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/

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