LOS ANGELES, Oct. 23 /PRNewswire-FirstCall/ -- Cathay General
Bancorp (the "Company", Nasdaq: CATY), the holding company for
Cathay Bank (the "Bank"), today announced results for the third
quarter of 2008. FINANCIAL PERFORMANCE Third Quarter 2008 Third
Quarter 2007 Net income $6.9 million $34.0 million Basic earnings
per share $0.14 $0.68 Diluted earnings per share $0.14 $0.67 Return
on average assets 0.25% 1.46% Return on average stockholders'
equity 2.71% 14.45% Efficiency ratio 53.92% 37.46% THIRD QUARTER
HIGHLIGHTS -- Third quarter earnings of $6.9 million decreased
$27.1 million, or 79.7%, compared to the same quarter a year ago.
Included in the results was a non-cash after-tax charge of $20.3
million, or $0.41 per diluted share, for "other-than-temporary"
impairment on agency preferred securities. Earnings for the third
quarter of 2008 excluding the $20.3 million impairment charge
decreased $6.8 million, or 20.0%, due in part to increased loan
provision of $13.6 million, compared to the same quarter a year
ago. -- Fully diluted earnings per share was $0.14, a 79.1%
decrease from the same quarter a year ago. Fully diluted earnings
per share excluding the $20.3 million impairment charge was $0.55,
a 17.9% decrease from the same quarter a year ago. -- Return on
average assets was 0.25% for the quarter ended September 30, 2008,
compared to 0.73% for the quarter ended June 30, 2008, and compared
to 1.46% for the same quarter a year ago. Return on average assets
excluding the $20.3 million impairment charge was 0.99% for the
quarter ended September 30, 2008. -- Return on average
stockholders' equity was 2.71% for the quarter ended September 30,
2008, compared to 7.66% for the quarter ended June 30, 2008, and
compared to 14.45% for the same quarter a year ago. Return on
average stockholders' equity excluding the $20.3 million impairment
charge was 10.70% for the quarter ended September 30, 2008. --
Gross loans increased by $171.6 million, or 2.3%, for the quarter
to $7.5 billion at September 30, 2008, from $7.3 billion at June
30, 2008. -- Total deposits increased by $107.1 million, or 1.6%,
for the quarter to $6.8 billion at September 30, 2008, from $6.7
billion at June 30, 2008. "In the midst of the most troubled times
in many years, we are pleased with the fundamental operating
results for the third quarter of 2008. We continue to bolster our
reserves and recorded a provision for credit losses during the
third quarter of $15.8 million which increased our reserve for
credit losses to 1.29% of total loans. In addition, we have limited
new loan growth to further strengthen our capital ratios,"
commented Dunson Cheng, Chairman of the Board, Chief Executive
Officer, and President of the Company. "Our net interest margin has
begun to stabilize and the interest rate floors on many of our
floating rate loans should help mitigate the impact of lower short
term interest rates. To provide better customer service in Northern
California, we will be opening a new branch in Dublin in the first
quarter of 2009," said Peter Wu, Executive Vice Chairman and Chief
Operating Officer. "Our capital ratios are strong and qualify us as
a well capitalized institution. However, in view of the current
uncertain economic outlook, we deem it prudent to consider
participating in the US Treasury Capital Purchase Program to
position the Company to expand its services to its communities and
to enhance its strategic position. 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 $73.6
million during the third quarter of 2008, a decline of $6.2
million, or 7.8%, compared to the $79.8 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 2.88% for the third
quarter of 2008. The net interest margin decreased 6 basis points
from 2.94% in the second quarter of 2008 and decreased 81 basis
points from 3.69% in the third quarter of 2007. The decrease in the
net interest margin from the prior year primarily resulted from the
lag in the downward repricing of certificates of deposit following
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. The decrease in the net interest margin from
the second quarter primarily resulted from the increase in the
borrowing rates on securities sold under agreements to repurchase
and other borrowed funds. For the third quarter of 2008, the yield
on average interest-earning assets was 5.70% on a fully
taxable-equivalent basis, and the cost of funds on average
interest-bearing liabilities equaled 3.21%. In comparison, for the
third quarter of 2007, the yield on average interest-earning assets
was 7.34% and cost of funds on average interest-bearing liabilities
equaled 4.24%. 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 61
basis points to 2.49% for the quarter ended September 30, 2008,
from 3.10% for the same quarter a year ago, primarily due to the
reasons discussed above. Provision for credit losses The provision
for credit losses was $15.8 million for the third quarter of 2008
compared to $2.2 million for the third quarter of 2007 and $20.5
million for the second quarter of 2008. The provision for credit
losses was based on the review of the adequacy of the allowance for
loan losses at September 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
ended For the nine months ended September 30, September 30, (In
thousands) 2008 2007 2008 2007 Charge-offs: Commercial loans $6,796
$511 $8,917 $6,253 Construction loans 3,230 - 8,239 190 Real estate
loans 172 912 893 1,030 Installment and other loans - - - 1 Total
charge-offs 10,198 1,423 18,049 7,474 Recoveries: Commercial loans
1,067 138 1,634 2,911 Construction loans - - 83 190 Real estate
loans - - - 202 Installment and other loans 4 2 16 27 Total
recoveries 1,071 140 1,733 3,330 Net Charge-offs $9,127 $1,283
$16,316 $4,144 Total charge-offs for the third quarter of 2008
included $5.1 million in charge-offs related to two distributors
and a $3.2 million charge-off to a condominium conversion project
in San Diego county that had been previously reported as a troubled
debt restructuring. 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
negative $8.4 million for the third quarter of 2008, a decrease of
$17.3 million compared to the non-interest income of $8.9 million
for the third quarter of 2007. The decrease in non-interest income
primarily resulted from the "Other-than-temporary impairment"
charge of $27.8 million on agency preferred stock, which had a
carrying value of $2.5 million after the impairment write- down,
which was partially offset by net gains of $12.5 million from sale
of agency mortgage backed securities. Letters of credit commissions
decreased $157,000, or 9.7%, to $1.5 million in the third quarter
of 2008 from $1.6 million in the same quarter a year ago, primarily
due to decreased international transactions as a result of the
slowdown in the economy. Gains from sale of premises and equipment
decreased $2.7 million as a result of the sale of a former bank
branch building in September 2007. Other operating income increased
$992,000, or 30.1%, to $4.3 million in the third quarter of 2008
from $3.3 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
commissions from official check rebate of $275,000 and in wealth
management commissions of $235,000. Non-interest expense
Non-interest expense increased $2.0 million, or 5.9%, to $35.2
million in the third quarter of 2008 compared to $33.2 million in
the same quarter a year ago. The efficiency ratio was 53.92%, or
37.80% excluding the $27.8 million pre-tax impairment charge,
compared to 37.46% for the same period a year ago, and 41.52%, or
38.74% excluding the $5.8 million pre-tax impairment charge for the
second quarter of 2008. Federal Deposit Insurance Corporation
("FDIC") and State assessments increased to $1.3 million in the
third quarter of 2008 from $284,000 in the same quarter a year ago
as a result of the utilization of the remaining credit for prior
years' FDIC insurance premiums in March 2008. Professional service
expense increased $1.0 million, or 42.8%, primarily due to
increases in information technology consulting expenses of
$518,000, appraisal expenses of $217,000, and legal expenses of
$213,000. Other real estate owned ("OREO") expense increased $1.2
million due to a $1.3 million write-down on the Company's Texas
apartment foreclosure. Expense from operations of affordable
housing investments increased $300,000, or 11.8%, to $2.8 million
compared to $2.5 million in the same quarter a year ago as a result
of adjustments to estimated losses and additional investments in
affordable housing projects. Offsetting the above described
increases were decreases of $584,000 in computer and equipment
expense due primarily to the decrease in software license fees as a
result of the Company's new data processing contract, $517,000 in
salaries and employee benefits as a result of lower current year
bonus accrual, $253,000 in recruiting and education expenses, and
$201,000 in litigation expenses in the third quarter of 2008
compared to the same quarter a year ago. Income taxes The effective
tax rate was 51.7% for the third quarter of 2008 and 36.1% for the
first nine months of 2008, compared to 36.2% for the same quarter a
year ago and 36.2% for the full year 2007. The higher effective tax
rate for the third quarter of 2008 resulted from the lack of tax
benefits from that portion of the "other-than-temporary" impairment
on agency preferred stock in excess of available capital gains.
During the fourth quarter of 2008, an additional tax benefit of
$4.6 million will be recognized as a result of the enactment on
October 3 of the Emergency Economic Stabilization Act of 2008 which
amended the tax code to permit the loss on sale of agency preferred
stock by a financial institution to be treated as an ordinary loss
instead of a capital loss. Reconciliation of Reported Earnings to
Earnings Excluding the Impairment Charge Three months ended Nine
months ended September 30, September 30, 2008 2007 2008 2007
(Dollars in thousands, except share and per share data) Net income
as reported $6,891 $34,006 $53,421 $94,553 Add:
Other-than-temporary impairment charge 27,824 33,655 Less: Tax
benefit for non-cash other- than-temporary impairment charge
(7,525) - (9,977) - Earnings excluding the impairment charge
$27,190 $34,006 $77,099 $94,553 Basic average common shares
outstanding 49,441,621 49,828,379 49,392,655 50,683,650 Diluted
average common shares outstanding 49,530,272 50,417,332 49,497,171
51,283,317 Earnings per share as reported: Basic 0.14 0.68 1.08
1.87 Dilutive 0.14 0.67 1.08 1.84 Earnings per share excluding the
impairment charge Basic 0.55 0.68 1.56 1.87 Dilutive 0.55 0.67 1.56
1.84 Return on average assets As reported 0.25% 1.46% 0.67% 1.43%
Excluding the impairment charge 0.99% 1.46% 0.97% 1.43% Return on
average stockholders' equity As reported 2.71% 14.45% 7.09% 13.49%
Excluding the impairment charge 10.70% 14.45% 10.23% 13.49% Three
months ended Nine months ended September 30, September 30, 2008
2007 2008 2007 (Dollars in thousands) Total revenues as reported
$65,232 $88,686 $228,235 $249,981 Add: Other-than-temporary
impairment charge 27,824 - 33,655 - Total revenues excluding the
impairment charge $93,056 $88,686 $261,890 $249,981 Total
non-interest expenses reported $35,171 $33,222 $100,881 $95,736
Efficiency ratio As reported 53.92% 37.46% 44.20% 38.30% Excluding
the impairment charge 37.80% 37.46% 38.52% 38.30% BALANCE SHEET
REVIEW Total assets increased by $647.8 million, or 6.2%, to $11.1
billion at September 30, 2008, from $10.4 billion at December 31,
2007. The increase in total assets was represented primarily by
increases in available- for-sale securities of $244.7 million, or
10.4%, and increases in loans of $815.6 million, or 12.2%, offset
by decreases of $366.1 million in securities purchased under
agreements to resell. The growth of gross loans to $7.5 billion as
of September 30, 2008, from $6.7 billion as of December 31, 2007,
represents an increase of $815.6 million, or 12.2%, primarily due
to increases in commercial mortgage loans and commercial loans. The
changes in the loan composition from December 31, 2007, are
presented below: September 30, December 31, % Type of Loans: 2008
2007 Change (Dollars in thousands) Commercial $1,651,556 $1,435,861
15 Residential mortgage 628,670 555,703 13 Commercial mortgage
4,129,201 3,762,689 10 Equity lines 154,764 108,004 43 Real estate
construction 920,711 799,230 15 Installment 10,981 15,099 (27)
Other 3,398 7,059 (52) Gross loans and leases $7,499,281 $6,683,645
12 Allowance for loan losses (92,068) (64,983) 42 Unamortized
deferred loan fees (10,290) (10,583) (3) Total loans and leases,
net $7,396,923 $6,608,079 12 At September 30, 2008, total deposits
were $6.8 billion, an increase of $570.8 million, or 9.1%, from
$6.3 billion at December 31, 2007. Time deposit under $100,000
increased $239.2 million, or 18.2%, time deposits of $100,000 or
more increased $144.2 million, or 4.9%, and interest-bearing demand
deposits increased $142.5 million, or 15.6%. The changes in the
deposit composition from December 31, 2007, are presented below:
September 30, December 31, % Deposits 2008 2007 Change (Dollars in
thousands) Non-interest-bearing demand $821,233 $785,364 5 NOW
270,763 231,583 17 Money market 785,119 681,783 15 Savings 340,316
331,316 3 Time deposits under $100,000 1,550,433 1,311,251 18 Time
deposits of $100,000 or more 3,081,306 2,937,070 5 Total deposits
$6,849,170 $6,278,367 9 At September 30, 2008, brokered deposits
which are included in time deposits under $100,000 increased to
$888.0 million, a $255.4 million increase from $632.6 million at
December 31, 2007. ASSET QUALITY REVIEW At September 30, 2008,
total non-accrual loans of $101.1 million included thirteen
construction loans totaling $65.5 million, fourteen commercial real
estate loans totaling $10.7 million, five land loans totaling $8.8
million, twenty-two commercial loans totaling $10.7 million, and
ten residential mortgage loans totaling $5.4 million. The $65.5
million of construction loans included four condo construction
loans of $32.4 million in Los Angeles County, a $5.0 million town
house construction loan in Los Angeles County, a $2.7 million land
development loan in Los Angeles County, two condo conversion loans
of $10.1 million in San Diego County including a $7.9 million loan
that was reported as a troubled debt restructuring in prior
quarters, a $9.2 million condo construction loan in the state of
Nevada, a $4.1 million construction loan in the Central Valley,
California, and a $1.4 million condo construction loan in Boston,
Massachusetts. The $10.7 million of non-accrual commercial real
estate loans included four loans of $4.1 million secured by
multi-family residences, a $1.7 million loan secured by a motel in
Texas, and $4.9 million in loans secured by industrial buildings, a
retail store, and a restaurant. Non-accrual loans of $15.8 million
were paid off during the third quarter of 2008. At September 30,
2008, total residential construction loans were $428.6 million of
which $15.3 million were in San Bernardino and Riverside counties
in California and $18.9 million were in the Central Valley in
California. Residential construction loans of $4.1 million in the
Central Valley were on non-accrual status as of September 30, 2008.
At September 30, 2008, total land loans were $232.3 million of
which $29.2 million were in San Bernardino and Riverside counties
and $1.8 million were in Central Valley. Land loans in Riverside
County, San Bernardino county and Central Valley were all on
accrual status as of September 30, 2008. At September 30, 2008,
other real estate owned increased $14.3 million to $43.4 million
from $29.1 million at June 30, 2008. OREO was comprised of thirteen
properties, including $13.5 million land zoned for residential and
retail purposes in Riverside County, California, $11.6 million for
land zoned for apartments in Anaheim, California, an $8.1 million
apartment building in Texas, a $6.8 million shopping center in
Texas, a $1.4 million hotel in Texas, and seven other properties
totaling $2.0 million. Non-performing assets to gross loans and
other real estate owned was 1.92% at September 30, 2008, compared
to 1.25% at December 31, 2007. Total non- performing assets
increased $60.8 million, or 72.7%, to $144.5 million at September
30, 2008, compared with $83.7 million at December 31, 2007,
primarily due to a $42.8 million increase in non-accrual loans and
a $27.3 million increase in OREO offset by a $9.3 million decrease
in loans past due 90 days or more. There was no loan past due 90
days or more still accruing interest as of September 30, 2008. The
allowance for loan losses were $92.0 million and the allowance for
off-balance sheet unfunded credit commitments were $5.0 million at
September 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 $97.0 million at September 30, 2008,
compared to $69.6 million at December 31, 2007. The allowance for
credit losses represented 1.29% of period-end gross loans and 96.0%
of non- performing loans at September 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: September 30, December 31, % (Dollars in
thousands) 2008 2007 Change Non-performing assets Accruing loans
past due 90 days or more $- $9,265 (100) Non-accrual loans:
Construction 65,524 29,677 121 Land 8,841 6,627 33 Commercial real
estate, excluding land 10,743 13,336 (19) Commercial 10,646 6,664
60 Real estate mortgage 5,347 1,971 171 Total non-accrual loans:
$101,101 $58,275 73 Total non-performing loans 101,101 67,540 50
Other real estate owned 43,410 16,147 169 Total non-performing
assets $144,511 $83,687 73 Troubled debt restructurings $893
$12,601 (93) Allowance for loan losses $92,068 $64,983 42 Allowance
for off-balance sheet credit commitments 4,975 4,576 9 Allowance
for credit losses $97,043 $69,559 40 Total gross loans outstanding,
at period-end $7,499,281 $6,683,645 12 Allowance for loan losses to
non- performing loans, at period-end 91.07% 96.21% Allowance for
loan losses to gross loans, at period-end 1.23% 0.97% Allowance for
credit losses to non- performing loans, at period-end 95.99%
102.99% Allowance for credit losses to gross loans, at period-end
1.29% 1.04% CAPITAL ADEQUACY REVIEW At September 30, 2008, the Tier
1 risk-based capital ratio of 9.39%, total risk-based capital ratio
of 11.09%, and Tier 1 leverage capital ratio of 7.65%, 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 nine months of 2008. At September
30, 2008, 622,500 shares remain under the Company's November 2007
repurchase program. YEAR-TO-DATE REVIEW Net income was $53.4
million, or $1.08 per diluted share for the nine months ended
September 30, 2008, a decrease of $41.1 million, or 43.5%, in net
income compared to $94.5 million, or $1.84 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 $23.7 million impairment charge
was $77.1 million, or $1.56 per diluted share for the nine months
ended September 30, 2008, a decrease of $17.5 million, or 18.5%,
compared to the same period a year ago. The net interest margin for
the nine months ended September 30, 2008, decreased 77 basis points
to 2.99% compared to 3.76% for the same period a year ago. Return
on average stockholders' equity was 7.09% and return on average
assets was 0.67% for the nine months ended September 30, 2008,
compared to a return on average stockholders' equity of 13.49% and
a return on average assets of 1.43% for the same period of 2007.
Excluding the $23.7 million impairment charge, return on average
stockholders' equity was 10.23% and return on average assets was
0.97% for the nine months ended September 30, 2008. The efficiency
ratio for the nine months ended September 30, 2008 was 44.20%, or
38.52% excluding the $33.7 million pre-tax impairment charge,
compared to 38.30% 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 Nine months ended September 30, September 30, (Dollars
in thousands, % % except per share data) 2008 2007 Change 2008 2007
Change FINANCIAL PERFORMANCE Net interest income before provision
for credit losses $73,601 $79,827 (8) $220,905 $229,076 (4)
Provision for credit losses 15,800 2,200 618 43,800 5,300 726 Net
interest income after provision for credit losses 57,801 77,627
(26) 177,105 223,776 (21) Non-interest income (8,369) 8,859 (194)
7,330 20,905 (65) Non-interest expense 35,171 33,222 6 100,881
95,736 5 Income before income tax expense 14,261 53,264 (73) 83,554
148,945 (44) Income tax expense 7,370 19,258 (62) 30,133 54,392
(45) Net income $6,891 $34,006 (80) $53,421 $94,553 (44) Net income
per common share: Basic $0.14 $0.68 (79) $1.08 $1.87 (42) Diluted
$0.14 $0.67 (79) $1.08 $1.84 (41) Cash dividends paid per common
share $0.105 $0.105 - $0.315 $0.300 5 SELECTED RATIOS Return on
average assets 0.25% 1.46% (83) 0.67% 1.43% (53) Return on average
stockholders' equity 2.71% 14.45% (81) 7.09% 13.49% (47) Efficiency
ratio 53.92% 37.46% 44 44.20% 38.30% 15 Dividend payout ratio
75.30% 15.43% 388 29.12% 16.18% 80 YIELD ANALYSIS (Fully taxable
equivalent) Total interest-earning assets 5.70% 7.34% (22) 6.00%
7.39% (19) Total interest-bearing liabilities 3.21% 4.24% (24)
3.44% 4.24% (19) Net interest spread 2.49% 3.10% (20) 2.56% 3.15%
(19) Net interest margin 2.88% 3.69% (22) 2.99% 3.76% (20) Well
Capital- Minimum September September December ized Regulatory
CAPITAL RATIOS 30, 30, 31, Require- Require- 2008 2007 2007 ments
ments Tier 1 risk-based capital ratio 9.39% 9.22% 9.09% 6.0% 4.0%
Total risk-based capital ratio 11.09% 10.65% 10.52% 10.0% 8.0% Tier
1 leverage capital ratio 7.65% 8.32% 7.83% 5.0% 4.0% CATHAY GENERAL
BANCORP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In
thousands, except share and per September 30, December 31, % share
data) 2008 2007 change Assets Cash and due from banks $82,923
$118,437 (30) Short-term investments 5,185 2,278 128 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 $2,619,804 in 2008 and
$2,348,606 in 2007) 2,592,331 2,347,665 10 Trading securities 19
5,225 (100) Loans 7,499,281 6,683,645 12 Less: Allowance for loan
losses (92,068) (64,983) 42 Unamortized deferred loan fees, net
(10,290) (10,583) (3) Loans, net 7,396,923 6,608,079 12 Federal
Home Loan Bank stock 67,672 65,720 3 Other real estate owned, net
43,410 16,147 169 Affordable housing investments, net 105,748
94,000 12 Premises and equipment, net 98,182 76,848 28 Customers'
liability on acceptances 52,460 53,148 (1) Accrued interest
receivable 41,394 53,032 (22) Goodwill 319,557 319,873 (0) Other
intangible assets, net 30,945 36,097 (14) Other assets 63,544
39,883 59 Total assets $11,050,293 $10,402,532 6 Liabilities and
Stockholders' Equity Deposits Non-interest-bearing demand deposits
$821,233 $785,364 5 Interest-bearing deposits: NOW deposits 270,763
231,583 17 Money market deposits 785,119 681,783 15 Savings
deposits 340,316 331,316 3 Time deposits under $100,000 1,550,433
1,311,251 18 Time deposits of $100,000 or more 3,081,306 2,937,070
5 Total deposits 6,849,170 6,278,367 9 Federal funds purchased
33,000 41,000 (20) Securities sold under agreements to repurchase
1,550,000 1,391,025 11 Advances from the Federal Home Loan Bank
1,276,713 1,375,180 (7) Other borrowings from financial
institutions - 8,301 (100) Other borrowings from affordable housing
investments 19,541 19,642 (1) Long-term debt 171,136 171,136 -
Acceptances outstanding 52,460 53,148 (1) Minority interest in
consolidated subsidiaries 8,500 8,500 - Other liabilities 87,620
84,314 4 Total liabilities 10,048,140 9,430,613 7 Commitments and
contingencies - - - Total stockholders' equity 1,002,153 971,919 3
Total liabilities and stockholders' equity $11,050,293 $10,402,532
6 Book value per share $20.25 $19.70 3 Number of common stock
shares outstanding 49,477,706 49,336,187 0 CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME (Unaudited) Three months ended Nine months ended September
30, September 30, 2008 2007 2008 2007 (In thousands, except share
and per share data) INTEREST AND DIVIDEND INCOME Loan receivable,
including loan fees $114,005 $123,925 $341,880 $356,841 Investment
securities- taxable 27,575 25,127 84,507 71,381 Investment
securities- nontaxable 284 443 974 1,625 Federal Home Loan Bank
stock 1,004 639 2,685 1,689 Agency preferred stock 313 174 1,621
512 Federal funds sold and securities purchased under agreements to
resell 2,899 7,615 12,294 15,382 Deposits with banks 42 1,248 523
3,288 Total interest and dividend income 146,122 159,171 444,484
450,718 INTEREST EXPENSE Time deposits of $100,000 or more 26,226
34,475 86,398 97,527 Other deposits 17,100 20,068 49,519 56,739
Securities sold under agreements to repurchase 15,174 9,865 44,716
23,126 Advances from Federal Home Loan Bank 11,785 11,472 35,229
34,930 Long-term debt 2,030 3,182 6,889 8,057 Short-term borrowings
206 282 828 1,263 Total interest expense 72,521 79,344 223,579
221,642 Net interest income before provision for credit losses
73,601 79,827 220,905 229,076 Provision for credit losses 15,800
2,200 43,800 5,300 Net interest income after provision for loan
losses 57,801 77,627 177,105 223,776 NON-INTEREST INCOME Securities
(losses) gains, net (15,313) 88 (12,980) 268 Letters of credit
commissions 1,465 1,622 4,281 4,349 Depository service fees 1,189
1,146 3,636 3,529 Gains from sale of premises and equipment - 2,705
21 2,714 Other operating income 4,290 3,298 12,372 10,045 Total
non-interest income (8,369) 8,859 7,330 20,905 NON-INTEREST EXPENSE
Salaries and employee benefits 16,376 16,893 50,643 50,756
Occupancy expense 3,393 3,159 9,918 9,035 Computer and equipment
expense 1,848 2,432 6,024 7,209 Professional services expense 3,410
2,388 8,890 6,659 FDIC and State assessments 1,336 284 3,172 804
Marketing expense 584 608 2,449 2,413 Other real estate owned
expense 1,182 23 1,806 284 Operations of affordable housing
investments 2,840 2,540 5,361 4,928 Amortization of core deposit
intangibles 1,722 1,767 5,196 5,298 Other operating expense 2,480
3,128 7,422 8,350 Total non-interest expense 35,171 33,222 100,881
95,736 Income before income tax expense 14,261 53,264 83,554
148,945 Income tax expense 7,370 19,258 30,133 54,392 Net income
6,891 34,006 53,421 94,553 Other comprehensive income (loss), net
of tax 3,077 5,978 (15,376) 2,568 Total comprehensive income $9,968
$39,984 $38,045 $97,121 Net income per common share: Basic $0.14
$0.68 $1.08 $1.87 Diluted $0.14 $0.67 $1.08 $1.84 Cash dividends
paid per common share $0.105 $0.105 $0.315 $0.300 Basic average
common shares outstanding 49,441,621 49,828,379 49,392,655
50,683,650 Diluted average common shares outstanding 49,530,272
50,417,332 49,497,171 51,283,317 CATHAY GENERAL BANCORP AVERAGE
BALANCES - SELECTED CONSOLIDATED FINANCIAL INFORMATION (Unaudited)
For the three months ended, September 30, September 30, June 30,
(In thousands) 2008 2007 2008 Average Average Average Yield/ Yield/
Yield/ Interest-earning Average Rate Average Rate Average Rate
assets Balance (1)(2) Balance (1)(2) Balance (1)(2) Loans and
leases (1) $7,425,818 6.11% $6,298,452 7.81% $7,122,528 6.26%
Taxable investment securities 2,484,473 4.42% 1,769,245 5.63%
2,475,628 4.62% Tax-exempt investment securities (2) 47,938 7.20%
55,217 6.62% 60,781 8.69% FHLB stock 64,228 6.22% 50,297 5.04%
65,879 5.67% Federal funds sold and securities purchased under
agreements to resell 188,522 6.12% 371,413 8.13% 177,445 6.61%
Deposits with banks 8,941 1.87% 71,843 6.89% 5,188 2.09% Total
interest- earning assets $10,219,920 5.70% $8,616,467 7.34%
$9,907,449 5.86% Interest-bearing liabilities Interest-bearing
demand deposits $268,802 0.57% $233,116 1.28% $253,559 0.58% Money
market 760,679 1.81% 699,679 3.18% 738,206 1.76% Savings deposits
337,538 0.31% 342,971 1.01% 337,512 0.33% Time deposits 4,708,290
3.31% 3,935,125 4.77% 4,452,317 3.58% Total interest- bearing
deposits $6,075,309 2.84% $5,210,891 4.15% $5,781,594 3.03% Federal
funds purchased 39,842 2.06% 22,863 4.84% 37,720 2.24% Securities
sold under agreements to repurchase 1,550,000 3.89% 1,041,577 3.76%
1,551,571 3.87% Other borrowed funds 1,157,430 4.05% 978,759 4.65%
1,134,448 4.01% Long-term debt 171,136 4.72% 171,136 7.38% 171,136
4.72% Total interest- bearing liabilities 8,993,717 3.21% 7,425,226
4.24% 8,676,469 3.34% Non-interest- bearing demand deposits 788,028
774,513 764,270 Total deposits and other borrowed funds $9,781,745
$8,199,739 $9,440,739 Total average assets $10,926,283 $9,263,156
$10,561,123 Total average stockholders' equity $1,010,503 $933,562
$1,009,463 For the nine months ended, (In thousands) September 30,
September 30, 2008 2007 Average Average Yield/ Yield/ Average Rate
Average Rate Interest-earning assets Balance (1)(2) Balance (1)(2)
Loans and leases $7,118,773 6.42% $6,034,326 7.91% Taxable
investment securities 2,404,666 4.69% 1,694,897 5.63% Tax-exempt
investment securities (2) 58,690 8.49% 65,583 6.54% FHLB stock
65,283 5.49% 48,493 4.66% Federal funds sold and securities
purchased under agreements to resell 261,613 6.28% 269,137 7.64%
Deposits with banks 13,007 5.37% 62,702 7.01% Total
interest-earning assets $9,922,032 6.00% $8,175,138 7.39%
Interest-bearing liabilities Interest-bearing demand deposits
$253,380 0.65% $233,012 1.28% Money market deposits 733,578 1.92%
680,751 3.12% Savings deposits 335,193 0.39% 346,951 1.00% Time
deposits 4,448,113 3.70% 3,758,715 4.75% Total interest-bearing
deposits $5,770,264 3.15% $5,019,429 4.11% Federal funds purchased
40,299 2.65% 27,621 5.20% Securities sold under agreements to
repurchase 1,553,622 3.84% 831,430 3.72% Other borrowed funds
1,149,401 4.10% 961,589 4.88% Long-term debt 171,136 5.38% 144,853
7.44% Total interest-bearing liabilities 8,684,722 3.44% 6,984,922
4.24% Non-interest-bearing demand deposits 777,664 776,946 Total
deposits and other borrowed funds $9,462,386 $7,761,868 Total
average assets $10,597,770 $8,816,682 Total average stockholders'
equity $1,006,310 $937,357 (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%. DATASOURCE: Cathay General Bancorp
CONTACT: Heng W. Chen of Cathay General Bancorp, +1-213-625-4752
Web site: http://www.cathaybank.com/
Copyright