Cathay General Bancorp Announces Second Quarter 2022 Results
Cathay General Bancorp Announces Second Quarter 2022 Results

LOS ANGELES–(BUSINESS WIRE)–Cathay General Bancorp (the “Company”, “we”, “us”, or “our”) (Nasdaq: CATY), the holding company for Cathay Bank, today announced its unaudited financial results for the quarter ended June 30, 2022. The Company reported net income of $89.0 million, or $1.18 per share, for the second quarter of 2022.

FINANCIAL PERFORMANCE

Three months ended
(unaudited) June 30, 2022 March 31, 2022 June 30, 2021
Net income $89.0 million $75.0 million $77.2 million
Basic earnings per common share

$1.19

$1.00

$0.98

Diluted earnings per common share

$1.18

$0.99

$0.97

Return on average assets

1.69%

1.46%

1.60%

Return on average total stockholders’ equity

14.62%

12.29%

12.53%

Efficiency ratio

39.06%

40.52%

43.41%

SECOND QUARTER HIGHLIGHTS

  • Total loans increased to $17.8 billion, or 9.5% annualized, in the second quarter.
  • Earnings per share increased 19.3% compared to first quarter of 2022 and 21.6% when compared to same quarter in 2021.

“Net interest income for the quarter increased by 18.4% compared to the same quarter last year primarily as a result of loan growth and the higher level of interest rates. During the second quarter, we repurchased 0.75 million shares at an average cost of $40.78 per share, for a total of $30.6 million,” commented Chang M. Liu, President and Chief Executive Officer of the Company.

SECOND QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended June 30, 2022, was $89.0 million, an increase of $11.8 million, or 15.3%, compared to net income of $77.2 million for the same quarter a year ago. Diluted earnings per share for the quarter ended June 30, 2022, was $1.18 per share compared to $0.97 per share for the same quarter a year ago.

Return on average stockholders’ equity was 14.62% and return on average assets was 1.69% for the quarter ended June 30, 2022, compared to a return on average stockholders’ equity of 12.53% and a return on average assets of 1.60% for the same quarter a year ago.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $27.2 million, or 18.4%, to $175.1 million during the second quarter of 2022, compared to $148.0 million during the same quarter a year ago. The increase was due primarily to an increase in interest income from loans and securities and a decrease in interest expense from deposits.

The net interest margin was 3.52% for the second quarter of 2022 compared to 3.24% for the second quarter of 2021 and 3.26% for the first quarter of 2022.

For the second quarter of 2022, the yield on average interest-earning assets was 3.81%, the cost of funds on average interest-bearing liabilities was 0.41%, and the cost of interest-bearing deposits was 0.37%. In comparison, for the second quarter of 2021, the yield on average interest-earning assets was 3.62%, the cost of funds on average interest-bearing liabilities was 0.53%, and the cost of interest-bearing deposits was 0.48%. The increase in the yield on average interest-earning assets resulted mainly from higher interest rates. The net interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, was 3.40% for the quarter ended June 30, 2022, compared to 3.09% for the same quarter a year ago.

(Reversal)/provision for credit losses

The Company recorded a provision for credit losses of $2.5 million in the second quarter of 2022 compared with $8.6 million in the first quarter of 2022 and a reversal for credit losses of $9.0 million in the second quarter of 2021. As of June 30, 2022, the allowance for loan losses increased $12.6 million to $148.8 million, or 0.84% of gross loans, compared to $136.2 million, or 0.83% of gross loans, as of December 31, 2021. The change in the allowance for loan losses during the second quarter of 2022 consisted of a $2.8 million provision for loan losses, and $218 thousand in net recoveries.

Three months ended Six months ended June 30,
June 30, 2022 March 31, 2022 June 30, 2021

2022

2021

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

$

50

$

221

$

7,712

$

272

$

16,850

Real estate loans (1)

 

1

 

 

 

1

 

Total charge-offs

 

51

 

221

 

7,712

 

273

 

16,850

Recoveries:
Commercial loans

 

175

 

359

 

155

 

534

 

1,425

Construction loans

 

 

6

 

 

6

 

Real estate loans (1)

 

94

 

146

 

303

 

240

 

413

Total recoveries

 

269

 

511

 

458

 

780

 

1,838

Net charge-offs/(recoveries)

$

(218)

$

(290)

$

7,254

$

(507)

$

15,012

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

Non-interest income

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wire transfer fees, and other sources of fee income, was $14.6 million for the second quarter of 2022, an increase of $2.0 million, or 15.9%, compared to $12.6 million for the second quarter of 2021. The increase was primarily due to an increase of $0.9 million in loan fees, when compared to the same quarter a year ago.

Non-interest expense

Non-interest expense increased $4.4 million, or 6.3%, to $74.1 million in the second quarter of 2022 compared to $69.7 million in the same quarter a year ago. The increase in non-interest expense in the second quarter of 2022 was primarily due to an increase of $4.5 million in salaries and employee benefits, due in part to the acquisition of certain West Coast HSBC branches, an increase of $1.9 million in professional service expenses, offset, in part, by a decrease of $3.4 million in amortization expense of investments in low-income housing and alternative energy partnerships when compared to the same quarter a year ago. The efficiency ratio was 39.1% in the second quarter of 2022 compared to 43.4% for the same quarter a year ago.

Income taxes

The effective tax rate for the second quarter of 2022 was 21.4% compared to 22.7% for the second quarter of 2021. The effective tax rate includes the impact of alternative energy investments and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans were $17.8 billion as of June 30, 2022, an increase of $1.4 billion, or 8.6%, from $16.3 billion as of December 31, 2021. The increase was primarily due to an increase of $212.1 million, or 7.1%, in commercial loans, an increase of $863.4 million, or 20.7%, in residential mortgage loans, which included $592.9 million acquired from the acquisition of certain HSBC West Coast branches, and an increase of $419.7 million, or 5.2%, in commercial mortgage loans, offset, in part, by a decrease of $42.5 million, or 10.1%, in home equity loans. For the second quarter of 2022, total loans, increased by $389.5 million or 9.5% annualized.

The loan balances and composition as of June 30, 2022, compared to December 31, 2021 and June 30, 2021, are presented below:

  June 30, 2022 December 31, 2021 June 30, 2021
  (In thousands) (Unaudited)
Commercial loans  

$

3,168,123

$

2,891,914

$

2,628,534

Paycheck protection program loans  

 

26,386

 

90,485

 

238,904

Residential mortgage loans  

 

5,045,383

 

4,182,006

 

4,103,736

Commercial mortgage loans  

 

8,563,001

 

8,143,272

 

7,615,087

Equity lines  

 

377,009

 

419,487

 

436,801

Real estate construction loans  

 

602,052

 

611,031

 

664,495

Installment and other loans  

 

5,934

 

4,284

 

3,132

Gross loans  

$

17,787,888

$

16,342,479

$

15,690,689

   
Allowance for loan losses  

 

(148,772)

 

(136,157)

 

(131,256)

Unamortized deferred loan fees  

 

(5,540)

 

(4,321)

 

(6,865)

Total loans, net  

$

17,633,576

$

16,202,001

$

15,552,568

Total deposits were $18.3 billion as of June 30, 2022, an increase of $228.5 million, or 1.3%, from $18.1 billion as of December 31, 2021. During the second quarter of 2022, our deposits increased by $227.0 million, or 5.0% annualized.

The deposit balances and composition as of June 30, 2022, compared to December 31, 2021 and June 30, 2021, are presented below:

  June 30, 2022 December 31, 2021 June 30, 2021
  (In thousands) (Unaudited)
Non-interest-bearing demand deposits  

$

4,433,959

$

4,492,054

$

3,664,931

NOW deposits  

 

2,494,524

 

2,522,442

 

2,026,154

Money market deposits  

 

5,322,510

 

4,611,579

 

4,003,043

Savings deposits  

 

1,178,572

 

915,515

 

900,106

Time deposits  

 

4,857,762

 

5,517,252

 

5,943,278

Total deposits  

$

18,287,327

$

18,058,842

$

16,537,512

ASSET QUALITY REVIEW

As of June 30, 2022, total non-accrual loans were $60.7 million, a decrease of $5.2 million, or 7.9%, from $65.8 million as of December 31, 2021, and a decrease of $7.1 million, or 10.5%, from $67.8 million as of June 30, 2021.

The allowance for loan losses was $148.8 million and the allowance for off-balance sheet unfunded credit commitments was $6.1 million as of June 30, 2022. The allowances represent the amount estimated by management to be appropriate to absorb credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for loan losses represented 0.84% of period-end gross loans, and 238.5% of non-performing loans as of June 30, 2022. The comparable ratios were 0.83% of period-end gross loans, and 202.4% of non-performing loans as of December 31, 2021.

The changes in non-performing assets and troubled debt restructurings as of June 30, 2022, compared to December 31, 2021 and June 30, 2021, are presented below:

(Dollars in thousands) (Unaudited)  

June 30, 2022

December 31, 2021

%
Change

June 30, 2021

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

$

1,737

$

1,439

21

$

1,513

15

Non-accrual loans:  
Construction loans  

 

 

 

4,116

(100)

Commercial mortgage loans  

 

15,141

 

38,173

(60)

 

36,884

(59)

Commercial loans  

 

27,849

 

16,558

68

 

16,333

71

Residential mortgage loans  

 

17,583

 

11,115

58

 

10,449

68

Installment and other loans  

 

79

 

 

Total non-accrual loans:  

$

60,652

$

65,846

(8)

$

67,782

(11)

Total non-performing loans  

 

62,389

 

67,285

(7)

 

69,295

(10)

Other real estate owned  

 

4,067

 

4,368

(7)

 

4,871

(17)

Total non-performing assets  

$

66,456

$

71,653

(7)

$

74,166

(10)

Accruing troubled debt restructurings (TDRs)  

$

12,675

$

12,837

(1)

$

27,261

(54)

   
Allowance for loan losses  

$

148,772

$

136,157

9

$

131,256

13

Total gross loans outstanding, at period-end  

$

17,787,888

$

16,342,479

9

$

15,690,689

13

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

 

238.46%

 

202.36%

 

189.42%

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

 

0.84%

 

0.83%

 

0.84%

The ratio of non-performing assets to total assets was 0.3% as of June 30, 2022, compared to 0.3% as of December 31, 2021. Total non-performing assets decreased $5.2 million, or 7.3%, to $66.5 million as of June 30, 2022, compared to $71.7 million as of December 31, 2021, primarily due to a decrease of $5.2 million, or 7.9%, in nonaccrual loans and $301 thousand in other real estate owned, offset in part, by an increase of $298 thousand, or 20.7%, in accruing loans past due 90 days or more.

CAPITAL ADEQUACY REVIEW

As of June 30, 2022, the Company’s Tier 1 risk-based capital ratio of 12.18%, total risk-based capital ratio of 13.74%, and Tier 1 leverage capital ratio of 10.15%, calculated under the Basel III capital rules, continue to place the Company in the “well capitalized” category for regulatory purposes, which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 8%, a total risk-based capital ratio equal to or greater than 10%, and a Tier 1 leverage capital ratio equal to or greater than 5%. As of December 31, 2021, the Company’s Tier 1 risk-based capital ratio was 12.80%, total risk-based capital ratio was 14.41%, and Tier 1 leverage capital ratio was 10.40%.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its second quarter 2022 financial results this afternoon, Monday, July 25, 2022, at 3:00 p.m., Pacific Time. Analysts and investors may dial in and participate in the question-and-answer session. To access dial-in information, please register at https://register.vevent.com/register/BI66b30b75e6404795bddccf676282eccc. The presentation accompanying this call and access to the live webcast is available on our site at www.cathaygeneralbancorp.com. You can also access the live webcast from https://edge.media-server.com/mmc/p/xufoitrk or a replay of the webcast on our website, which will be archived for one year, within 24 hours after the event.

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 47 branches in California, 10 branches in New York State, four in Washington State, two in Illinois, two in Texas, one in Maryland, Massachusetts, Nevada, and New Jersey, one in Hong Kong, and a representative office in Taipei, Beijing, and Shanghai. Cathay Bank’s website is at www.cathaybank.com. Cathay General Bancorp’s website is at www.cathaygeneralbancorp.com. Information set forth on such websites is not incorporated into this press release.

FORWARD-LOOKING STATEMENTS

Statements made in this press release, other than statements of historical fact, are forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management’s beliefs, projections, and assumptions concerning future results and events. These forward-looking statements may include, but are not limited to, such words as “aims,” “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “predicts,” “potential,” “possible,” “optimistic,” “seeks,” “shall,” “should,” “will,” and variations of these words and similar expressions. Forward-looking statements are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from local, regional, national and international business, market and economic conditions and events (such as the COVID-19 pandemic) and the impact they may have on us, our customers and our operations, assets and liabilities; possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to including potential future supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation including the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act; higher capital requirements from the implementation of the Basel III capital standards; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; our ability to generate anticipated returns on our investments and financings, including in tax-advantaged projects; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; natural disasters, public health crises (such as the COVID-19 pandemic) and geopolitical events; general economic or business conditions in Asia, and other regions where Cathay Bank has operations; failures, interruptions, or security breaches of our information systems; our ability to adapt our systems to technological changes; risk management processes and strategies; adverse results in legal proceedings; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in accounting standards or tax laws and regulations; market disruption and volatility; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuance of preferred stock; successfully raising additional capital, if needed, and the resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; and general competitive, economic political, and market conditions and fluctuations.

These and other factors are further described in Cathay General Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2021 (Item 1A in particular), other reports filed with the Securities and Exchange Commission (“SEC”), and other filings Cathay General Bancorp makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this press release. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we undertake no obligation to update or review any forward-looking statement to reflect circumstances, developments or events occurring after the date on which the statement is made or to reflect the occurrence of unanticipated events.

CATHAY GENERAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

 
    Three months ended   Six months ended June 30,
(Dollars in thousands, except per share data)  

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

2022

 

2021

                     
FINANCIAL PERFORMANCE                    
Net interest income before (reversal)/provision for credit losses      

$

         175,163

 

$

                    159,191

$

          148,001

$

        334,354

$

           289,819

(Reversal)/provision for credit losses  

 

2,500

 

8,643

 

(9,000)

 

11,143

 

(22,558)

Net interest income after (reversal)/provision for credit losses  

 

172,663

 

 

150,548

 

157,001

 

323,211

 

312,377

Non-interest income  

 

14,618

 

20,232

 

12,583

 

34,850

 

22,583

Non-interest expense  

 

74,123

 

72,697

 

69,707

 

146,820

 

141,110

Income before income tax expense  

 

113,158

 

 

98,083

 

99,877

 

211,241

 

193,850

Income tax expense  

 

24,180

 

23,055

 

22,678

 

47,235

 

43,267

Net income  

$

           88,978

 

$

                      75,028

 

$

            77,199

 

$

        164,006

 

$

           150,583

                     
Net income per common share                    
Basic  

$

               1.19

$

                         1.00

$

               0.98

$

             2.18

$

                 1.90

Diluted  

$

               1.18

$

                         0.99

$

               0.97

$

             2.17

$

                 1.89

   
Cash dividends paid per common share    

$

               0.34

$

                         0.34

$

               0.31

$

             0.68

$

                 0.62

                     
                     
SELECTED RATIOS                    
Return on average assets  

 

1.69%

 

 

1.46%

 

 

1.60%

 

 

1.58%

 

 

1.58%

Return on average total stockholders’ equity  

 

14.62%

 

 

12.29%

 

 

12.53%

 

 

13.54%

 

 

12.36%

Efficiency ratio  

 

39.06%

 

 

40.52%

 

 

43.41%

 

 

39.77%

 

 

45.17%

Dividend payout ratio  

 

28.70%

 

 

34.01%

 

 

31.80%

 

 

31.13%

 

 

32.67%

                     
                     
YIELD ANALYSIS (Fully taxable equivalent)                    
Total interest-earning assets  

 

3.81%

 

 

3.53%

 

 

3.62%

 

 

3.67%

 

 

3.65%

Total interest-bearing liabilities  

 

0.41%

 

 

0.38%

 

 

0.53%

 

 

0.39%

 

 

0.60%

Net interest spread  

 

3.40%

 

 

3.15%

 

 

3.09%

 

 

3.28%

 

 

3.05%

Net interest margin  

 

3.52%

 

 

3.26%

 

 

3.24%

 

 

3.39%

 

 

3.22%

                     
                     
CAPITAL RATIOS  

June 30, 2022

 

December 31, 2021

 

June 30, 2021

       
Tier 1 risk-based capital ratio  

 

12.18%

 

 

12.80%

 

 

13.77%

       
Total risk-based capital ratio  

 

13.74%

 

 

14.41%

 

 

15.47%

       
Tier 1 leverage capital ratio  

 

10.15%

 

 

10.40%

 

 

10.85%

       
                .    

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
(In thousands, except share and per share data) June 30, 2022 December 31, 2021 June 30, 2021
 
Assets
Cash and due from banks

$

141,734

$

134,141

$

133,507

Short-term investments and interest bearing deposits

 

1,012,228

 

2,315,563

 

1,589,086

Securities available-for-sale (amortized cost of $1,336,292 at June 30, 2022, $1,126,867 at December 31, 2021 and $991,715 at June 30, 2021)

 

1,234,571

 

1,127,309

 

1,002,515

Loans

 

17,787,888

 

16,342,479

 

15,690,689

Less: Allowance for loan losses

 

(148,772)

 

(136,157)

 

(131,256)

Unamortized deferred loan fees, net

 

(5,540)

 

(4,321)

 

(6,865)

Loans, net

 

17,633,576

 

16,202,001

 

15,552,568

Equity securities

 

26,785

 

22,319

 

20,113

Federal Home Loan Bank stock

 

17,250

 

17,250

 

17,250

Other real estate owned, net

 

4,067

 

4,368

 

4,871

Affordable housing investments and alternative energy partnerships, net

 

321,717

 

299,211

 

286,833

Premises and equipment, net

 

97,565

 

99,402

 

100,917

Customers’ liability on acceptances

 

12,650

 

8,112

 

7,560

Accrued interest receivable

 

61,939

 

56,994

 

56,092

Goodwill

 

375,696

 

372,189

 

372,189

Other intangible assets, net

 

7,231

 

4,627

 

5,041

Right-of-use assets- operating leases

 

31,883

 

27,834

 

31,310

Other assets

 

256,661

 

195,403

 

168,510

Total assets

$

21,235,553

$

20,886,723

$

19,348,362

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

$

4,433,959

$

4,492,054

$

3,664,931

Interest-bearing deposits:
NOW deposits

 

2,494,524

 

2,522,442

 

2,026,154

Money market deposits

 

5,322,510

 

4,611,579

 

4,003,043

Savings deposits

 

1,178,572

 

915,515

 

900,106

Time deposits

 

4,857,762

 

5,517,252

 

5,943,278

Total deposits

 

18,287,327

 

18,058,842

 

16,537,512

 
Advances from the Federal Home Loan Bank

 

95,000

 

20,000

 

20,000

Other borrowings for affordable housing investments

 

22,319

 

23,145

 

23,249

Long-term debt

 

119,136

 

119,136

 

119,136

Acceptances outstanding

 

12,650

 

8,112

 

7,560

Lease liabilities – operating leases

 

35,171

 

30,694

 

34,194

Other liabilities

 

232,418

 

180,544

 

154,354

Total liabilities

 

18,804,021

 

18,440,473

 

16,896,005

Stockholders’ equity

 

2,431,532

 

2,446,250

 

2,452,357

Total liabilities and equity

$

21,235,553

$

20,886,723

$

19,348,362

 
Book value per common share

$

32.67

$

32.29

$

31.38

Number of common shares outstanding

 

74,421,884

 

75,750,862

 

78,158,590

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
Three months ended Six months ended June 30,
June 30, 2022   March 31, 2022   June 30, 2021

2022

 

2021

(In thousands, except share and per share data)  
INTEREST AND DIVIDEND INCOME      
Loan receivable, including loan fees

$

181,022

 

$

166,094

 

$

161,493

$

347,116

 

$

321,214

Investment securities

 

5,748

 

 

4,828

 

 

3,189

 

10,576

 

 

6,256

Federal Home Loan Bank stock

 

255

 

 

261

 

 

255

 

516

 

 

472

Deposits with banks

 

2,508

 

 

763

 

 

438

 

3,271

 

 

753

Total interest and dividend income

 

189,533

 

 

171,946

 

 

165,375

 

361,479

 

 

328,695

INTEREST EXPENSE      
Time deposits

 

5,724

 

 

6,060

 

 

10,055

 

11,784

 

 

24,064

Other deposits

 

6,895

 

 

5,128

 

 

5,465

 

12,023

 

 

11,059

Advances from Federal Home Loan Bank

 

312

 

 

143

 

 

415

 

455

 

 

890

Long-term debt

 

1,439

 

 

1,424

 

 

1,439

 

2,863

 

 

2,863

Total interest expense

 

14,370

 

 

12,755

 

 

17,374

 

27,125

 

 

38,876

       
Net interest income before (reversal)/provision for credit losses

 

175,163

 

 

159,191

 

 

148,001

 

334,354

 

 

289,819

(Reversal)/provision for credit losses

 

2,500

 

 

8,643

 

 

(9,000)

 

11,143

 

 

(22,558)

Net interest income after (reversal)/provision for credit losses

 

172,663

 

 

150,548

 

 

157,001

 

323,211

 

 

312,377

       
NON-INTEREST INCOME      
Net (losses)/gains from equity securities

 

(955)

 

 

5,974

 

 

(879)

 

5,019

 

 

(3,631)

Securities gains, net

 

 

 

 

 

 

 

 

853

Letters of credit commissions

 

1,602

 

 

1,556

 

 

1,782

 

3,158

 

 

3,472

Depository service fees

 

1,632

 

 

1,671

 

 

1,343

 

3,303

 

 

2,706

Wealth management fees

 

3,956

 

 

4,354

 

 

3,939

 

8,310

 

 

7,496

Other operating income

 

8,383

 

 

6,677

 

 

6,398

 

15,060

 

 

11,687

Total non-interest income

 

14,618

 

 

20,232

 

 

12,583

 

34,850

 

 

22,583

NON-INTEREST EXPENSE      
Salaries and employee benefits

 

37,301

 

 

35,475

 

 

32,758

 

72,776

 

 

65,480

Occupancy expense

 

5,562

 

 

5,613

 

 

4,960

 

11,175

 

 

10,006

Computer and equipment expense

 

3,297

 

 

2,956

 

 

3,647

 

6,253

 

 

6,918

Professional services expense

 

7,704

 

 

6,697

 

 

5,756

 

14,401

 

 

10,466

Data processing service expense

 

3,420

 

 

2,909

 

 

3,243

 

6,329

 

 

6,898

FDIC and State assessments

 

2,194

 

 

1,802

 

 

1,440

 

3,996

 

 

3,365

Marketing expense

 

1,740

 

 

947

 

 

1,443

 

2,687

 

 

4,325

Other real estate owned expense/(income)

 

(33)

 

 

71

 

 

191

 

38

 

 

285

Amortization of investments in low income housing and alternative energy partnerships

 

7,235

 

 

8,287

 

 

10,682

 

15,522

 

 

22,252

Amortization of core deposit intangibles

 

250

 

 

224

 

 

171

 

474

 

 

343

Cost associated with debt redemption

 

 

 

 

 

 

 

 

732

Acquisition, integration and restructuring costs

 

91

 

 

3,936

 

 

 

4,027

 

 

Other operating expense

 

5,362

 

 

3,780

 

 

5,416

 

9,142

 

 

10,040

Total non-interest expense

 

74,123

 

 

72,697

 

 

69,707

 

146,820

 

 

141,110

Income before income tax expense

 

113,158

 

 

98,083

 

 

99,877

 

211,241

 

 

193,850

Income tax expense

 

24,180

 

 

23,055

 

 

22,678

 

47,235

 

 

43,267

Net income

$

88,978

 

$

75,028

 

$

77,199

$

164,006

 

$

150,583

Net income per common share:      
Basic

$

1.19

 

$

1.00

 

$

0.98

$

2.18

 

$

1.90

Diluted

$

1.18

 

$

0.99

 

$

0.97

$

2.17

 

$

1.89

Cash dividends paid per common share

$

0.34

 

$

0.34

 

$

0.31

$

0.68

 

$

0.62

Basic average common shares outstanding

 

74,958,913

 

 

75,331,976

 

 

79,167,004

 

75,144,414

 

 

79,347,886

Diluted average common shares outstanding

 

75,270,140

 

 

75,719,375

 

 

79,418,668

 

75,493,516

 

 

79,624,344

CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

     
  Three months ended  
(In thousands)   June 30, 2022 March 31, 2022 June 30, 2021
Interest-earning assets   Average
Balance
  Average
Yield/Rate (1)
Average
Balance
  Average
Yield/Rate (1)
Average
Balance
  Average
Yield/Rate (1)
Loans (1)  

$

17,530,650

 

4.14%

$

16,939,787

 

3.98%

$

15,684,329

 

4.13%

Taxable investment securities  

 

1,249,679

 

1.84%

 

1,174,245

 

1.67%

 

976,593

 

1.31%

FHLB stock  

 

17,250

 

5.93%

 

17,250

 

6.13%

 

17,250

 

5.93%

Deposits with banks  

 

1,173,702

 

0.86%

 

1,650,702

 

0.19%

 

1,633,686

 

0.11%

Total interest-earning assets  

$

19,971,281

 

3.81%

$

19,781,984

 

3.53%

$

18,311,858

 

3.62%

         
Interest-bearing liabilities        
Interest-bearing demand deposits  

$

2,459,940

 

0.13%

$

2,400,010

 

0.08%

$

1,967,069

 

0.13%

Money market deposits  

 

5,291,824

 

0.45%

 

4,815,578

 

0.38%

 

3,951,549

 

0.47%

Savings deposits  

 

1,183,821

 

0.07%

 

1,076,690

 

0.07%

 

896,747

 

0.09%

Time deposits  

 

4,881,365

 

0.47%

 

5,289,313

 

0.46%

 

6,035,219

 

0.67%

Total interest-bearing deposits  

$

13,816,950

 

0.37%

$

13,581,591

 

0.33%

$

12,850,584

 

0.48%

Other borrowed funds  

 

82,660

 

1.52%

 

43,143

 

1.34%

 

93,442

 

1.79%

Long-term debt  

 

119,136

 

4.85%

 

119,136

 

4.85%

 

119,136

 

4.84%

Total interest-bearing liabilities  

 

14,018,746

 

0.41%

 

13,743,870

 

0.38%

 

13,063,162

 

0.53%

         
Non-interest-bearing demand deposits  

 

4,391,925

 

 

4,360,392

 

 

3,597,475

 
         
Total deposits and other borrowed funds  

$

18,410,671

 

$

18,104,262

 

$

16,660,637

 
         
Total average assets  

$

21,079,634

 

$

20,864,531

 

$

19,347,886

 
Total average equity  

$

2,441,128

 

$

2,445,412

 

$

2,471,388

 
         
  Six months ended  
(In thousands)   June 30, 2022 June 30, 2021  
Interest-earning assets   Average
Balance
  Average
Yield/Rate (1)
Average
Balance
  Average
Yield/Rate (1)
 
Loans (1)  

$

17,236,850

 

4.06%

$

15,688,131

 

4.13%

 
Taxable investment securities  

 

1,212,170

 

1.76%

 

986,096

 

1.28%

 
FHLB stock  

 

17,250

 

6.03%

 

17,250

 

5.52%

 
Deposits with banks  

 

1,410,884

 

0.47%

 

1,459,498

 

0.10%

 
Total interest-earning assets  

$

19,877,154

 

3.67%

$

18,150,975

 

3.65%

 
         
Interest-bearing liabilities        
Interest-bearing demand deposits  

$

2,430,141

 

0.11%

$

1,928,941

 

0.14%

 
Money market deposits  

 

5,055,017

 

0.41%

 

3,752,986

 

0.50%

 
Savings deposits  

 

1,130,551

 

0.07%

 

871,286

 

0.10%

 
Time deposits  

 

5,084,212

 

0.47%

 

6,218,967

 

0.78%

 
Total interest-bearing deposits  

$

13,699,921

 

0.35%

$

12,772,180

 

0.55%

 
Other borrowed funds  

 

63,011

 

1.46%

 

108,350

 

1.66%

 
Long-term debt  

 

119,136

 

4.85%

 

119,136

 

4.85%

 
Total interest-bearing liabilities  

 

13,882,068

 

0.39%

 

12,999,666

 

0.60%

 
         
Non-interest-bearing demand deposits  

 

4,376,246

 

 

3,502,495

   
Total deposits and other borrowed funds  

$

18,258,314

 

$

16,502,161

   
         
Total average assets  

$

20,972,677

 

$

19,181,963

   
Total average equity  

$

2,443,258

 

$

2,456,167

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

CATHAY GENERAL BANCORP

GAAP to NON-GAAP RECONCILIATION

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. Tangible equity and tangible equity to tangible assets ratio are non-GAAP financial measures. Tangible equity and tangible assets represent stockholders’ equity and total assets, respectively, which have been reduced by goodwill and other intangible assets. Given that the use of such measures and ratios is more prevalent in the banking industry, and such measures and ratios are used by banking regulators and analysts, the Company has included them below for discussion.

    Three Months Ended
    June 30, 2022 March 31, 2022 June 30, 2021  
       
Stockholders’ equity   (a)  

$

2,431,532

$

2,446,250

$

2,452,357

 
Less: Goodwill    

 

(375,696)

 

(372,189)

 

(372,189)

 
Other intangible assets (1)    

 

(7,231)

 

(4,627)

 

(5,041)

 
Tangible equity   (b)  

$

2,048,605

$

2,069,434

$

2,075,127

 
       
Total assets   (c)  

$

21,235,553

$

20,886,723

$

19,348,362

 
Less: Goodwill    

 

(375,696)

 

(372,189)

 

(372,189)

 
Other intangible assets (1)    

 

(7,231)

 

(4,627)

 

(5,041)

 
Tangible assets   (d)  

$

20,852,626

$

20,509,907

$

18,971,132

 
       
Number of common shares outstanding   (e)  

 

74,421,884

 

75,750,862

 

78,158,590

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

 

11.45%

 

11.71%

 

12.67%

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

 

9.82%

 

10.09%

 

10.94%

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

$

27.53

$

27.32

$

26.55

 
       
    Three Months Ended Six Months Ended
    June 30, 2022 March 31, 2022 June 30, 2021 June 30, 2022   June 30, 2021
Net Income    

$

88,978

$

75,028

$

77,199

$

164,006

 

$

150,583

Add: Amortization of other intangibles    

 

277

 

252

 

207

 

528

 

 

421

Tax effect of amortization adjustments (2)    

 

(82)

 

(75)

 

(61)

 

(157)

 

 

(125)

Tangible net income   (f)  

$

89,173

$

75,205

$

77,345

$

164,377

 

$

150,879

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

 

17.41%

 

14.54%

 

14.91%

 

16.05%

 

 

14.54%

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

 

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