Cathay General Bancorp Reports Third Quarter Results; Nonaccrual Loans Down 6%, Accruing Delinquent Loans Down 50%, Net Interest Margin Increased 16 Basis Points
- Press Release
- Source: Cathay General Bancorp
- On 8:00 am EDT, Thursday October 8, 2009
LOS ANGELES, Oct. 8 /PRNewswire-FirstCall/ -- Cathay General Bancorp (the "Company"), (Nasdaq: CATY - News), the holding company for Cathay Bank (the "Bank"), today announced results for the third quarter of 2009.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| CATY | 8.00 | +0.04 |
FINANCIAL PERFORMANCE
Third Quarter Third Quarter
2009 2008
---------------------------------------------------- --------------
Net (loss)/income ($17.7) million $6.9 million
Net (loss)/income available to
common stockholders ($21.8) million $6.9 million
(Loss)/basic earnings per
common share ($0.43) $0.14
(Loss)/ diluted earnings per
common share ($0.43) $0.14
THIRD QUARTER HIGHLIGHTS
- Nonaccrual loans down 6% - Total nonaccrual loans decreased by 6%, or $21.5 million, to $361.6 million at September 30, 2009 compared to $383.1 million at June 30, 2009.
- Total accruing delinquent loans down 50% - Total loans delinquent 30 days or more and still accruing interest decreased by 50% to $79.3 million at September 30, 2009 compared to $158.2 million at June 30, 2009.
- Increase in net interest margin - Net interest margin for the third quarter of 2009 increased to 2.65% from 2.49% for the second quarter of 2009.
- Allowance for credit losses strengthened - Total allowance for credit losses increased to $194.4 million, or 2.73%, of total loans at September 30, 2009 compared to 2.42% of total loans at June 30, 2009.
- Decrease in provision for credit losses - The Company recorded a provision for credit losses of $76.0 million during the third quarter of 2009, a decrease of $17.0 million in the provision for credit losses, as compared to a provision of $93.0 million during the second quarter of 2009.
- Capital strengthened - During the month of September 2009, the Company raised $31.7 million in additional capital through the sale of 3.5 million shares of common stock in its at-the-market capital offering.
"We are pleased that our nonaccruals dropped by $21.5 million during the third quarter and are committed to continue to aggressively dispose of other real estate owned. We are also encouraged by the significant decline in past due loans. We recorded a provision for credit losses during the third quarter of $76 million which increased our allowance for credit losses to 2.73% of total loans," commented Dunson Cheng, Chairman of the Board, Chief Executive Officer, and President of the Company.
"During the first nine months of the year, we had solid growth in total deposits, which increased by $874 million, or 13%, net of a $211 million reduction of brokered deposits, which helped us to improve our net loan to deposit ratio to 89.8% at September 30, 2009. We are especially pleased that our core deposits increased $533.9 million to $3.2 billion at September 30, 2009, equating to a 26.9% growth rate, if annualized," said Peter Wu, Executive Vice Chairman and Chief Operating Officer.
"As part of our ongoing evaluation of our capital levels and needs during this challenging economic period, we previously announced an 'at the market' stock issuance program on September 9, 2009 to further strengthen our capital base. We are pleased that we raised $31.7 million of new capital through this program at the end of the third quarter. Our focus continues to be managing through this challenging credit cycle, resolving problem assets on a case by case basis without resorting to bulk sales and maintaining strong liquidity. We expect an increase in the pace of sales of nonaccrual loans and foreclosed real estate during the remainder of the year as we continue to resolve problem assets," concluded Dunson Cheng.
INCOME STATEMENT REVIEW
Net loss attributable to common stockholders for the three months ended September 30, 2009 was $21.8 million, a $28.7 million income decrease, compared to net income attributable to common stockholders of $6.9 million for the same period a year ago. Loss per share for the three months ended September 30, 2009, was $0.43 compared to earnings of $0.14 per diluted share for the same period a year ago due primarily to increases in the provision for credit losses, lower net interest income and higher provision for OREO write-downs.
Return on average stockholders' equity was negative 5.58% and return on average assets was negative 0.60% for the three months ended September 30, 2009, compared to a return on average stockholders' equity of 2.71% and a return on average assets of 0.25% for the same period of 2008.
Net interest income before provision for credit losses
Net interest income before provision for credit losses decreased to $72.5 million during the third quarter of 2009, a decline of $1.1 million, or 1.5%, compared to $73.6 million during the same quarter a year ago. The decrease was due primarily to the increases in interest expense paid for securities sold under agreements to repurchase.
The net interest margin, on a fully taxable-equivalent basis, was 2.65% for the third quarter of 2009. The net interest margin increased 16 basis points from 2.49% in the second quarter of 2009, and decreased 23 basis points from 2.88%, on a fully taxable-equivalent basis, in the third quarter of 2008. The decrease in net interest margin from the prior year primarily resulted from increases in non-accrual loans and the increase in the borrowing rate on our long term repurchase agreements and other borrowed funds. The majority of our variable rate loans contain interest rate floors, which help limit the impact of the recent decreases in the prime interest rate.
For the third quarter of 2009, the yield on average interest-earning assets was 4.82%, on a fully taxable-equivalent basis, the cost of funds on average interest-bearing liabilities equaled 2.48%, and the cost of interest bearing deposits was 1.80%. In comparison, for the third quarter of 2008, the yield on average interest-earning assets was 5.70%, on a fully taxable-equivalent basis, cost of funds on average interest-bearing liabilities equaled 3.21%, and the cost of interest bearing deposits was 2.84%. 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 15 basis points to 2.34% for the third quarter ended September 30, 2009, from 2.49% for the same quarter a year ago, primarily due to the reasons discussed above.
The cost of deposits, including demand deposits, decreased 33 basis points to 1.62% in the third quarter of 2009 compared to 1.95% in the second quarter of 2009 due primarily to growth in core deposits and decreased 89 basis points from 2.51% in the third quarter of 2008 due partly to decrease in market rates and partly to growth in core deposits.
Provision for credit losses
The provision for credit losses was $76.0 million for the third quarter of 2009 compared to $93.0 million for the second quarter of 2009 and compared to $15.8 million in the third 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, 2009. The provision for credit losses represents the charge against current earnings that is determined by management, through a credit review process, as the amount needed to establish an allowance that management believes to be sufficient to absorb credit losses inherent in the Company's loan portfolio, including unfunded commitments. The following table summarizes the charge-offs and recoveries for the periods as indicated:
For the three months For the nine months
ended September 30, ended September 30,
--------------------------------------------------- -------------------
(In thousands) 2009 2008 2009 2008
---------------------------------------- -------- -------- --------
Charge-offs:
Commercial loans $27,748 $6,796 $49,913 $8,917
Construction loans-
residential 13,126 3,230 58,535 8,239
Construction loans- other 3,072 - 11,840 -
Real estate loans 10,732 172 25,188 554
Real estate- land loans 3,865 - 7,599 339
Installment and other loans - - 4 -
------- ------ -------- -------
Total charge-offs 58,543 10,198 153,079 18,049
------- ------ -------- -------
Recoveries:
Commercial loans 219 1,067 523 1,634
Construction loans- residential 598 - 772 83
Construction loans- other - - 1 -
Real estate loans 46 - 46 -
Real estate- land loans 685 - 686 -
Installment and other loans 2 4 19 16
------- ------ -------- -------
Total recoveries 1,550 1,071 2,047 1,733
------- ------ -------- -------
Net Charge-offs $56,993 $9,127 $151,032 $16,316
======= ====== ======== =======
Total charge-offs of $58.5 million for the third quarter of 2009 included $13.1 million of charge-offs on twelve residential construction loans, $3.1 million of charge-offs on commercial property construction loans, $9.2 million of charge-offs on commercial real estate loans, $27.7 million on 25 commercial loans, $1.5 million charge-offs on residential mortgage loans, and $3.9 million of charge-offs on land loans. Net loan charge-offs increased from $56.0 million in the second quarter of 2009 to $57.0 million in the third quarter of 2009 and compared to $9.1 million in the third quarter of last year. Net loan charge-offs remained high in the third quarter as a result of the continuing weak economy.
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 $10.3 million for the third quarter of 2009, an increase of $18.7 million compared to the non-interest loss of $8.4 million for the third quarter of 2008. The increase in non-interest income was primarily due to net securities losses in 2008 of $15.3 million. In the third quarter of 2009, net gains on sales of agency mortgage-backed securities were $2.9 million compared to a $27.8 million other-than-temporary impairment charge on agency preferred stock which was partially offset by net gains of $12.5 million from sales of agency mortgage-backed securities in the same quarter a year ago. In the third quarter of 2009, the Company sold an aircraft owned through a leveraged lease and recorded a $3.3 million gain. Offsetting the above gains were losses of $1.3 million from interest rate swap agreements, a decrease of $1.0 million from foreign exchange and currency transaction commissions, and $328,000 from higher write-downs of venture capital investments.
Non-interest expense
Non-interest expense increased $3.8 million, or 10.8%, to $38.8 million in the third quarter of 2009 compared to $35.0 million in the same quarter a year ago. The efficiency ratio was 46.87% in the third quarter of 2009 compared to 53.69% for the same period a year ago due to the securities losses recorded in the prior year.
OREO expense increased $2.9 million to $4.1 million in the third quarter of 2009 from $1.2 million in the same quarter a year ago primarily due to higher OREO provision and expense resulting from increased OREO activities.
FDIC and State assessments increased $3.2 million to $4.5 million in the third quarter of 2009 from $1.3 million in the same quarter a year ago due to a higher assessment rate. Occupancy expense increased $606,000 primarily due to increases in depreciation expense of $782,000 primarily related to our new administrative offices at 9650 Flair Drive, El Monte which opened in January 2009, which were partially offset by lower rental expense of $206,000. Professional service expense increased $284,000, or 8.3%, primarily due to increases in credit appraisal expenses, legal expenses, and collection expenses.
Offsetting the above described increases were decreases of $2.0 million in salaries and employee benefits and decreases of $1.4 million expense from operations of affordable housing investments. Salaries and employee benefits decreased primarily due to a $665,000 decrease in option compensation expense, a $556,000 decrease in bonus accruals, and a $331,000 decrease in salaries. Expense from operations of affordable housing investments decreased as the result of an expense reversal of $494,000 to the prior year's estimated losses in the third quarter of 2009 compared to additional expense adjustment of $577,000 in the same quarter a year ago.
Income taxes
The tax benefit for the third quarter of 2009 resulted from the pretax loss for the quarter and the utilization of low income housing tax credits.
BALANCE SHEET REVIEW
Total assets increased by $167.1 million, or 1.4%, to $11.7 billion at September 30, 2009, from $11.6 billion at December 31, 2008 primarily due to a $211.0 million increase in securities available-for-sale and a $420.2 million increase in cash, due from banks and short-term investments offset by a $421.7 million decrease in net loans.
The changes in the loan composition from December 31, 2008, are presented below:
Type of Loans: September 30, December 31, %
2009 2008 Change
------------------------------------------------ ------------- ------
(Dollars in thousands)
Commercial $1,401,069 $1,620,438 (14)
Residential mortgage 666,510 622,741 7
Commercial mortgage 4,124,384 4,132,850 (0)
Equity lines 192,743 168,756 14
Real estate construction 715,071 913,168 (21)
Installment 11,819 11,340 4
Other 5,092 3,075 66
---------- ----------
Gross loans and leases $7,116,688 $7,472,368 (5)
Allowance for loan losses (189,370) (122,093) 55
Unamortized deferred loan fees (8,880) (10,094) (12)
---------- ----------
Total loans and leases, net $6,918,438 $7,340,181 (6)
========== ==========
Total deposits were $7.7 billion at September 30, 2009, an increase of $874.5 million, or 12.8%, from $6.8 billion at December 31, 2008, primarily due to increases of $305.7 million, or 46.4%, in money market accounts and increases of $527.2 million, or 16.3%, in time deposits of $100,000 or more offset by decreases of $160.4 million, or 9.8%, in time deposits under $100,000. Brokered deposits which are reported in time deposits under $100,000 declined $226.0 million to $746.9 million at September 30, 2009 from $972.9 million at December 31, 2008. The changes in the deposit composition from December 31, 2008, are presented below:
Deposits September 30, December 31, %
2009 2008 Change
---------------------------------------------- ------------ ------
(Dollars in thousands)
Non-interest-bearing demand $831,800 $730,433 14
NOW 324,774 257,234 26
Money market 965,159 659,454 46
Savings 349,298 316,263 10
Time deposits under $100,000 1,484,056 1,644,407 (10)
Time deposits of $100,000 or more 3,756,142 3,228,945 16
---------- ----------
Total deposits $7,711,229 $6,836,736 13
========== ==========
ASSET QUALITY REVIEW
At September 30, 2009, total non-accrual loans were $361.6 million, a decrease of $21.5 million, or 5.6%, from $383.1 million at June 30, 2009 and an increase of $180.4 million, or 99.6%, from $181.2 million at December 31, 2008. A summary of non-accrual loans by collateral type as of September 30, 2009 is shown below:
Collateral Type No. No. No.
of Other of of
California Borrowers States Borrowers Total Borrowers
----------------------------------- ----------------- -----------------
(Dollars in thousands except no. of borrowers)
Commercial
real estate $110,361 32 $55,968 29 $166,329 61
Commercial 18,599 29 6,624 10 25,223 39
Construction-
residential 86,901 16 9,428 6 96,329 22
Construction-
non-
residential 34,227 5 974 2 35,201 7
Residential
mortgage 8,617 30 2,654 12 11,271 42
Land 22,265 16 4,993 6 27,258 22
------------------ ----------------- ------------------
Total $280,970 128 $80,641 65 $361,611 193
================== ================= ==================
Included in nonaccrual commercial real estate loans is a loan with an outstanding balance of $47.6 million to a borrower who filed for bankruptcy in March 2009. While the loan is non-accrual at September 30, 2009, management believes that the value of the underlying real estate collateral is sufficient for a full collection of principal and interest. Nonaccrual loans also include those troubled debt restructurings that do not qualify for accrual status.
At September 30, 2009, total residential construction loans were $297.1 million of which $7.9 million were in the Central Valley in California and $17.7 million were in San Bernardino and Riverside counties in California. Residential construction loans of $7.9 million in the Central Valley and $8.3 million in San Bernardino and Riverside counties were on non-accrual status as of September 30, 2009. At September 30, 2009, total land loans were $200.7 million of which $28.6 million were in San Bernardino, Riverside, and Imperial counties and $2.8 million were in the Central Valley. Land loans of $2.8 million in the Central Valley and a land loan of $4.7 million in Riverside were on non-accrual status as of September 30, 2009.
Troubled debt restructurings on accrual status totaled $59.4 million at September 30, 2009 and were comprised of 12 loans. These loans are classified as troubled debt restructurings as a result of granting a concession to borrowers. The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the loan balance or accrued interest, and extension of the maturity date. Although these loan modifications are considered Statement 15 troubled debt restructurings, the loans have performed under the restructured terms and have demonstrated sustained performance under the modified terms. The sustained performance considered by management includes the periods prior to the modification if the prior performance met or exceeded the modified terms as well as cash paid to set up interest reserves.
At September 30, 2009, net carrying value of other real estate owned increased $25.7 million, or 42.0%, to $86.7 million from $61.0 million at December 31, 2008. At September 30, 2009, $50.6 million of OREO was located in California, $25.1 million of OREO was located in Texas, $5.0 million of OREO was located in state of Washington, $4.5 million of OREO was located in Nevada, and $1.5 million was located in all other states.
The ratio of non-performing assets to total assets was 4.0% at September 30, 2009, compared to 2.2% at December 31, 2008, and compared to 4.2% at June 30, 2009. Total non-performing assets increased $213.0 million, or 84.6%, to $464.8 million at September 30, 2009, compared with $251.8 million at December 31, 2008, primarily due to a $180.4 million increase in non-accrual loans and a $25.7 million increase in OREO. Total non-performing assets decreased $8.9 million, or 1.9%, to $464.8 million at September 30, 2009, compared with $473.7 million at June 30, 2009, primarily due to a $21.5 million decrease in non-accrual loans offset by a $12.9 million increase in OREO.
The allowance for loan losses was $189.4 million and the allowance for off-balance sheet unfunded credit commitments was $5.0 million at September 30, 2009, and represented the amount that the Company believes to be sufficient to absorb credit losses inherent in the Company's loan portfolio. The allowance for credit losses, the sum of allowance for loan losses and for off-balance sheet unfunded credit commitments, was $194.4 million at September 30, 2009, compared to $129.4 million at December 31, 2008, an increase of $65.0 million, or 50.2%. The allowance for credit losses represented 2.73% of period-end gross loans and 51.4% of non-performing loans at September 30, 2009. The comparable ratios were 1.73% of period-end gross loans and 68.9% of non-performing loans at December 31, 2008. Results of the changes from December 31, 2008 and June 30, 2009, to September 30, 2009, to the Company's non-performing assets and troubled debt restructurings are highlighted below:
(Dollars in September 30, June 30, % December 31, %
thousands) 2009 2009 Change 2008 Change
------------- -------- ------ ------------ ------
Non-performing assets
Accruing loans past
due 90 days or more $16,507 $16,952 (3) $6,733 145
Non-accrual loans:
Construction-
residential 96,329 154,348 (38) 100,169 (4)
Construction-
non-residential 35,201 23,797 48 22,012 60
Land 27,258 27,060 1 12,608 116
Commercial real
estate, excluding
land 166,329 133,161 25 19,733 743
Commercial 25,223 34,844 (28) 20,904 21
Residential mortgage 11,271 9,869 14 5,776 95
-------- -------- --------
Total non-accrual
loans: $361,611 $383,079 (6) $181,202 100
-------- -------- --------
Total non-
performing loans 378,118 400,031 (5) 187,935 101
Other real
estate owned
and other assets 86,662 73,715 18 63,892 36
-------- -------- --------
Total non-performing
assets $464,780 $473,746 (2) $251,827 85
-------- -------- --------
Performing troubled
debt restructurings $59,400 $23,705 151 $924 6,329
======== ======== ========
Allowance for loan
losses $189,370 $169,551 12 $122,093 55
Allowance for
off-balance
sheet credit
commitments 5,023 5,835 (14) 7,332 (31)
-------- -------- --------
Allowance for credit
losses $194,393 $175,386 11 $129,425 50
======== ======== ========
Total gross loans
outstanding, at
period-end $7,116,688 $7,254,264 (2)$7,472,368 (5)
Allowance for loan
losses to
non-performing
loans, at
period-end 50.08% 42.38% 64.97%
Allowance for
loan losses to
gross loans,
at period-end 2.66% 2.34% 1.63%
Allowance for
credit losses
to non-performing
loans, at period-end 51.41% 43.84% 68.87%
Allowance for credit
losses to gross
loans, at period-end 2.73% 2.42% 1.73%
Loans past due 30 to 89 days still accruing decreased $78.5 million, or 55.6%, from $141.3 million at June 30, 2009, to $62.8 million at September 30, 2009. The following table presents types and changes of loans past due 30 days or more and still accruing as the dates indicated:
(Dollars in September 30, June 30, % December 31, %
thousands) 2009 2009 Change 2008 Change
------------- -------- ------ ------------ ------
Accruing loans past
due 30 to 89 days
Construction-
residential 8,912 12,295 (28) 28,814 (69)
Construction-
non-residential 5,654 1,944 191 16,716 (66)
Land 6,652 20,170 (67) 12,029 (45)
Commercial real
estate, excluding
land 26,122 93,808 (72) 48,412 (46)
Commercial 12,576 8,569 47 28,568 (56)
Residential
mortgage 2,884 4,446 (35) 8,271 (65)
Other - 65 (100) 5 (100)
------- -------- --------
Total loans past
due 30 to 89
days $62,800 $141,297 (56) $142,815 (56)
------- -------- --------
Accruing loans
past due 90 days
or more 16,507 16,952 (3) $6,733 145
------- -------- --------
Total accruing
loans past due 30
or more $79,307 $158,249 (50) $149,548 (47)
======= ======== ========
CAPITAL ADEQUACY REVIEW
At September 30, 2009, the Tier 1 risk-based capital ratio of 12.63%, total risk-based capital ratio of 14.49%, and Tier 1 leverage capital ratio of 9.29%, continue to place the Company in the "well capitalized" category for regulatory purposes, which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 6%, a total risk-based capital ratio equal to or greater than 10%, and a Tier 1 leverage capital ratio equal to or greater than 5%. At December 31, 2008, the Company's Tier 1 risk-based capital ratio was 12.12%, the total risk-based capital ratio was 13.94%, and Tier 1 leverage capital ratio was 9.79%.
During the third quarter of 2009, the Company raised additional capital of $31.7 million from the sale of approximately 3.5 million shares of common stock.
YEAR-TO-DATE REVIEW
Net loss available to common stockholders for the first nine months of 2009 was $44.4 million, an $97.8 million, or 183%, decrease compared to net income available to common stockholders of $53.4 million for the same period a year ago. Loss per share was $0.89 compared to earnings of $1.08 per diluted share for the same period a year ago due primarily to increases in the provision for loan losses, lower net interest income and higher provision for OREO write-downs. The net interest margin for the nine months ended September 30, 2009, decreased 38 basis points to 2.61% compared to 2.99% for the same period a year ago.
Return on average stockholders' equity was negative 3.35% and return on average assets was negative 0.37% for the nine months ended September 30, 2009, compared to a return on average stockholders' equity of 7.09% and a return on average assets of 0.67% for the same period of 2008. The efficiency ratio for the nine months ended September 30, 2009 was 46.66% compared to 44.00% 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, eight branches in New York State, one in Massachusetts, two in Texas, three in Washington State, three in the Chicago, Illinois area, one in New Jersey, one in Hong Kong, and a representative office in Shanghai and in Taipei. Cathay Bank's website is found at http://www.cathaybank.com. Cathay General Bancorp's website is found at http://www.cathaygeneralbancorp.com. Information set forth on such websites is not incorporated into this press release.
FORWARD-LOOKING STATEMENTS AND OTHER NOTICES
The information contained in this press release is not intended as a solicitation to buy Cathay General Bancorp stock or any other securities and is provided for information only. Statements made in this press release, other than statements of historical fact, are forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management's beliefs, projections, and assumptions concerning future results and events. These forward-looking statements may include, but are not limited to, such words as "aims," "anticipates," "believes," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "shall," "should," "will," "predicts," "potential," "continue," and variations of these words and similar expressions. Forward-looking statements are based on estimates, beliefs, projections, and assumptions and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from: significant volatility and deterioration in the credit and financial markets; adverse changes in general economic conditions; the effects of the Emergency Economic Stabilization Act, the American Recovery and Reinvestment Act, and the Troubled Asset Relief Program (TARP) and any changes or amendments thereto; deterioration in asset or credit quality; the availability of capital; the impact of any goodwill impairment that may be determined; acquisitions of other banks, if any; fluctuations in interest rates; the soundness of other financial institutions; expansion into new market areas; earthquakes, wildfires, or other natural disasters; competitive pressures; changes in laws, regulations, and accounting rules, or their interpretations; legislative, judicial, or regulatory actions and developments against us; and general economic or business conditions in California and other regions where Cathay Bank has operations, including, but not limited to, adverse changes in economic conditions resulting from the continuation or worsening of the current economic downturn.
These and other factors are further described in Cathay General Bancorp's Current Report on Form 8-K filed on September 9, 2009, as amended on September 23, 2009 (Item 8.01 in particular), other reports filed with the Securities and Exchange Commission ("SEC"), and other filings Cathay General Bancorp makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this press release. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which speak to the date of this press release. Cathay General Bancorp has no intention and undertakes no obligation to update any forward-looking statement or to publicly announce any revision of any forward-looking statement to reflect future developments or events, except as required by law.
Cathay General Bancorp's filings with the SEC are available at the website maintained by the SEC at http://www.sec.gov, or by request directed to Cathay General Bancorp, 9650 Flair Drive, El Monte, California 91731, Attention: Investor Relations (626) 279-3286.
CATHAY GENERAL BANCORP
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in Three months ended Nine months ended
thousands, September 30, September 30,
except per ---------------------------- ----------------------------
share data) 2009 2008 % Change 2009 2008 % Change
----------------------- ------- -------- ------- -------- --------
FINANCIAL
PERFORMANCE
Net interest
income before
provision for
credit losses $72,515 $73,601 (1) $208,937 $220,905 (5)
Provision
for credit
losses 76,000 15,800 381 216,000 43,800 393
-------- ------- -------- --------
Net
interest
income
after
provision
for credit
losses (3,485) 57,801 (106) (7,063) 177,105 (104)
Non-interest
income 10,287 (8,369) (223) 70,382 7,330 860
Non-interest
expense 38,807 35,020 11 130,336 100,429 30
-------- ------- -------- --------
(Loss)/income
before income
tax (benefit)
/expense (32,005) 14,412 (322) (67,017) 84,006 (180)
Income tax
(benefit)
/expense (14,482) 7,370 (296) (35,362) 30,133 (217)
-------- ------- -------- --------
Net (loss)
/income (17,523) 7,042 (349) (31,655) 53,873 (159)
Net (loss)
/income
attributable
to
noncontrolling
interest (156) (151) 3 (457) (452) 1
-------- ------- -------- --------
Net (loss)
/income
attributable
to Cathay
General
Bancorp (17,679) 6,891 (357) (32,112) 53,421 (160)
-------- ------- -------- --------
Dividends
on
preferred
stock (4,086) - 100 (12,249) - 100
-------- ------- -------- --------
Net (loss)
/income
available
to common
stockholders $(21,765) $6,891 (416) $(44,361) $53,421 (183)
======== ======= ======== ========
Net (loss)
/income
available to
common
stockholders
per common
share:
Basic $(0.43) $0.14 (407) $(0.89) $ 1.08 (182)
Diluted $(0.43) $0.14 (407) $(0.89) $ 1.08 (182)
Cash dividends
paid per
common share $0.010 $0.105 (90) $0.195 $ 0.315 (38)
==========================================================================
SELECTED RATIOS
Return on
average
assets -0.60% 0.25% (340) -0.37% 0.67% (155)
Return on
average
total
stockholders'
equity -5.58% 2.71% (306) -3.35% 7.09% (147)
Efficiency
ratio 46.87% 53.69% (13) 46.66% 44.00% 6
Dividend
payout
ratio n/m 75.30% n/m n/m 29.12% n/m
* n/m - not meaningful
==========================================================================
YIELD ANALYSIS
(Fully taxable
equivalent)
Total interest
-earning
assets 4.82% 5.70% (15) 4.98% 6.00% (17)
Total interest
-bearing
liabilities 2.48% 3.21% (23) 2.73% 3.44% (21)
Net interest
spread 2.34% 2.49% (6) 2.25% 2.56% (12)
Net interest
margin 2.65% 2.88% (8) 2.61% 2.99% (13)
==========================================================================
September September December Well Minimum
CAPITAL 30, 30, 31, Capitalized Regulatory
RATIOS 2009 2008 2008 Requirements Requirements
Tier 1
risk-based
capital
ratio 12.63% 9.39% 12.12% 6.0% 4.0%
Total
risk-based
capital
ratio 14.49% 11.09% 13.94% 10.0% 8.0%
Tier 1
leverage
capital
ratio 9.29% 7.65% 9.79% 5.0% 4.0%
==========================================================================
CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except September 30, December 31, %
share and per share data) 2009 2008 change
--------------------------------- ------------- ------------ ---------
Assets
Cash and due from banks $198,237 $84,818 134
Short-term investments
and interest bearing deposits 331,767 25,000 1,227
Securities purchased under
agreements to resell - 201,000 (100)
Securities held-to-maturity 99,865 - 100
Securities available-for-sale
(amortized cost of
$3,266,440 in 2009 and
$3,043,566 in 2008) 3,294,808 3,083,817 7
Trading securities 12 12 -
Loans 7,116,688 7,472,368 (5)
Less: Allowance for loan losses (189,370) (122,093) 55
Unamortized deferred loan
fees, net (8,880) (10,094) (12)
----------- -----------
Loans, net 6,918,438 7,340,181 (6)
Federal Home Loan Bank stock 71,791 71,791 -
Other real estate owned, net 86,662 61,015 42
Affordable housing investments, net 98,046 103,562 (5)
Premises and equipment, net 109,370 104,107 5
Customers' liability on acceptances 28,974 39,117 (26)
Accrued interest receivable 33,459 43,603 (23)
Goodwill 316,340 319,557 (1)
Other intangible assets, net 24,448 29,246 (16)
Other assets 137,546 75,813 81
----------- -----------
Total assets $11,749,763 $11,582,639 1
=========== ===========
Liabilities and Stockholders' Equity
Deposits
Non-interest-bearing demand
deposits $831,800 $730,433 14
Interest-bearing deposits:
NOW deposits 324,774 257,234 26
Money market deposits 965,159 659,454 46
Savings deposits 349,298 316,263 10
Time deposits under $100,000 1,484,056 1,644,407 (10)
Time deposits of $100,000 or
more 3,756,142 3,228,945 16
----------- ----------
Total deposits 7,711,229 6,836,736 13
----------- ----------
Federal funds purchased - 52,000 (100)
Securities sold under agreements to
repurchase 1,550,000 1,610,000 (4)
Advances from the Federal Home Loan
Bank 929,362 1,449,362 (36)
Other borrowings from financial
institutions 1,313 - 100
Other borrowings for affordable
housing investments 19,355 19,500 (1)
Long-term debt 171,136 171,136 -
Acceptances outstanding 28,974 39,117 (26)
Other liabilities 58,929 103,401 (43)
----------- ----------
Total liabilities 10,470,298 10,281,252 2
----------- ----------
Commitments and contingencies - - -
----------- ----------
Stockholders' Equity
Preferred stock, 10,000,000
shares authorized, 258,000 issued
and outstanding in 2009 and 2008 243,103 240,554 1
Common stock, $0.01 par value,
100,000,000 shares authorized,
57,279,715 issued and 53,072,150
outstanding at September 30, 2009
and 53,715,815 issued and
49,508,250 outstanding at
December 31, 2008 573 537 7
Additional paid-in-capital 545,010 508,613 7
Accumulated other comprehensive
income, net 16,441 23,327 (30)
Retained earnings 591,574 645,592 (8)
Treasury stock, at cost
(4,207,565 shares in 2009
and in 2008) (125,736) (125,736) -
----------- ----------
Total Cathay General Bancorp
stockholders' equity 1,270,965 1,292,887 (2)
----------- ----------
Noncontrolling interest 8,500 8,500 -
----------- ----------
Total equity 1,279,465 1,301,387 (2)
----------- ----------
Total liabilities and equity $11,749,763 $11,582,639 1
=========== ===========
Book value per common stock share $19.09 $20.90 (9)
Number of common stock shares
outstanding 53,072,150 49,508,250 7
CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
----------------------- ---------------------
2009 2008 2009 2008
----------------------- ---------------------
(In thousands, except share and per share data)
INTEREST AND
DIVIDEND INCOME
Loan receivable,
including loan fees $99,588 $114,005 $302,232 $341,880
Investment securities-
taxable 31,589 27,575 94,104 84,507
Investment securities-
nontaxable 167 284 620 974
Federal Home Loan
Bank stock 149 1,004 149 2,685
Agency preferred stock - 313 - 1,621
Federal funds sold
and securities
purchased under
agreements to resell 35 2,899 1,338 12,294
Deposits with banks 119 42 250 523
----------------------- ---------------------
Total interest and
dividend income 131,647 146,122 398,693 444,484
----------------------- ---------------------
INTEREST EXPENSE
Time deposits of
$100,000 or more 20,224 26,226 65,337 86,398
Other deposits 10,622 17,100 40,196 49,519
Securities sold under
agreements to repurchase 16,555 15,174 48,527 44,716
Advances from
Federal Home Loan
Bank 10,664 11,785 31,781 35,229
Long-term debt 1,067 2,030 3,891 6,889
Short-term
borrowings - 206 24 828
----------------------- ---------------------
Total interest
expense 59,132 72,521 189,756 223,579
----------------------- ---------------------
Net interest
income before
provision for
credit losses 72,515 73,601 208,937 220,905
Provision for
credit losses 76,000 15,800 216,000 43,800
----------------------- ---------------------
Net interest
income after
provision for
loan losses (3,485) 57,801 (7,063) 177,105
----------------------- ---------------------
NON-INTEREST INCOME
Securities gains
(losses), net 2,883 (15,313) 52,319 (12,980)
Letters of credit
commissions 1,150 1,465 3,159 4,281
Depository service
fees 1,272 1,189 3,940 3,636
Other operating
income 4,982 4,290 10,964 12,393
----------------------- ---------------------
Total non-interest
income 10,287 (8,369) 70,382 7,330
----------------------- ---------------------
NON-INTEREST EXPENSE
Salaries and employee
benefits 14,410 16,376 46,369 50,643
Occupancy expense 3,999 3,393 12,126 9,918
Computer and
equipment expense 2,052 1,848 5,938 6,024
Professional
services expense 3,694 3,410 10,021 8,890
FDIC and State
assessments 4,464 1,336 15,372 3,172
Marketing expense 669 584 2,153 2,449
Other real estate
owned expense
(income) 4,135 1,182 20,150 1,806
Operations of affordable
housing investments 1,407 2,840 5,255 5,361
Amortization of core
deposit intangibles 1,689 1,722 5,089 5,196
Other operating
expense 2,288 2,329 7,863 6,970
----------------------- ---------------------
Total non-interest
expense 38,807 35,020 130,336 100,429
----------------------- ---------------------
(Loss)/income before
income tax (benefit)
/expense (32,005) 14,412 (67,017) 84,006
Income tax (benefit)
/expense (14,482) 7,370 (35,362) 30,133
----------------------- ---------------------
Net (loss)/income (17,523) 7,042 (31,655) 53,873
Less: net income
attributable to
noncontrolling
interest (156) (151) (457) (452)
----------------------- ---------------------
Net (loss)/income
attributable to
Cathay General Bancorp (17,679) 6,891 (32,112) 53,421
----------------------- ---------------------
Dividends on preferred
stock (4,086) - (12,249) -
----------------------- ---------------------
Net (loss)/income
available to common
stockholders $(21,765) $6,891 $(44,361) $53,421
======================= =====================
Net (loss)/income
available to common
stockholders per
common share:
Basic $(0.43) $0.14 $(0.89) $1.08
Diluted $(0.43) $0.14 $(0.89) $1.08
Cash dividends paid
per common share $0.010 $0.105 $0.195 $0.315
Basic average common
shares outstanding 50,183,296 49,441,621 49,758,833 49,392,655
Diluted average
common shares
outstanding 50,183,296 49,530,272 49,758,833 49,497,171
CATHAY GENERAL BANCORP
AVERAGE BALANCES - SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
For the three months ended,
--------------------------------------------------------------------------
(In thousands) September 30, September 30, June 30,
2009 2008 2009
-------------------------------- ------------------- -------------------
Interest- Average Average Average
earning Average Yield/Rate Average Yield/Rate Average Yield/Rate
assets Balance (1) (2) Balance (1) (2) Balance (1) (2)
------------------- -------------------- -------------------
Loans and
leases(1) $7,211,984 5.48% $7,425,818 6.11% $7,342,100 5.39%
Taxable
investment
securities 3,385,904 3.70% 2,484,473 4.42% 3,158,632 3.85%
Tax-exempt
investment
securities(2) 18,590 5.48% 47,938 7.20% 19,315 6.60%
FHLB stock 71,819 0.82% 64,228 6.22% 71,791 0.00%
Federal
funds sold
and
securities
purchased
under
agreements
to resell 104,946 0.13% 188,522 6.12% 3,989 0.10%
Deposits
with banks 57,297 0.82% 8,941 1.87% 37,363 0.78%
------------------- -------------------- -------------------
Total
interest
-earning
assets $10,850,540 4.82% $10,219,920 5.70% $10,633,190 4.88%
----------- ----------- -----------
Interest-
bearing
liabilities
Interest-
bearing
demand
deposits $310,047 0.40% $268,802 0.57% $278,944 0.41%
Money
market 967,839 1.54% 760,679 1.81% 834,063 1.56%
Savings
deposits 338,053 0.21% 337,538 0.31% 328,274 0.21%
Time
deposits 5,175,066 2.04% 4,708,290 3.31% 5,064,471 2.50%
------------------- -------------------- -------------------
Total
interest
-bearing
deposits $6,791,005 1.80% $6,075,309 2.84% $6,505,752 2.18%
Federal
funds
purchased 163 0.45% 39,842 2.06% 16,747 0.26%
Securities
sold under
agreements
to
repurchase 1,556,343 4.22% 1,550,000 3.89% 1,559,302 4.12%
Other
borrowed
funds 957,558 4.42% 1,157,430 4.05% 962,405 4.40%
Long-term
debt 171,136 2.47% 171,136 4.72% 171,136 3.09%
------------------- -------------------- -------------------
Total
interest
-bearing
liabilities 9,476,205 2.48% 8,993,717 3.21% 9,215,342 2.75%
Non-interest
-bearing
demand
deposits 783,826 788,028 749,573
----------- ----------- -----------
Total
deposits
and other
borrowed
funds $10,260,031 $9,781,745 $9,964,915
----------- ----------- -----------
Total
average
assets $11,626,641 $10,926,283 $11,385,247
Total
average
equity $1,264,864 $1,019,003 $1,300,018
----------- ----------- -----------
For the nine months ended,
-------------------------------------------------------------------------
(In thousands) September 30, September 30,
2009 2008
---------------------------------------------------- --------------------
Average Average
Interest- Average Yield/Rate Average Yield/Rate
earning assets Balance (1) (2) Balance (1) (2)
----------------------- --------------------
Loans and leases (1) $7,336,822 5.51% $7,118,773 6.42%
Taxable investment
securities 3,174,308 3.96% 2,404,666 4.69%
Tax-exempt investment
securities (2) 20,234 6.30% 58,690 8.49%
FHLB stock 71,800 0.28% 65,283 5.49%
Federal funds sold
and securities purchased
under agreements to resell 63,300 2.83% 261,613 6.28%
Deposits with banks 42,614 0.78% 13,007 5.37%
----------------------- --------------------
Total interest-earning
assets $10,709,078 4.98% $9,922,032 6.00%
----------- ----------
Interest-bearing
liabilities
Interest-bearing
demand deposits $283,027 0.40% $253,380 0.65%
Money market deposits 854,706 1.56% 733,578 1.92%
Savings deposits 325,943 0.22% 335,193 0.39%
Time deposits 5,070,283 2.48% 4,448,113 3.70%
----------------------- --------------------
Total interest-
bearing deposits $6,533,959 2.16% $5,770,264 3.15%
Federal funds purchased 11,220 0.27% 40,299 2.65%
Securities sold under
agreements to repurchase 1,565,455 4.14% 1,553,622 3.84%
Other borrowed funds 1,012,015 4.20% 1,149,401 4.10%
Long-term debt 171,136 3.04% 171,136 5.38%
----------------------- --------------------
Total interest-bearing
liabilities 9,293,785 2.73% 8,684,722 3.44%
Non-interest-bearing
demand deposits 757,719 777,664
----------- ----------
Total deposits and other
borrowed funds $10,051,504 $9,462,386
----------- ----------
Total average assets $11,461,781 $10,597,770
Total average equity $1,288,780 $1,014,810
----------- ----------
(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%.
Related Headlines
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