CATY Cathay General Bancorp

Cathay General Bancorp (the “Company”, “we”, “us”, or “our”) (Nasdaq: CATY), the holding company for Cathay Bank, today announced its unaudited financial results for the quarter and year ended December 31, 2023. The Company reported net income of $354.1 million, or $4.86 per share, for the year ended December 31, 2023 and net income of $82.5 million, or $1.13 per share, for the fourth quarter of 2023. The fourth quarter net income included a $11.3 million, or $0.12 per diluted share, charge for the one-time FDIC special assessment.

FINANCIAL PERFORMANCE

Three months ended Year ended December 31, (unaudited) December 31, 2023 September 30, 2023 December 31, 2022

2023

2022

Net income

$82.5 million

$82.4 million

$97.6 million

$354.1 million

$360.6 million

Basic earnings per common share

$1.14

$1.14

$1.33

$4.88

$4.85

Diluted earnings per common share

$1.13

$1.13

$1.33

$4.86

$4.83

Return on average assets

1.40%

1.42%

1.77%

1.56%

1.69%

Return on average total stockholders' equity

12.21%

12.36%

15.73%

13.56%

14.70%

Efficiency ratio

53.84%

48.57%

37.97%

46.97%

38.38%

HIGHLIGHTS

• Diluted earnings per share for the year increased to $4.86.
• Total loans increased $1.3 billion, or 7.1%, to $19.55 billion in 2023.
• Total deposits increased $820.2 million, or 4.4%, to $19.33 billion in 2023.

“Total loans increased by $1.3 billion to $19.55 billion for the year and diluted earnings per share for the year increased to $4.86 per share,” commented Chang M. Liu, President and Chief Executive Officer of the Company.

INCOME STATEMENT REVIEW FOURTH QUARTER 2023 COMPARED TO THE THIRD QUARTER 2023

Net income for the quarter ended December 31, 2023, was $82.5 million, an increase of $0.1 million, or 0.1%, compared to net income of $82.4 million for the third quarter of 2023. Diluted earnings per share for the fourth quarter of 2023 was $1.13 per share compared to $1.13 per share for the third quarter of 2023. Net income for the fourth quarter included an $11.3 million, or $0.12 per diluted share, one-time FDIC special assessment as a result of the Federal Deposit Insurance Act.

Return on average stockholders’ equity was 12.21% and return on average assets was 1.40% for the quarter ended December 31, 2023, compared to a return on average stockholders’ equity of 12.36% and a return on average assets of 1.42% in the third quarter of 2023.

Net interest income before provision for credit losses

Net interest income before provision for credit losses decreased $3.5 million, or 1.9%, to $182.1 million during the fourth quarter of 2023, compared to $185.6 million in the third quarter of 2023. The decrease was due primarily to an increase in interest deposit expense, partially offset by an increase in interest income from loans and securities.

The net interest margin was 3.27% for the fourth quarter of 2023 compared to 3.38% for the third quarter of 2023.

For the fourth quarter of 2023, the yield on average interest-earning assets was 5.99%, the cost of funds on average interest-bearing liabilities was 3.59%, and the cost of average interest-bearing deposits was 3.50%. In comparison, for the third quarter of 2023, the yield on average interest-earning assets was 5.89%, the cost of funds on average interest-bearing liabilities was 3.33%, and the cost of average interest-bearing deposits was 3.23%. The increase in the yield on average interest-bearing liabilities resulted mainly from higher interest rates on deposits driven by the higher repricing of maturing time deposits in the fourth quarter. The increase in the yield on average interest-earning assets resulted mainly from higher interest rates on loans due to the increasing rate environment. The net interest spread, defined as the difference between the yield on average interest-earning assets and the cost of funds on average interest-bearing liabilities, was 2.40% for the fourth quarter of 2023, compared to 2.56% for the third quarter of 2023.

Provision for credit losses

The Company recorded a provision for credit losses of $1.7 million in the fourth quarter of 2023, compared to $7.0 million in the third quarter of 2023. As of December 31, 2023, the allowance for credit losses decreased by $2.4 million to $163.6 million, or 0.84% of gross loans, compared to $166.0 million, or 0.87% of gross loans as of September 30, 2023.

The following table sets forth the charge-offs and recoveries for the periods indicated:

Three months ended Year ended December 31, December 31, 2023 September 30, 2023 December 31, 2022

2023

2022

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

$

1,392

$

6,254

$

860

$

13,909

$

3,222

Construction loans

 

4,221

 

—

 

—

 

4,221

 

—

Real estate loans (1)

 

—

 

1,221

 

2,131

 

5,341

 

2,268

Installment and other loans

 

—

 

8

 

—

 

15

 

—

Total charge-offs

 

5,613

 

7,483

 

2,991

 

23,486

 

5,490

Recoveries: Commercial loans

 

1,426

 

611

 

356

 

2,990

 

2,465

Construction loans

 

—

 

—

 

—

 

—

 

6

Real estate loans (1)

 

55

 

261

 

97

 

2,918

 

432

Installment and other loans

 

—

 

—

 

2

 

—

 

2

Total recoveries

 

1,481

 

872

 

455

 

5,908

 

2,905

Net charge-offs/(recoveries)

$

4,132

$

6,611

$

2,536

$

17,578

$

2,585

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

Non-interest income

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wealth management fees, and other sources of fee income, was $23.1 million for the fourth quarter of 2023, an increase of $15.3 million, or 194.8%, compared to $7.8 million for the third quarter of 2023. The increase was primarily due to an increase of $15.2 million in gain on equity securities, when compared to the third quarter of 2023.

Non-interest expense

Non-interest expense increased $16.5 million, or 17.6%, to $110.5 million in the fourth quarter of 2023, compared to $94.0 million in the third quarter of 2023. The increase in non-interest expense in the fourth quarter of 2023 was primarily due to an increase of $11.3 million in FDIC and State assessments, an increase of $3.0 million in amortization expense of investments in low-income housing and alternative energy partnerships, an increase of $1.3 million in salaries and employee benefits and an increase of $671 thousand in one-time restructuring costs, when compared to the third quarter of 2023. The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, was 53.84% in the fourth quarter of 2023, compared to 48.57% for the third quarter of 2023.

Income taxes

The effective tax rate for the fourth quarter of 2023 was 11.28%, compared to 10.95% for the third quarter of 2023. The effective tax rate includes the impact of alternative energy investments and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans were $19.55 billion as of December 31, 2023, an increase of $1.3 billion, or 7.1%, from $18.25 billion as of December 31, 2022. The increase was primarily due to increases of $935.9 million, or 10.6%, in commercial real estate loans, $585.8 million, or 11.2%, in residential mortgage loans, offset by a decrease of $136.7 million, or 24.4%, in construction loans, and a decrease of $78.6 million, or 24.2%, in home equity loans. For the fourth quarter of 2023, gross loans increased by $524.3 million, or 11.5% annualized.

The loan balances and composition as of December 31, 2023, compared to September 30, 2023, and December 31, 2022, are presented below:

December 31, 2023 September 30, 2023 December 31, 2022 (In thousands) (Unaudited) Commercial loans

$

3,305,048

$

3,090,609

$

3,318,778

Residential mortgage loans

 

5,838,747

 

5,685,844

 

5,252,952

Commercial real estate loans

 

9,729,581

 

9,511,805

 

8,793,685

Equity lines

 

245,919

 

253,826

 

324,548

Construction loans

 

422,647

 

474,294

 

559,372

Installment and other loans

 

6,198

 

7,444

 

4,689

Gross loans

$

19,548,140

$

19,023,822

$

18,254,024

  Allowance for loan losses

 

(154,562)

 

(154,619)

 

(146,485)

Unamortized deferred loan fees

 

(10,720)

 

(9,521)

 

(6,641)

Total loans, net

$

19,382,858

$

18,859,682

$

18,100,898

Total deposits were $19.33 billion as of December 31, 2023, an increase of $820.2 million, or 4.4%, from $18.51 billion as of December 31, 2022.

The deposit balances and composition as of December 31, 2023, compared to September 30, 2023, and December 31, 2022, are presented below:

December 31, 2023

September 30, 2023

December 31, 2022

(In thousands) (Unaudited) Non-interest-bearing demand deposits

$

3,529,018

$

3,623,483

$

4,168,989

NOW deposits

 

2,370,685

 

2,454,878

 

2,509,736

Money market deposits

 

3,049,754

 

3,222,612

 

3,812,724

Savings deposits

 

1,039,203

 

1,131,352

 

1,000,460

Time deposits

 

9,336,787

 

9,203,263

 

7,013,370

Total deposits

$

19,325,447

$

19,635,588

$

18,505,279

ASSET QUALITY REVIEW

As of December 31, 2023, total non-accrual loans were $66.7 million, a decrease of $2.2 million, or 3.2%, from $68.9 million as of December 31, 2022, and a decrease of $10.6 million, or 13.7%, from $77.3 million as of September 30, 2023.

The allowance for loan losses was $154.6 million and the allowance for off-balance sheet unfunded credit commitments was $9.1 million as of December 31, 2023. The allowances represent the amount estimated by management to be appropriate to absorb credit losses inherent in the loan portfolio, including unfunded credit commitments. The allowance for loan losses represented 0.79% of period-end gross loans, and 209.33% of non-performing loans as of December 31, 2023. The comparable ratios were 0.80% of period-end gross loans, and 182.12% of non-performing loans as of December 31, 2022.

The changes in non-performing assets and loan modifications to borrowers experiencing financial difficulty as of December 31, 2023, compared to December 31, 2022, and September 30, 2023, are presented below:

(Dollars in thousands) (Unaudited)

December 31, 2023

December 31, 2022

%

Change

September 30, 2023

%

Change

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

$

7,157

$

11,580

(38)

$

1,924

272

  Non-accrual loans: Construction loans

 

7,736

 

—

—

 

16,992

(54)

Commercial real estate loans

 

32,030

 

34,096

(6)

 

32,539

(2)

Commercial loans

 

14,404

 

25,772

(44)

 

14,661

(2)

Residential mortgage loans

 

12,511

 

8,978

39

 

13,138

(5)

Installment and other loans

 

—

 

8

(100)

 

—

—

Total non-accrual loans:

$

66,681

$

68,854

(3)

$

77,330

(14)

Total non-performing loans

 

73,838

 

80,434

(8)

 

79,254

(7)

Other real estate owned

 

19,441

 

4,067

378

 

14,407

35

Total non-performing assets

$

93,279

$

84,501

10

$

93,661

(0)

Accruing loan modifications to borrowers experiencing financial difficulties (1)

$

2,872

$

—

—

$

1,489

93

Accruing troubled debt restructurings (TDRs)

$

—

$

15,145

(100)

$

—

—

  Allowance for loan losses

$

154,562

$

146,485

6

$

154,619

(0)

Total gross loans outstanding, at period-end

$

19,548,140

$

18,254,024

7

$

19,023,822

3

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

 

209.33%

 

182.12%

 

195.09%

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

 

0.79%

 

0.80%

 

0.81%

(1) Beginning after January 1, 2023, modifications are reported in accordance with the new guidance under ASU 2022-02.

The ratio of non-performing assets to total assets was 0.40% as of December 31, 2023, compared to 0.39% as of December 31, 2022. Total non-performing assets increased $8.8 million, or 10.4%, to $93.3 million as of December 31, 2023, compared to $84.5 million as of December 31, 2022, primarily due to an increase of $15.4 million, or 378.0%, in other real estate owned, offset by a decrease of $4.4 million, or 38.2%, in accruing loans past due 90 days or more and a decrease of $2.2 million, or 3.2%, in non-accrual loans.

CAPITAL ADEQUACY REVIEW

As of December 31, 2023, the Company’s Tier 1 risk-based capital ratio of 12.82%, total risk-based capital ratio of 14.30%, and Tier 1 leverage capital ratio of 10.55%, calculated under the Basel III capital rules, continue to place the Company in the “well capitalized” category for regulatory purposes, which is defined as institutions with a Tier 1 risk-based capital ratio equal to or greater than 8%, a total risk-based capital ratio equal to or greater than 10%, and a Tier 1 leverage capital ratio equal to or greater than 5%. As of December 31, 2022, the Company’s Tier 1 risk-based capital ratio was 12.21%, total risk-based capital ratio was 13.73%, and Tier 1 leverage capital ratio was 10.08%.

FULL YEAR REVIEW

Net income for the year ended December 31, 2023, was $354.1 million, a decrease of $6.5 million, or 1.8%, compared to net income of $360.6 million for the year ended December 31, 2022. Diluted earnings per share for the year ended December 31, 2023 was $4.86, compared to $4.83 per share for the year ended December 31, 2022. The net interest margin for the year ended December 31, 2023 was 3.45%, compared to 3.63% for the year ended December 31, 2022.

Return on average stockholders’ equity was 13.56% and return on average assets was 1.56% for the year ended December 31, 2023, compared to a return on average stockholders’ equity of 14.70% and a return on average assets of 1.69% for the year ended December 31, 2022. The efficiency ratio for the year ended December 31, 2023, was 46.97%, compared to 38.38% for the year ended December 31, 2022.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its fourth quarter and year-end 2023 financial results this afternoon, Wednesday, January 24, 2024, at 3:00 p.m. Pacific Time. Analysts and investors may dial in and participate in the question-and-answer session. To access the call, please dial 1-833-816-1377 and enter Conference ID 10185350. The presentation accompanying this call and access to the live webcast is available on our site at www.cathaygeneralbancorp.com and a replay of the webcast will be archived for one year within 24 hours after the event.

ABOUT CATHAY GENERAL BANCORP

Cathay General Bancorp is a publicly traded company (Nasdaq: CATY) and is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services and currently operates over 60 branches across the United States in California, New York, Washington, Texas, Illinois, Massachusetts, Maryland, Nevada, and New Jersey. Overseas, it has a branch outlet in Hong Kong, and representative offices in Beijing, Shanghai, and Taipei. To learn more about Cathay Bank, please visit www.cathaybank.com. Cathay General Bancorp’s website is at www.cathaygeneralbancorp.com. Information set forth on such websites is not incorporated into this press release.

FORWARD-LOOKING STATEMENTS

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

These and other factors are further described in Cathay General Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2022 (Item 1A in particular), other reports filed with the Securities and Exchange Commission (“SEC”), and other filings Cathay General Bancorp makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this press release. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we undertake no obligation to update or review any forward-looking statement to reflect circumstances, developments or events occurring after the date on which the statement is made or to reflect the occurrence of unanticipated events.

CATHAY GENERAL BANCORP

CONSOLIDATED FINANCIAL HIGHLIGHTS

(Unaudited)

  Three months ended Year ended December 31, (Dollars in thousands, except per share data) December 31, 2023 September 30, 2023 December 31, 2022

2023

2022

  Financial performance Net interest income before provision for credit losses

$

182,138

$

185,640

$

201,814

$

741,746

$

733,697

Provision for credit losses

 

1,723

 

7,000

 

1,400

 

25,978

 

14,543

Net interest income after provision for credit losses

 

180,415

 

178,640

 

200,414

 

715,768

 

719,154

Non-interest income

 

23,101

 

7,837

 

12,088

 

68,292

 

56,814

Non-interest expense

 

110,498

 

93,973

 

81,224

 

380,478

 

303,432

Income before income tax expense

 

93,018

 

92,504

 

131,278

 

403,582

 

472,536

Income tax expense

 

10,492

 

10,133

 

33,677

 

49,458

 

111,894

Net income

$

82,526

$

82,371

$

97,601

$

354,124

$

360,642

  Net income per common share Basic

$

1.14

$

1.14

$

1.33

$

4.88

$

4.85

Diluted

$

1.13

$

1.13

$

1.33

$

4.86

$

4.83

  Cash dividends paid per common share

$

0.34

$

0.34

$

0.34

$

1.36

$

1.36

    Selected ratios Return on average assets

 

1.40%

 

1.42%

 

1.77%

 

1.56%

 

1.69%

Return on average total stockholders’ equity

 

12.21%

 

12.36%

 

15.73%

 

13.56%

 

14.70%

Efficiency ratio

 

53.84%

 

48.57%

 

37.97%

 

46.97%

 

38.38%

Dividend payout ratio

 

29.92%

 

29.95%

 

25.45%

 

27.85%

 

27.99%

    Yield analysis (Fully taxable equivalent) Total interest-earning assets

 

5.99%

 

5.89%

 

5.06%

 

5.78%

 

4.21%

Total interest-bearing liabilities

 

3.59%

 

3.33%

 

1.66%

 

3.11%

 

0.82%

Net interest spread

 

2.40%

 

2.56%

 

3.40%

 

2.67%

 

3.39%

Net interest margin

 

3.27%

 

3.38%

 

3.87%

 

3.45%

 

3.63%

    Capital ratios December 31, 2023 September 30, 2023 December 31, 2022 Tier 1 risk-based capital ratio

 

12.82%

 

12.70%

 

12.19%

Total risk-based capital ratio

 

14.30%

 

14.21%

 

13.71%

Tier 1 leverage capital ratio

 

10.55%

 

10.44%

 

10.08%

. . .   CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

  (In thousands, except share and per share data) December 31, 2023 September 30, 2023 December 31, 2022   Assets Cash and due from banks

$

173,988

$

145,580

$

195,440

Short-term investments and interest bearing deposits

 

654,813

 

1,017,354

 

966,962

Securities available-for-sale (amortized cost of $1,726,080 at December 31, 2023, $1,684,951 at September 30, 2023 and $1,622,173 at December 31, 2022)

 

1,604,570

 

1,508,798

 

1,473,348

Loans

 

19,548,140

 

19,023,822

 

18,254,024

Less: Allowance for loan losses

 

(154,562)

 

(154,619)

 

(146,485)

Unamortized deferred loan fees, net

 

(10,720)

 

(9,521)

 

(6,641)

Loans, net

 

19,382,858

 

18,859,682

 

18,100,898

Equity securities

 

40,406

 

31,456

 

22,158

Federal Home Loan Bank stock

 

17,746

 

17,250

 

17,250

Other real estate owned, net

 

19,441

 

14,407

 

4,067

Affordable housing investments and alternative energy partnerships, net

 

315,683

 

332,903

 

327,128

Premises and equipment, net

 

91,097

 

91,033

 

94,776

Customers’ liability on acceptances

 

3,264

 

16,900

 

2,372

Accrued interest receivable

 

97,673

 

90,875

 

82,428

Goodwill

 

375,696

 

375,696

 

375,696

Other intangible assets, net

 

4,461

 

4,725

 

5,757

Right-of-use assets- operating leases

 

32,076

 

30,586

 

29,627

Other assets

 

267,762

 

307,284

 

250,069

Total assets

$

23,081,534

$

22,844,529

$

21,947,976

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

$

3,529,018

$

3,623,483

$

4,168,989

Interest-bearing deposits: NOW deposits

 

2,370,685

 

2,454,878

 

2,509,736

Money market deposits

 

3,049,754

 

3,222,612

 

3,812,724

Savings deposits

 

1,039,203

 

1,131,352

 

1,000,460

Time deposits

 

9,336,787

 

9,203,263

 

7,013,370

Total deposits

 

19,325,447

 

19,635,588

 

18,505,279

  Advances from the Federal Home Loan Bank

 

540,000

 

15,000

 

485,000

Other borrowings for affordable housing investments

 

15,787

 

22,374

 

22,600

Long-term debt

 

119,136

 

119,136

 

119,136

Acceptances outstanding

 

3,264

 

16,900

 

2,372

Lease liabilities - operating leases

 

34,797

 

32,962

 

32,518

Other liabilities

 

306,529

 

363,833

 

307,031

Total liabilities

 

20,344,960

 

20,205,793

 

19,473,936

Stockholders' equity

 

2,736,574

 

2,638,736

 

2,474,040

Total liabilities and equity

$

23,081,534

$

22,844,529

$

21,947,976

  Book value per common share

$

37.66

$

36.35

$

34.01

Number of common shares outstanding

 

72,668,927

 

72,586,992

 

72,742,151

  CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

  Three months ended Year ended December 31, December 31, 2023 September 30, 2023 December 31, 2022

2023

2022

(In thousands, except share and per share data) Interest and Dividend Income Loan receivable, including loan fees

$

302,477

$

293,108

$

243,324

$

1,130,242

$

801,981

Investment securities

 

14,885

 

12,698

 

10,181

 

51,717

 

28,240

Federal Home Loan Bank stock

 

392

 

355

 

329

 

1,349

 

1,103

Deposits with banks

 

15,509

 

17,307

 

9,954

 

58,914

 

19,957

Total interest and dividend income

 

333,263

 

323,468

 

263,788

 

1,242,222

 

851,281

  Interest Expense Time deposits

 

97,826

 

90,022

 

34,352

 

331,997

 

56,354

Other deposits

 

43,282

 

38,207

 

23,048

 

135,965

 

48,942

Advances from Federal Home Loan Bank

 

7,289

 

6,779

 

2,484

 

22,164

 

5,880

Long-term debt

 

1,759

 

1,726

 

1,228

 

6,480

 

5,546

Short-term borrowings

 

969

 

1,094

 

862

 

3,870

 

862

Total interest expense

 

151,125

 

137,828

 

61,974

 

500,476

 

117,584

  Net interest income before provision for credit losses

 

182,138

 

185,640

 

201,814

 

741,746

 

733,697

Provision for credit losses

 

1,723

 

7,000

 

1,400

 

25,978

 

14,543

Net interest income after provision for credit losses

 

180,415

 

178,640

 

200,414

 

715,768

 

719,154

  Non-Interest Income Net (losses)/gains from equity securities

 

8,950

 

(6,218)

 

(966)

 

18,248

 

392

Debt securities losses, net

 

—

 

—

 

—

 

(3,000)

 

—

Letters of credit commissions

 

1,744

 

1,738

 

1,584

 

6,716

 

6,351

Depository service fees

 

1,423

 

1,536

 

1,530

 

6,432

 

6,523

Wealth management fees

 

4,820

 

5,150

 

3,942

 

17,506

 

16,436

Other operating income

 

6,164

 

5,631

 

5,998

 

22,390

 

27,112

Total non-interest income

 

23,101

 

7,837

 

12,088

 

68,292

 

56,814

  Non-Interest Expense Salaries and employee benefits

 

40,101

 

38,774

 

35,093

 

154,149

 

142,546

Occupancy expense

 

5,387

 

5,851

 

5,658

 

22,270

 

22,808

Computer and equipment expense

 

4,579

 

4,387

 

3,842

 

17,478

 

13,603

Professional services expense

 

8,279

 

7,906

 

7,529

 

32,491

 

28,237

Data processing service expense

 

3,718

 

3,614

 

3,368

 

14,728

 

13,181

FDIC and State assessments

 

14,358

 

3,063

 

2,038

 

23,588

 

8,037

Marketing expense

 

1,110

 

1,587

 

2,171

 

5,887

 

6,863

Other real estate owned expense

 

195

 

435

 

34

 

761

 

127

Amortization of investments in low income housing and alternative energy partnerships

 

26,119

 

23,157

 

14,594

 

86,616

 

42,065

Amortization of core deposit intangibles

 

251

 

250

 

1,168

 

1,310

 

1,892

Acquisition, integration and restructuring costs

 

671

 

—

 

—

 

671

 

4,127

Other operating expense

 

5,730

 

4,949

 

5,729

 

20,529

 

19,946

Total non-interest expense

 

110,498

 

93,973

 

81,224

 

380,478

 

303,432

  Income before income tax expense

 

93,018

 

92,504

 

131,278

 

403,582

 

472,536

Income tax expense

 

10,492

 

10,133

 

33,677

 

49,458

 

111,894

Net income

$

82,526

$

82,371

$

97,601

$

354,124

$

360,642

Net income per common share: Basic

$

1.14

$

1.14

$

1.33

$

4.88

$

4.85

Diluted

$

1.13

$

1.13

$

1.33

$

4.86

$

4.83

  Cash dividends paid per common share

$

0.34

$

0.34

$

0.34

$

1.36

$

1.36

Basic average common shares outstanding

 

72,652,779

 

72,568,518

 

73,130,500

 

72,573,025

 

74,337,265

Diluted average common shares outstanding

 

72,906,310

 

72,890,414

 

73,467,401

 

72,862,628

 

74,664,735

  CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

  Three months ended (In thousands)(Unaudited) December 31, 2023 September 30, 2023 December 31, 2022 Interest-earning assets:

Average

Balance

Average

Yield/Rate (1)

Average

Balance

Average

Yield/Rate (1)

Average

Balance

Average

Yield/Rate (1)

Loans (1)

$

19,330,187

6.21%

$

18,959,444

6.13%

$

18,117,692

5.33%

Taxable investment securities

 

1,594,267

3.71%

 

1,530,767

3.29%

 

1,493,472

2.70%

FHLB stock

 

19,599

7.94%

 

19,141

7.35%

 

17,250

7.57%

Deposits with banks

 

1,130,806

5.44%

 

1,273,751

5.39%

 

1,052,161

3.75%

Total interest-earning assets

$

22,074,859

5.99%

$

21,783,103

5.89%

$

20,680,575

5.06%

  Interest-bearing liabilities: Interest-bearing demand deposits

$

2,466,263

2.14%

$

2,405,011

1.98%

$

2,514,877

0.78%

Money market deposits

 

3,200,455

3.33%

 

3,036,445

2.98%

 

4,350,804

1.63%

Savings deposits

 

1,112,454

1.11%

 

1,151,615

1.17%

 

1,064,019

0.09%

Time deposits

 

9,208,820

4.21%

 

9,145,176

3.91%

 

6,403,334

2.13%

Total interest-bearing deposits

$

15,987,992

3.50%

$

15,738,247

3.23%

$

14,333,034

1.59%

Other borrowed funds

 

600,483

5.46%

 

586,824

5.32%

 

358,840

3.70%

Long-term debt

 

119,136

5.86%

 

119,136

5.75%

 

119,136

4.09%

Total interest-bearing liabilities

 

16,707,611

3.59%

 

16,444,207

3.33%

 

14,811,010

1.66%

  Non-interest-bearing demand deposits

 

3,598,385

 

3,603,779

 

4,337,065

  Total deposits and other borrowed funds

$

20,305,996

$

20,047,986

$

19,148,075

  Total average assets

$

23,304,836

$

22,997,408

$

21,917,339

Total average equity

$

2,681,899

$

2,644,005

$

2,461,524

  Year ended (In thousands)(Unaudited) December 31, 2023 December 31, 2022 Interest-earning assets:

Average

Balance

Average

Yield/Rate (1)

Average

Balance

Average

Yield/Rate (1)

Loans (1)

$

18,763,271

6.02%

$

17,631,943

4.55%

Taxable investment securities

 

1,558,877

3.32%

 

1,321,346

2.14%

FHLB stock

 

18,620

7.25%

 

17,629

6.26%

Deposits with banks

 

1,141,720

5.16%

 

1,261,833

1.58%

Total interest-earning assets

$

21,482,488

5.78%

$

20,232,751

4.21%

  Interest-bearing liabilities: Interest-bearing demand deposits

$

2,388,080

1.71%

$

2,471,256

0.33%

Money market deposits

 

3,164,739

2.72%

 

4,902,357

0.81%

Savings deposits

 

1,070,405

0.83%

 

1,118,967

0.08%

Time deposits

 

8,849,293

3.75%

 

5,398,808

1.04%

Total interest-bearing deposits

$

15,472,517

3.02%

$

13,891,388

0.76%

Other borrowed funds

 

505,218

5.15%

 

247,276

2.73%

Long-term debt

 

119,136

5.44%

 

119,136

4.66%

Total interest-bearing liabilities

 

16,096,871

3.11%

 

14,257,800

0.82%

  Non-interest-bearing demand deposits

 

3,705,788

 

4,386,526

Total deposits and other borrowed funds

$

19,802,659

$

18,644,326

  Total average assets

$

22,705,192

$

21,383,739

Total average equity

$

2,610,582

$

2,453,391

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

CATHAY GENERAL BANCORP GAAP to NON-GAAP RECONCILIATION SELECTED CONSOLIDATED FINANCIAL INFORMATION (Unaudited)

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

As of

December 31, 2023

September 30, 2023

December 31, 2022

  (In thousands) (Unaudited)   Stockholders' equity (a)

$

2,736,574

$

2,638,736

$

2,474,040

  Less: Goodwill

 

(375,696)

 

(375,696)

 

(375,696)

  Other intangible assets (1)

 

(4,461)

 

(4,725)

 

(5,757)

  Tangible equity (b)

$

2,356,417

$

2,258,315

$

2,092,587

      Total assets (c)

$

23,081,534

$

22,844,529

$

21,947,976

  Less: Goodwill

 

(375,696)

 

(375,696)

 

(375,696)

  Other intangible assets (1)

 

(4,461)

 

(4,725)

 

(5,757)

  Tangible assets (d)

$

22,701,377

$

22,464,108

$

21,566,523

      Number of common shares outstanding (e)

 

72,668,927

 

72,586,992

 

72,742,151

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

 

11.86%

 

11.55%

 

11.27%

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

 

10.38%

 

10.05%

 

9.70%

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

$

32.43

$

31.11

$

28.77

      Three Months Ended Twelve Months Ended

December 31, 2023

September 30, 2023

December 31, 2022

December 31, 2023

 

December 31, 2022

(In thousands) (Unaudited)   Net Income

$

82,526

$

82,371

$

97,601

$

354,124

 

$

360,642

Add: Amortization of other intangibles

 

262

 

270

 

1,191

 

1,294

 

 

2,007

Tax effect of amortization adjustments (2)

 

(78)

 

(80)

 

(353)

 

(384)

 

 

(595)

Tangible net income (f)

$

82,710

$

82,561

$

98,439

$

355,034

 

$

362,054

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

 

14.04%

 

14.62%

 

18.82%

 

15.07%

 

 

17.30%

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240124135759/en/

Heng W. Chen (626) 279-3652