0.9 million loan secured by an office building in
Texas, and $4.0 million in loans secured by industrial buildings, a retail
store and a restaurant.
At June 30, 2008, other real estate owned is comprised of nine properties,
including $11.6 million for land zoned for apartments in Anaheim, California,
a $9.3 million apartment building in Texas, a $6.8 million shopping center in
Texas, and six other properties totaling $1.4 million.
Non-performing assets to gross loans and other real estate owned was 1.40%
at June 30, 2008, compared to 1.25% at December 31, 2007. Total
non-performing assets increased $19.3 million, or 23.1%, to $103.0 million at
June 30, 2008, compared with $83.7 million at December 31, 2007, primarily due
to a $14.7 million increase in non-accrual loans and a $12.9 million increase
in OREO offset by a $8.3 million decrease in loans past due 90 days or more.
The allowance for loan losses were $84.9 million and the allowance for
off-balance sheet unfunded credit commitments were $5.5 million at June 30,
2008, 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 $90.4 million at June 30, 2008,
compared to $69.6 million at December 31, 2007. The allowance for credit
losses represented 1.23% of period-end gross loans and 122% of non-performing
loans at June 30, 2008. The comparable ratios were 1.04% of gross loans and
103% of non-performing loans at December 31, 2007. Results of the changes
to the Company's non-performing assets and troubled debt restructurings are
highlighted below:
(Dollars in thousands) June 30, December 31, % Change
20082007
Non-performing assets
Accruing loans past due 90 days or more $960 $9,265 (90)
Non-accrual loans:
Construction 26,727 29,677 (10)
Land 22,282 6,627 236
Commercial real estate, excluding land11,512 13,336 (14)
Commercial 8,186 6,664 23
Real estate mortgage 4,299 1,971 118
Total non-accrual loans: $73,006 $58,275 25
Total non-performing loans73,966 67,540 10
Other real estate owned 29,077 16,147 80
Total non-performing assets $103,043 $83,687 23
Troubled debt restructurings $12,584 $12,601 (0)
Allowance for loan losses $84,856 $64,983 31
Allowance for off-balance sheet credit
commitments 5,514 4,576 20
Allowance for credit losses$90,370 $69,559 30
Total gross loans outstanding,
at period-end $7,327,724 $6,683,645 10
Allowance for loan losses to
non-performing loans, at period-end114.72% 96.21%
Allowance for loan losses to gross
loans, at period-end 1.16% 0.97%
Allowance for credit losses to
non-performing loans, at period-end122.18% 102.99%
Allowance for credit losses to gross
loans, at period-end 1.23% 1.04%
CAPITAL ADEQUACY REVIEW
At June 30, 2008, the Tier 1 risk-based capital ratio of 9.38%, total
risk-based capital ratio of 11.02%, and Tier 1 leverage capital ratio of
7.83%, continue to place the Company in the "well capitalized" category, 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, 2007, the Company's Tier 1 risk-based capital ratio was 9.09%,
the total risk-based capital ratio was 10.52%, and Tier 1 leverage capital
ratio was 7.83%.
No shares were purchased during the six months of 2008. At June 30, 2008,
622,500 shares remain under the Company's November 2007 repurchase program.
YEAR-TO-DATE REVIEW
Net income was $46.5 million, or $0.94 per diluted share for the six
months ended June 30, 2008, a decrease of $14.0 million, or 23.2%, in net
income compared to $60.5 million, or $1.17 per diluted share for the same
period a year ago due primarily to increases in the provision for loan losses
and the "other-than-temporary impairment" charge. Net income excluding the
$3.4 million impairment charge was $49.9 million, or $1.01 per diluted share
for the six months ended June 30, 2008, a decrease of $10.6 million, or 17.6%,
compared to the same period a year ago. The net interest margin for the six
months ended June 30, 2008, decreased 75 basis points to 3.05% compared to
3.80% for the same period a year ago.
Return on average stockholders' equity was 9.32% and return on average
assets was 0.90% for the six months ended June 30, 2008, compared to a return
on average stockholders' equity of 13.00% and a return on average assets of
1.42% for the same period of 2007. Excluding the $3.4 million impairment
charge, return on average stockholders' equity was 9.99% and return on average
assets was 0.96% for the six months ended June 30, 2008. The efficiency
ratio for the six months ended June 30, 2007 was 40.31%, or 38.92% excluding
the $5.8 million pre-tax impairment charge, compared to 38.76% for the same
period a year ago.
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, nine 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/.
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 "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "may," "will," "should," "could," "predicts," "potential,"
"continue," or the negative of such terms and other comparable terminology or
similar expressions. Forward-looking statements are not guarantees. They
involve known and unknown risks, uncertainties, and other factors that may
cause the actual results, performance, or achievements of Cathay General
Bancorp to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
risks and uncertainties and other factors include, but are not limited to,
adverse developments or conditions related to or arising from: the impact of
any goodwill impairment that may be determined, deterioration in asset or
credit quality; acquisitions of other banks, if any; fluctuations in interest
rates; expansion into new market areas; earthquakes, wildfires, or other
natural disasters; competitive pressures; changes in the availability of
capital; legislative and regulatory developments; and general economic or
business conditions in California and other regions where Cathay Bank has
operations.
These and other factors are further described in Cathay General Bancorp's
Annual Report on Form 10-K for the year ended December 31, 2007, its reports
and registration statements filed with the Securities and Exchange Commission
("SEC") and other filings it makes in the future 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 as of the date of this press release. Cathay General
Bancorp has no intention and undertakes no obligation to update any forward-
looking statements or to publicly announce the results of any revision of any
forward-looking statement to reflect future developments or events.
Cathay General Bancorp's filings with the SEC are available to the public
at the website maintained by the SEC at http://www.sec.gov, or by request
directed to Cathay General Bancorp, 777 N. Broadway, Los Angeles, CA 90012,
Attention: Investor Relations (213) 625-4749.
CATHAY GENERAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
Three months ended Six months ended
(Dollars in thousands,June 30, June 30,
except per share data) 2008 2007 %Change 20082007 %Change
FINANCIAL PERFORMANCE
Net interest income
before provision for
loan losses $72,114 $76,497 (6) $147,304 $149,249 (1)
Provision for loan
losses 20,5002,100 87628,0003,100 803
Net interest income
after provision
for loan losses 51,614 74,397 (31) 119,304 146,149 (18)
Non-interest income 9,1756,162 4915,699 12,046 30
Non-interest expense 33,754 32,285565,710 62,5145
Income before income
tax expense 27,035 48,274 (44) 69,293 95,681 (28)
Income tax expense7,804 17,693 (56) 22,763 35,134 (35)
Net income $19,231 $30,581 (37) $46,530 $60,547 (23)
Net income per common
share:
Basic $0.39$0.60 (35)$0.94$1.18 (20)
Diluted $0.39$0.60 (35)$0.94$1.17 (20)
Cash dividends paid per
common share $0.105 $0.105 --$0.210 $0.1958
SELECTED RATIOS
Return on average assets 0.73%1.40% (48) 0.90%1.42% (37)
Return on average
stockholders' equity 7.66% 13.13% (42) 9.32% 13.00% (28)
Efficiency ratio 41.52% 39.06% 6 40.31% 38.76% 4
Dividend payout ratio 26.96% 17.56% 54 22.28% 16.59% 34
YIELD ANALYSIS
(Fully taxable equivalent)
Total interest-earning
assets5.86%7.39% (21) 6.16%7.41% (17)
Total interest-bearing
liabilities 3.34%4.22% (21) 3.56%4.24% (16)
Net interest spread2.52%3.17% (21) 2.60%3.17% (18)
Net interest margin2.94%3.78% (22) 3.05%3.80% (20)
CAPITAL RATIOS June 30, June 30, December 31,Well Minimum
2008 2007 2007 Capitalized Regulatory
Requirements Requirements
Tier 1
risk-based
capital ratio 9.38% 9.21%9.09%6.0% 4.0%
Total
risk-based
capital ratio 11.02%10.69% 10.52% 10.0% 8.0%
Tier 1
leverage
capital ratio 7.83% 8.46%7.83%5.0% 4.0%
CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share June 30, December 31,%
and per share data)2008 2007 Change
Assets
Cash and due from banks $114,270 $118,437(4)
Short-term investments 6,4082,278 181
Securities purchased under agreements
to resell 150,000 516,100 (71)
Long-term certificates of deposit -- 50,000 (100)
Securities available-for-sale
(amortized cost of $2,566,135 in 2008
and $2,348,606 in 2007) 2,533,3532,347,665 8
Trading securities 755,225 (99)
Loans7,327,7246,683,64510
Less: Allowance for loan losses(84,856) (64,983) 31
Unamortized deferred loan
fees, net (10,165) (10,583) (4)
Loans, net 7,232,7036,608,079 9
Federal Home Loan Bank stock65,825 65,720 0
Other real estate owned, net29,077 16,14780
Affordable housing investments, net103,795 94,00010
Premises and equipment, net 88,699 76,84815
Customers' liability on acceptances 30,988 53,148 (42)
Accrued interest receivable 45,984 53,032 (13)
Goodwill 319,285 319,873(0)
Other intangible assets, net32,588 36,097 (10)
Other assets58,865 39,88348
Total assets $10,811,915 $10,402,532 4
Liabilities and Stockholders' Equity
Deposits
Non-interest-bearing demand deposits$818,776 $785,364 4
Interest-bearing deposits:
NOW deposits 261,005 231,58313
Money market deposits 732,410 681,783 7
Savings deposits 334,328 331,316 1
Time deposits under $100,000 1,424,6921,311,251 9
Time deposits of $100,000 or more3,170,8312,937,070 8
Total deposits 6,742,0426,278,367 7
Federal funds purchased 81,000 41,00098
Securities sold under agreements
to repurchase 1,550,0001,391,02511
Advances from the Federal Home
Loan Bank 1,116,7131,375,180 (19)
Other borrowings from financial
institutions 10,0008,30120
Other borrowings from affordable
housing investments19,577 19,642(0)
Long-term debt 171,136 171,136--
Acceptances outstanding 30,988 53,148 (42)
Minority interest in consolidated
subsidiaries8,5008,500--
Other liabilities 87,270 84,314 4
Total liabilities 9,817,2269,430,613 4
Commitments and contingencies -- ----
Total stockholders' equity 994,689 971,919 2
Total liabilities and stockholders'
equity $10,811,915 $10,402,532 4
Book value per share$20.13 $19.70 2
Number of common stock shares
outstanding49,419,098 49,336,187 0
CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE (LOSS) INCOME
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2008 2007 20082007
(In thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loan receivable, including
loan fees $110,850$118,737$227,875$232,916
Investment securities-
taxable 28,426 24,439 56,932 46,254
Investment securities-
nontaxable 324 583 690 1,182
Federal Home Loan Bank stock 928 541 1,681 1,050
Agency preferred stock592 174 1,308 338
Federal funds sold and securities
purchased under agreements
to resell 2,915 3,965 9,395 7,767
Deposits with banks27 1,254 481 2,040
Total interest and dividend
income 144,062 149,693 298,362 291,547
INTEREST EXPENSE
Time deposits of $100,000
or more 28,304 31,900 60,172 63,052
Other deposits 15,184 18,684 32,419 36,671
Securities sold under
agreements to repurchase 14,917 7,544 29,542 13,261
Advances from Federal Home
Loan Bank 11,323 11,677 23,444 23,458
Long-term debt 2,010 2,899 4,859 4,875
Short-term borrowings 210 492 622 981
Total interest expense 71,948 73,196 151,058 142,298
Net interest income before
provision for credit losses 72,114 76,497 147,304 149,249
Provision for credit losses20,500 2,100 28,000 3,100
Net interest income after
provision for loan losses 51,614 74,397 119,304 146,149
NON-INTEREST INCOME
Securities gains, net 2,333 -- 2,333 191
Letters of credit commissions 1,376 1,435 2,816 2,727
Depository service fees 1,175 1,037 2,447 2,383
Other operating income 4,291 3,690 8,103 6,745
Total non-interest income 9,175 6,162 15,699 12,046
NON-INTEREST EXPENSE
Salaries and employee benefits 16,408 16,886 34,267 33,863
Occupancy expense 3,242 3,107 6,525 5,876
Computer and equipment expense 1,932 2,553 4,176 4,777
Professional services expense 3,095 2,543 5,480 4,271
FDIC and State assessments 1,545 261 1,836 520
Marketing expense 848 904 1,865 1,805
Other real estate owned expense 641 17 624 261
Operations of affordable housing
investments1,696 1,444 2,521 2,388
Amortization of core deposit
intangibles1,722 1,767 3,474 3,531
Other operating expense 2,625 2,803 4,942 5,222
Total non-interest expense 33,754 32,285 65,710 62,514
Income before income tax
expense 27,035 48,274 69,293 95,681
Income tax expense 7,804 17,693 22,763 35,134
Net income 19,231 30,581 46,530 60,547
Other comprehensive loss,
net of tax (26,443) (8,093)(18,453) (3,410)
Total comprehensive
(loss)/income$(7,212)$22,488 $28,077 $57,137
Net income per common share:
Basic $0.39 $0.60 $0.94 $1.18
Diluted $0.39 $0.60 $0.94 $1.17
Cash dividends paid per
common share $0.105 $0.105 $0.210 $0.195
Basic average common shares
outstanding 49,389,522 50,558,218 49,367,903 51,118,374
Diluted average common
shares outstanding49,429,348 51,158,029 49,480,439 51,723,487
CATHAY GENERAL BANCORP
AVERAGE BALANCES - SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
For the three months ended
(In thousands)June 30, 2008 June 30, 2007
Interest-earning
assets AverageAverage Average Average
Balance Yield/RateBalanceYield/Rate
(1) (2) (1) (2)
Loans and leases (1) $7,122,528 6.26% $6,010,9587.92%
Taxable investment
securities 2,475,628 4.62% 1,734,6455.65%
Tax-exempt investment
securities (2) 60,781 8.69% 66,2066.89%
FHLB stock 65,879 5.67% 50,1654.33%
Federal funds sold and
securities purchased
under agreements to
resell 177,445 6.61%216,6467.34%
Deposits with banks 5,188 2.09% 68,1777.38%
Total interest-earning
assets$9,907,449 5.86% $8,146,7977.39%
Interest-bearing liabilities
Interest-bearing demand
deposits $253,559 0.58% $233,2601.29%
Money market738,206 1.76%675,7533.09%
Savings deposits337,512 0.33%353,5621.01%
Time deposits 4,452,317 3.58% 3,683,0894.76%
Total interest-bearing
deposits $5,781,594 3.03% $4,945,6644.10%
Federal funds purchased 37,720 2.24% 34,7805.35%
Securities sold under
agreements to
repurchase 1,551,571 3.87%831,6253.64%
Other borrowed funds 1,134,448 4.01%982,1264.78%
Long-term debt 171,136 4.72%157,5417.38%
Total interest-bearing
liabilities8,676,469 3.34% 6,951,7364.22%
Non-interest-bearing
demand deposits764,270784,033
Total deposits and
other borrowed funds $9,440,739 $7,735,769
Total average assets$10,561,123 $8,787,525
Total average
stockholders' equity$1,009,463 $934,313
For the three months ended
(In thousands)March 31, 2008
Interest-earning
assets Average Average
BalanceYield/Rate
(1) (2)
Loans and leases (1)$6,804,599 6.92%
Taxable investment
securities 2,250,823 5.09%
Tax-exempt investment
securities (2)69,668 8.94%
FHLB stock 65,753 4.61%
Federal funds sold and
securities purchased
under agreements to
resell419,675 6.21%
Deposits with banks 24,885 7.34%
Total interest-earning
assets $9,635,403 6.46%
Interest-bearing liabilities
Interest-bearing demand
deposits $237,611 0.82%
Money market 701,552 2.20%
Savings deposits 330,504 0.54%
Time deposits4,180,871 4.26%
Total interest-bearing
deposits $5,450,538 3.62%
Federal funds purchased 43,341 3.54%
Securities sold under
agreements to
repurchase 1,559,336 3.77%
Other borrowed funds 1,156,238 4.23%
Long-term debt 171,136 6.70%
Total interest-bearing
liabilities 8,380,589 3.80%
Non-interest-bearing
demand deposits 780,579
Total deposits and
other borrowed funds $9,161,168
Total average assets $10,302,295
Total average
stockholders' equity $998,917
For the six months ended,
(In thousands) June 30, 2008 June 30, 2007
Interest-earning
assets AverageAverage Average Average
Balance Yield/RateBalanceYield/Rate
(1) (2) (1) (2)
Loans and leases $6,963,5646.58% $5,900,074 7.96%
Taxable investment
securities 2,364,3244.84% 1,657,107 5.63%
Tax-exempt investment
securities (2) 64,1258.98% 70,851 6.50%
FHLB stock 65,8165.14% 47,575 4.45%
Federal funds sold and
securities purchased
under agreements to
resell 298,5606.33%217,151 7.21%
Deposits with banks15,0626.42% 58,056 7.09%
Total interest-earning
assets $9,771,4516.16% $7,950,814 7.41%
Interest-bearing liabilities
Interest-bearing
demand deposits $245,5850.70% $232,960 1.28%
Money market deposits 719,8791.97%671,130 3.09%
Savings deposits 334,0080.43%348,974 1.00%
Time deposits 4,316,5943.91% 3,669,048 4.74%
Total interest-bearing
deposits$5,616,0663.32% $4,922,112 4.09%
Federal funds
purchased 40,5302.94% 30,039 5.35%
Securities sold under
agreements to
repurchase 1,555,4543.82%724,616 3.69%
Other borrowed funds1,145,3434.12%952,862 5.00%
Long-term debt171,1365.71%131,493 7.48%
Total interest-bearing
liabilities 8,528,5293.56% 6,761,122 4.24%
Non-interest-bearing
demand deposits 772,424 778,183
Total deposits and
other borrowed
funds $9,300,953 $7,539,305
Total average assets $10,431,709 $8,589,745
Total average
stockholders' equity $1,004,190$939,286
(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
