CATHAY GENERAL BANCORP 
By LOS ANGELES, Jan. 23, 2012 /PRNewswire/ -- Cathay General Bancorp (the "Company", NASDAQ: CATY), the holding company for Cathay Bank (the "Bank"), today announced results for the fourth quarter and for the year ended December 31, 2011.
FINANCIAL PERFORMANCE
Three months ended Year ended December
December 31, 31,
------------------ --------------------
2011 2010 2011 2010
---- ---- ---- ----
Net
income $27.7 million $18.1 million $100.2 million $11.6 million
Net
income/
(loss)
available
to
common
stockholders $23.6 million $14.0 million $83.7 million ($4.8) million
Basic
earnings/
(loss)
per
common
share $0.30 $0.18 $1.06 ($0.06)
Diluted
earnings/
(loss)
per
common
share $0.30 $0.18 $1.06 ($0.06)
Return
on
average
assets 1.05% 0.65% 0.94% 0.10%
Return
on
average
total
stockholders'
equity 7.33% 4.99% 6.78% 0.81%
Efficiency
ratio 49.82% 61.65% 50.90% 53.22%
FOURTH QUARTER HIGHLIGHTS
-- Improved profitability - Fourth quarter net income was $27.7 million
compared to net income of $26.1 million in the third quarter of 2011 and
net income of $18.1 million in the same quarter a year ago.
-- Decrease in net charge-offs - Net charge-offs decreased $18.2 million,
or 79.7%, to $4.6 million in the fourth quarter of 2011 from $22.8
million in the same quarter a year ago and decreased $24.9 million, or
84.2%, from $29.5 million in the third quarter of 2011.
-- Decrease in loan loss provisions - Loan loss provision decreased $8.0
million, or 80%, to $2.0 million in the fourth quarter of 2011 compared
to $10.0 million in the same quarter a year ago and decreased $7.0
million from $9.0 million in the third quarter of 2011.
FULL YEAR HIGHLIGHTS
-- Net income increased $88.6 million, or 766%, to $100.2 million for the
year ended 2011 compared to net income of $11.6 million for the year
ended 2010.
-- Strong growth in commercial loans - Commercial loans increased $427.1
million, or 29.6%, during 2011, to $1.9 billion at December 31, 2011,
compared to $1.4 billion at December 31, 2010.
-- Net charge-offs decreased $60.2 million, or 47.6%, to $66.2 million for
the year ended 2011 from $126.4 million for the year ended 2010.
"We are pleased with the continued improvement in profitability in 2011. Commercial loan growth of 30% for the year reflects both increased business from our existing customers as well as the addition of new borrowers," commented Dunson Cheng, Chairman of the Board, Chief Executive Officer, and President of the Company.
"Our net interest margin decreased to 3.28% for the fourth quarter from 3.32% in the third quarter due mainly to slightly lower loan yields and amortization of premiums on mortgaged backed securities. However, we expect an improvement in the net interest margin in 2012 from further reductions in our problem loans and as our deposits reprice to current market levels," said Peter Wu, Executive Vice Chairman and Chief Operating Officer.
"We are optimistic that in 2012 as we celebrate Cathay Bank's Fiftieth Anniversary, our profitability could approach or even possibly exceed our historical record levels," concluded Dunson Cheng.
INCOME STATEMENT REVIEW
Net income available to common stockholders for the quarter ended December 31, 2011, was $23.6 million, an increase of $9.6 million, or 68.4%, compared to a net income available to common stockholders of $14.0 million for the same quarter a year ago. Diluted earnings per share available to common stockholders for the quarter ended December 31, 2011, was $0.30 compared to a diluted earnings per share of $0.18 for the same quarter a year ago due primarily to decreases in the provision for credit losses, decreases in other real estate owned ("OREO") expenses, decreases in prepayment penalties on the repayment of Federal Home Loan Bank ("FHLB") advances, and increases in net interest income which were partially offset by decreases in gains on sales of securities, increases in incentive compensation accruals, and increases in professional service expenses.
Return on average stockholders' equity was 7.33% and return on average assets was 1.05% for the quarter ended December 31, 2011, compared to a return on average stockholders' equity of 4.99% and a return on average assets of 0.65% for the same quarter a year ago.
Net interest income before provision for credit losses
Net interest income before provision for credit losses increased $4.1 million, or 5.4%, to $79.3 million during the fourth quarter of 2011 compared to $75.2 million during the same quarter a year ago. The increase was due primarily to the decrease in interest expense paid on time certificates of deposit and the prepayment of FHLB advances and securities sold under agreement to repurchase.
The net interest margin, on a fully taxable-equivalent basis, was 3.28% for the fourth quarter of 2011, a decrease of 4 basis points from 3.32% for the third quarter of 2011, and an increase of 40 basis points from 2.88% for the fourth quarter of 2010. The decrease in the rate on interest bearing deposits and the prepayment of FHLB advances and decreases in securities sold under agreement to repurchase contributed to the increase in the net interest margin from the same quarter a year ago.
For the fourth quarter of 2011, the yield on average interest-earning assets was 4.58%, on a fully taxable-equivalent basis, the cost of funds on average interest-bearing liabilities equaled 1.60%, and the cost of interest bearing deposits was 0.92%. In comparison, for the fourth quarter of 2010, the yield on average interest-earning assets was 4.52%, on a fully taxable-equivalent basis, cost of funds on average interest-bearing liabilities equaled 1.99%, and the cost of interest bearing deposits was 1.16%. 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, increased 45 basis points to 2.98% for the fourth quarter ended December 31, 2011, from 2.53% for the same quarter a year ago, primarily due to the reasons discussed above.
The cost of deposits, including demand deposits, decreased 6 basis points to 0.79% in the fourth quarter of 2011 compared to 0.85% in the third quarter of 2011 and decreased 21 basis points from 1.00% in the fourth quarter of 2010 due primarily to the decrease in the rates paid on certificates of deposit upon renewal and on money market accounts.
Provision for credit losses
The provision for credit losses was $2.0 million for the fourth quarter of 2011 compared to $9.0 million for the third quarter of 2011 and $10.0 million in the fourth quarter of 2010. The provision for credit losses was based on the review of the adequacy of the allowance for loan losses at December 31, 2011. 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 indicated:
Three months ended Year ended December
December 31, 31,
2011 2010 2011 2010
---- ---- ---- ----
(In thousands)
Charge-offs:
Commercial loans $530 $4,108 $11,745 $21,609
Construction
loans-
residential 2,452 2,660 20,801 14,889
Construction
loans- other 654 4,448 16,699 30,432
Real estate loans
(1) 3,208 10,088 27,327 47,765
Real estate-
land loans 46 4,240 1,054 24,060
--- ----- ----- ------
Total charge-
offs 6,890 25,544 77,626 138,755
----- ------ ------ -------
Recoveries:
Commercial loans 206 1,380 1,774 4,712
Construction
loans-
residential 141 1,043 3,808 5,448
Construction
loans- other 36 100 665 553
Real estate loans
(1) 1,874 3 4,539 933
Real estate-
land loans 3 205 621 668
Installment and
other loans - 11 - 13
--- --- --- ---
Total recoveries 2,260 2,742 11,407 12,327
Net charge-offs $4,630 $22,802 $66,219 $126,428
====== ======= ======= ========
(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), gains (losses) on loan sales, wire transfer fees, and other sources of fee income, was $9.0 million for the fourth quarter of 2011, a decrease of $7.2 million, or 44.4%, compared to non-interest income of $16.2 million for the fourth quarter of 2010. The decrease in non-interest income in the fourth quarter of 2011 was primarily due to decreases of $8.7 million from gains on sale of securities and decreases of $364,000 in gains on sale of loans offset by a $678,000 increase in commissions from foreign exchange transactions, a $528,000 increase in trading revenues, a $345,000 increase in letters of credit commissions, and a $340,000 increase in venture capital income.
Non-interest expense
Non-interest expense decreased $12.3 million, or 21.9%, to $44.0 million in the fourth quarter of 2011 compared to $56.3 million in the same quarter a year ago. The efficiency ratio was 49.82% in the fourth quarter of 2011 compared to 61.65% for the same quarter a year ago due primarily to decreases in OREO expenses and lower prepayment penalties from prepayment of FHLB advances.
Prepayment penalties from prepaying $50.0 million of FHLB advances were $1.7 million in the fourth quarter of 2011 compared to prepaying $314.4 million of FHLB advances with penalties of $13.4 million in the same quarter a year ago. OREO expense decreased $8.7 million, or 81.4%, to $2.0 million in the fourth quarter of 2011 compared to $10.7 million in the fourth quarter of 2010 primarily due to decreases of $10.8 million in 2011 from OREO write-downs offset by decreases of $2.5 million in gains from OREO.
Offsetting the above decreases were the increases of $4.0 million in salaries and employee benefits in the fourth quarter of 2011 compared to the same quarter a year ago primarily due to increases in incentive compensation and the hiring of new employees. Occupancy expense increased $1.8 million primarily due to a correction in the depreciation life for certain components of our administrative office building made in 2010. Professional service expenses increased $3.1 million primarily due to increases in legal collection expenses and consulting expenses.
Income taxes
The effective tax rate for the fourth quarter of 2011 was 34.3% compared to 27.3% in the fourth quarter of 2010. The effective tax rate includes the impact of the utilization of low income housing tax credits, which had a greater relative impact in 2010 compared to 2011.
BALANCE SHEET REVIEW
Total assets were $10.6 billion at December 31, 2011, a decrease of $157.1 million, or 1.5%, from $10.8 billion at December 31, 2010, primarily due to decreases of $395.7 million in investment securities and decreases of $110.0 million from securities purchased under agreements to resell offset by increases of $190.6 million in gross loans and increases of $88.6 million in short-term investments.
Gross loans, excluding loans held for sale, were $7.06 billion at December 31, 2011, an increase of $190.6 million, or 2.8%, from $6.87 billion at December 31, 2010, primarily due to an increase of $427.1 million, or 29.6%, in commercial loans and an increase of $119.8 million, or 14.1%, in residential mortgage loans offset by a decrease of $172.6 million, or 42.1%, in construction loans, and a decrease of $191.2 million, or 4.9%, in commercial real estate loans. The changes in loan composition from December 31, 2010, are presented below:
Type of
Loans: December 31, 2011 December 31, 2010 % Change
------- ----------------- ----------------- --------
(Dollars in thousands)
Commercial
loans $1,868,275 $1,441,167 30
Residential
mortgage
loans 972,262 852,454 14
Commercial
mortgage
loans 3,748,897 3,940,061 (5)
Equity
lines 214,707 208,876 3
Real
estate
construction
loans 237,372 409,986 (42)
Installment
& other
loans 17,699 16,077 10
Gross
loans $7,059,212 $6,868,621 3
Allowance
for loan
losses (206,280) (245,231) (16)
Unamortized
deferred
loan fees (8,449) (7,621) 11
------ ------
Total
loans and
leases,
net $6,844,483 $6,615,769 3
---------- ----------
Loans held
for sale $760 $2,873 (74)
---- ------
Total deposits were $7.2 billion at December 31, 2011, an increase of $237.3 million, or 3.4%, from $7.0 billion at December 31, 2010, primarily due to a $304.6 million, or 9.5%, increase in time deposits of $100,000 or more and a $144.4 million, or 15.5%, increase in non-interest-bearing demand deposits, offset primarily by a $248.3 million, or 23.0%, decrease in time deposits under $100,000. The changes in deposit composition from December 31, 2010, are presented below:
Deposits December 31, 2011 December 31, 2010 % Change
-------- ----------------- ----------------- --------
(Dollars in thousands)
Non-
interest-
bearing
demand
deposits $1,074,718 $930,300 16
NOW deposits 451,541 418,703 8
Money market
deposits 951,516 982,617 (3)
Saving
deposits 420,030 385,245 9
Time
deposits
under
$100,000 832,997 1,081,266 (23)
Time
deposits of
$100,000 or
more 3,498,329 3,193,715 10
--------- ---------
Total
deposits $7,229,131 $6,991,846 3
========== ==========
ASSET QUALITY REVIEW
At December 31, 2011, total non-accrual portfolio loans, excluding non-accrual loans held for sale, were $201.2 million, a decrease of $41.1 million, or 17.0%, from $242.3 million at December 31, 2010, and an increase of $8.5 million, or 4.4%, from $192.7 million at September 30, 2011.
The allowance for loan losses was $206.3 million and the allowance for off-balance sheet unfunded credit commitments was $2.1 million at December 31, 2011, and represented the amount believed by management to be sufficient to absorb credit losses inherent in the loan portfolio, including unfunded commitments. The allowance for credit losses, the sum of allowance for loan losses and for off-balance sheet unfunded credit commitments, was $208.3 million at December 31, 2011, compared to $247.6 million at December 31, 2010, a decrease of $39.2 million, or 15.8%. The allowance for credit losses represented 2.95% of period-end gross loans, excluding loans held for sale, and 100.2% of non-performing portfolio loans at December 31, 2011. The comparable ratios were 3.60% of period-end gross loans and 100.1% of non-performing loans at December 31, 2010. Results of the changes from December 31, 2010, and September 30, 2011, to December 31, 2011, of the Company's non-performing assets and troubled debt restructurings are highlighted below:
(Dollars in thousands) December 31, 2011 September 30, 2011 % Change December 31, 2010 % Change
----------------- ------------------ -------- ----------------- --------
Non-performing assets
Accruing loans past due 90 days or more $6,726 $13,053 (48) $5,006 34
Non-accrual loans:
Construction- residential loans 25,288 28,386 (11) 25,251 0
Construction- non-residential loans 20,724 21,611 (4) 28,686 (28)
Land loans 10,975 13,355 (18) 21,923 (50)
Commercial real estate loans, excluding land loans 96,809 83,983 15 122,672 (21)
Commercial loans 30,661 29,723 3 31,499 (3)
Residential mortgage loans 16,740 15,656 7 12,288 36
------ ------ ------
Total non-accrual loans: $201,197 $192,714 4 $242,319 (17)
-------- -------- --------
Total non-performing loans 207,923 205,767 1 247,325 (16)
Other real estate owned 92,713 94,308 (2) 77,740 19
Total non-performing assets $300,636 $300,075 0 $325,065 (8)
-------- -------- --------
Accruing troubled debt restructurings (TDRs) $120,016 $126,270 (5) $136,800 (12)
Non-accrual loans held for sale $760 $1,276 (40) $2,873 (74)
Allowance for loan losses $206,280 $209,116 (1) $245,231 (16)
Allowance for off-balance sheet credit commitments 2,069 1,863 11 2,337 (11)
----- ----- -----
Allowance for credit losses $208,349 $210,979 (1) $247,568 (16)
======== ======== ========
Total gross loans outstanding, at period-end (1) $7,059,212 $7,017,142 1 $6,868,621 3
Allowance for loan losses to non-performing loans, at period-end (2) 99.21% 101.63% 99.15%
Allowance for loan losses to gross loans, at period-end (1) 2.92% 2.98% 3.57%
Allowance for credit losses to non-performing loans, at period-end (2) 100.20% 102.53% 100.10%
Allowance for credit losses to gross loans, at period-end (1) 2.95% 3.01% 3.60%
(1) Excludes loans held for sale at period-end.
(2) Excludes non-accrual loans held for sale at period-end.
Troubled debt restructurings on accrual status totaled $120.0 million at December 31, 2011. These loans are classified as troubled debt restructurings as a result of granting a concession to borrowers who are experiencing financial difficulties. The concessions may be granted in various forms, including change in the stated interest rate, reduction in the loan balance or accrued interest, or extension of the maturity date that causes a significant delay in payment. Although these loan modifications are considered troubled debt restructurings under Accounting Standard Codification 310-40 and Accounting Standard Update 2011-02, these loans have been performing 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.
The ratio of non-performing assets, excluding non-accrual loans held for sale, to total assets was 2.8% at December 31, 2011, compared to 3.0% at December 31, 2010. Total non-performing portfolio assets decreased $24.4 million, or 7.5%, to $300.6 million at December 31, 2011, compared to $325.1 million at December 31, 2010, primarily due to a $41.1 million decrease in non-accrual loans offset by a $15.0 million increase in OREO and by a $1.7 million increase in accruing loans past due 90 days or more.
CAPITAL ADEQUACY REVIEW
At December 31, 2011, the Company's Tier 1 risk-based capital ratio of 15.97%, total risk-based capital ratio of 17.85%, and Tier 1 leverage capital ratio of 12.93%, 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, 2010, the Company's Tier 1 risk-based capital ratio was 15.37%, total risk-based capital ratio was 17.27%, and Tier 1 leverage capital ratio was 11.44%.
YEAR-TO-DATE REVIEW
Net income attributable to common stockholders for the year ended December 31, 2011, was $83.7 million, an increase of $88.5 million compared to net loss attributable to common stockholders of $4.8 million for the year ended December 31, 2010, due primarily to decreases in the provision for loan losses, decreases in net losses from interest rate swaps, decreases in FDIC assessments, increases in gains on sale of securities, increases in net interest income, and decreases in OREO expense which were partially offset by prepayment penalties on the repayment of FHLB advances, increases in salaries and incentive compensation expense, occupancy expense, and professional services expense. Diluted earnings per share was $1.06 for the year ended December 31, 2011, compared to a $0.06 loss per share for the year ended December 31, 2010. The net interest margin for the year ended December 31, 2011, increased 44 basis points to 3.21% compared to 2.77% for the same period a year ago.
Return on average stockholders' equity was 6.78% and return on average assets was 0.94% for the year ended December 31, 2011, compared to return on average stockholders' equity of 0.81% and return on average assets of 0.10% for the year ended of 2010. The efficiency ratio for the year ended December 31, 2011, was 50.90% compared to 53.22% for the year ended December 31, 2010.
CONFERENCE CALL
Cathay General Bancorp will host a conference call this afternoon to discuss its fourth quarter and year-end 2011 financial results. The call will begin 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 1-866-700-0133 and enter Participant Passcode 81268353. A listen-only live Webcast of the call will be available at www.cathaygeneralbancorp.com and a recorded version is scheduled to be available for replay for 12 months after the call.
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
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," "could," "estimates," "expects," "hopes," "intends," "may," "plans," "projects," "seeks," "shall," "should," "will," "predicts," "potential," "continue," "possible," "optimistic," 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: U.S. and international economic and market conditions; market disruption and volatility; current and potential future supervisory action by bank supervisory authorities and changes in laws and regulations, or their interpretations; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; credit losses and deterioration in asset or credit quality; availability of capital; potential goodwill impairment; liquidity risk; fluctuations in interest rates; past and future acquisitions; inflation and deflation; success of expansion, if any, of our business in new markets; the soundness of other financial institutions; real estate market conditions; our ability to compete with competitors; increased costs of compliance and other risks associated with changes in regulations and the current regulatory environment, including the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the potential for substantial changes in the legal, regulatory, and enforcement framework and oversight applicable to financial institutions in reaction to adverse financial market events of recent years, including changes pursuant to the Dodd-Frank Act; the short term and long term impact of the Basel II and the proposed Basel III capital standards of the Basel Committee; our ability to retain key personnel; successful management of reputational risk; natural disasters and geopolitical events; general economic or business conditions in California, Asia, and other regions where Cathay Bank has operations; restrictions on compensation paid to our executives as a result of our participation in the TARP Capital Purchase Program; our ability to adapt our information technology systems; and changes in accounting standards or tax laws and regulations.
These and other factors are further described in Cathay General Bancorp's Annual Report on Form 10-K for the year ended December 31, 2010 (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, 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)
Three months ended December 31, Year ended December 31,
------------------------------- -----------------------
(Dollars in thousands, except per share data) 2011 2010 % Change 2011 2010 % Change
-------------------------------------------- ---- ---- -------- ---- ---- --------
FINANCIAL PERFORMANCE
Net interest income before provision for credit losses $79,317 $75,237 5 $313,690 $297,906 5
Provision for credit losses 2,000 10,000 (80) 27,000 156,900 (83)
----- ------ ------ -------
Net interest income after provision for credit losses 77,317 65,237 19 286,690 141,006 103
Non-interest income 8,986 16,169 (44) 50,892 32,251 58
Non-interest expense 43,990 56,348 (22) 185,566 175,711 6
------ ------ ------- -------
Income/(loss) before income tax expense (benefit) 42,313 25,058 69 152,016 (2,454) 6,295
Income tax expense/(benefit) 14,459 6,789 113 51,261 (14,629) 450
------ ----- ------ -------
Net income 27,854 18,269 52 100,755 12,175 728
Net income attributable to noncontrolling interest 153 158 (3) 605 610 (1)
Net income attributable to Cathay General Bancorp $27,701 $18,111 53 $100,150 $11,565 766
------- ------- -------- -------
Dividends on preferred stock (4,114) (4,102) 0 (16,437) (16,388) 0
Net income/(loss) attributable to common stockholders $23,587 $14,009 68 $83,713 $(4,823) 1,836
======= ======= ======= =======
Net income/(loss) attributable to common stockholders per common share:
Basic $0.30 $0.18 67 $1.06 $(0.06) 1,867
Diluted $0.30 $0.18 67 $1.06 $(0.06) 1,867
Cash dividends paid per common share $0.01 $0.01 $ - $0.04 $0.04 $ -
SELECTED RATIOS
Return on average assets 1.05% 0.65% 62 0.94% 0.10% 840
Return on average total stockholders' equity 7.33% 4.99% 47 6.78% 0.81% 737
Efficiency ratio 49.82% 61.65% (19) 50.90% 53.22% (4)
Dividend payout ratio 2.84% 4.34% 3.14% 27.16%
YIELD ANALYSIS (Fully taxable equivalent)
Total interest-earning assets 4.58% 4.52% 1 4.63% 4.55% 2
Total interest-bearing liabilities 1.60% 1.99% (20) 1.73% 2.11% (18)
Net interest spread 2.98% 2.53% 18 2.90% 2.44% 19
Net interest margin 3.28% 2.88% 14 3.21% 2.77% 16
CAPITAL RATIOS December 31, 2011 December 31, 2010 September 30, 2011 Well Capitalized Minimum Regulatory
Requirements Requirements
------------ ------------
Tier 1 risk-based capital ratio 15.97% 15.37% 15.83% 6.0% 4.0%
Total risk-based capital ratio 17.85% 17.27% 17.72% 10.0% 8.0%
Tier 1 leverage capital ratio 12.93% 11.44% 12.60% 5.0% 4.0%
CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data) December 31, 2011 December 31, 2010 % change
---------------------------------------------- ----------------- ----------------- --------
Assets
Cash and due from banks $117,888 $87,347 35
Short-term investments and interest bearing deposits 294,956 206,321 43
Securities purchased under agreements to resell - 110,000 (100)
Securities held-to-maturity (market value of $1,203,977 in 2011
and $837,359 in 2010) 1,153,504 840,102 37
Securities available-for-sale (amortized cost of $1,309,521 in 2011 and
$2,005,330 in 2010) 1,294,478 2,003,567 (35)
Trading securities 4,542 3,818 19
Loans held for sale 760 2,873 (74)
Loans 7,059,212 6,868,621 3
Less: Allowance for loan losses (206,280) (245,231) (16)
Unamortized deferred loan fees, net (8,449) (7,621) 11
------ ------
Loans, net 6,844,483 6,615,769 3
Federal Home Loan Bank stock 52,989 63,873 (17)
Other real estate owned, net 92,713 77,740 19
Affordable housing investments, net 78,358 88,472 (11)
Premises and equipment, net 105,961 109,456 (3)
Customers' liability on acceptances 37,300 14,014 166
Accrued interest receivable 32,226 35,382 (9)
Goodwill 316,340 316,340 -
Other intangible assets, net 11,598 17,044 (32)
Other assets 206,768 209,868 (1)
Total assets $10,644,864 $10,801,986 (1)
=========== ===========
Liabilities and Stockholders' Equity
Deposits
Non-interest-bearing demand deposits $1,074,718 $930,300 16
Interest-bearing deposits:
NOW deposits 451,541 418,703 8
Money market deposits 951,516 982,617 (3)
Savings deposits 420,030 385,245 9
Time deposits under $100,000 832,997 1,081,266 (23)
Time deposits of $100,000 or more 3,498,329 3,193,715 10
--------- ---------
Total deposits 7,229,131 6,991,846 3
--------- ---------
Securities sold under agreements to repurchase 1,400,000 1,561,000 (10)
Advances from the Federal Home Loan Bank 225,000 550,000 (59)
Other borrowings from financial institutions 880 8,465 (90)
Other borrowings for affordable housing investments 18,920 19,111 (1)
Long-term debt 171,136 171,136 -
Acceptances outstanding 37,300 14,014 166
Other liabilities 46,864 50,309 (7)
------ ------
Total liabilities 9,129,231 9,365,881 (3)
--------- ---------
Commitments and contingencies - - -
--- ---
Stockholders' Equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued
and outstanding in 2011 and 2010 250,992 247,455 1
Common stock, $0.01 par value, 100,000,000 shares authorized,
82,860,122 issued and 78,652,557 outstanding at December 31, 2011, and
82,739,348 issued and 78,531,783 outstanding at December 31, 2010 829 827 0
Additional paid-in-capital 765,641 762,509 0
Accumulated other comprehensive loss, net (8,732) (1,022) (754)
Retained earnings 624,192 543,625 15
Treasury stock, at cost (4,207,565 shares at December 31, 2011,
and at December 31, 2010) (125,736) (125,736) -
Total Cathay General Bancorp stockholders' equity 1,507,186 1,427,658 6
--------- ---------
Noncontrolling interest 8,447 8,447 -
----- -----
Total equity 1,515,633 1,436,105 6
--------- ---------
Total liabilities and equity $10,644,864 $10,801,986 (1)
=========== ===========
Book value per common stock share $15.75 $14.80 6
Number of common stock shares outstanding 78,652,557 78,531,783 0
CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended December 31, Year ended December 31,
------------------------------- -----------------------
2011 2010 2011 2010
---- ---- ---- ----
(In thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loan receivable, including loan fees $91,640 $94,585 $364,580 $380,662
Investment securities- taxable 17,809 22,780 83,083 106,568
Investment securities- nontaxable 1,053 659 4,218 854
Federal Home Loan Bank stock 43 66 177 237
Federal funds sold and securities
purchased under agreements to resell 2 14 83 14
Deposits with banks 529 228 1,430 1,259
Total interest and dividend income 111,076 118,332 453,571 489,594
------- ------- ------- -------
INTEREST EXPENSE
Time deposits of $100,000 or more 10,089 11,801 42,204 54,219
Other deposits 4,139 6,254 20,010 29,943
Securities sold under agreements to repurchase 14,830 16,672 60,733 66,141
Advances from Federal Home Loan Bank 1,441 7,417 12,033 37,527
Long-term debt 1,260 950 4,890 3,852
Short-term borrowings - 1 11 6
Total interest expense 31,759 43,095 139,881 191,688
------ ------ ------- -------
Net interest income before provision for credit losses 79,317 75,237 313,690 297,906
Provision for credit losses 2,000 10,000 27,000 156,900
Net interest income after provision for credit losses 77,317 65,237 286,690 141,006
------ ------ ------- -------
NON-INTEREST INCOME
Securities gains, net 888 9,583 21,131 18,695
Letters of credit commissions 1,531 1,186 5,644 4,466
Depository service fees 1,319 1,350 5,420 5,220
Other operating income 5,248 4,050 18,697 3,870
Total non-interest income 8,986 16,169 50,892 32,251
----- ------ ------ ------
NON-INTEREST EXPENSE
Salaries and employee benefits 18,438 14,390 71,849 58,835
Occupancy expense 3,516 1,756 14,225 12,188
Computer and equipment expense 2,071 2,098 8,508 8,230
Professional services expense 6,675 3,531 20,209 17,630
FDIC and State assessments 2,630 4,022 12,494 19,549
Marketing expense 755 691 3,175 3,160
Other real estate owned expense 1,980 10,665 10,583 16,011
Operations of affordable housing investments 2,098 2,220 8,153 7,611
Amortization of core deposit intangibles 1,457 1,482 5,859 5,958
Cost associated with debt redemption 1,704 13,352 20,231 14,261
Other operating expense 2,666 2,141 10,280 12,278
Total non-interest expense 43,990 56,348 185,566 175,711
------ ------ ------- -------
Income/(loss) before income tax expense/(benefit) 42,313 25,058 152,016 (2,454)
Income tax expense/(benefit) 14,459 6,789 51,261 (14,629)
------ ----- ------ -------
Net income 27,854 18,269 100,755 12,175
Less: net income attributable to noncontrolling interest 153 158 605 610
--- --- --- ---
Net income attributable to Cathay General Bancorp 27,701 18,111 100,150 11,565
------ ------ ------- ------
Dividends on preferred stock (4,114) (4,102) (16,437) (16,388)
------ ------ ------- -------
Net income/(loss) attributable to common stockholders $23,587 $14,009 $83,713 $(4,823)
======= ======= ======= =======
Net income/ (loss) attributable to common stockholders per common share:
Basic $0.30 $0.18 $1.06 $(0.06)
Diluted $0.30 $0.18 $1.06 $(0.06)
Cash dividends paid per common share $0.01 $0.01 $0.04 $0.04
Basic average common shares outstanding 78,647,680 78,527,427 78,633,317 77,073,954
Diluted average common shares outstanding 78,648,591 78,528,630 78,640,652 77,073,954
CATHAY GENERAL BANCORP
AVERAGE BALANCES - SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
Three months ended,
-------------------
(In thousands) December 31, 2011 December 31, 2010 September 30, 2011
------------- ----------------- ----------------- ------------------
Interest-earning assets Average Balance Average Yield/Rate (1) (2) Average Balance Average Yield/Rate (1) (2) Average Balance Average Yield/Rate (1) (2)
--------------- -------------------------- --------------- -------------------------- --------------- --------------------------
Loans and leases (1) $7,061,140 5.15% $6,890,269 5.45% $6,981,382 5.26%
Taxable investment securities 2,316,940 3.05% 3,126,869 2.89% 2,308,509 3.49%
Tax-exempt investment securities (2) 133,856 4.80% 84,929 4.74% 134,735 4.77%
FHLB stock 54,835 0.31% 65,162 0.40% 57,439 0.26%
Federal funds sold and securities purchased
under agreements to resell 9,130 0.07% 27,500 0.20% 207,174 0.06%
Deposits with banks 90,301 2.32% 215,579 0.42% 64,897 2.20%
Total interest-earning assets $9,666,202 4.58% $10,410,308 4.52% $9,754,136 4.68%
---------- ----------- ----------
Interest-bearing liabilities
Interest-bearing demand deposits $444,170 0.15% $416,344 0.20% $431,016 0.17%
Money market deposits 956,313 0.63% 1,023,787 0.85% 948,678 0.71%
Savings deposits 421,381 0.09% 381,940 0.14% 454,780 0.10%
Time deposits 4,312,235 1.15% 4,369,433 1.41% 4,306,331 1.22%
--------- --------- ---------
Total interest-bearing deposits $6,134,099 0.92% $6,191,504 1.16% $6,140,805 0.99%
Securities sold under agreements to repurchase 1,407,076 4.18% 1,561,864 4.23% 1,411,332 4.17%
Other borrowed funds 169,386 3.38% 675,280 4.36% 283,996 2.94%
Long-term debt 171,136 2.92% 171,136 2.20% 171,136 2.80%
------- ---- ------- ---- ------- ----
Total interest-bearing liabilities 7,881,697 1.60% 8,599,784 1.99% 8,007,269 1.66%
Non-interest-bearing demand deposits 1,052,501 969,014 1,013,859
Total deposits and other borrowed funds $8,934,198 $9,568,798 $9,021,128
---------- ---------- ----------
Total average assets $10,513,596 $11,087,902 $10,595,366
Total average equity $1,508,717 $1,447,423 $1,505,156
---------- ---------- ----------
Year ended,
-----------
(In thousands) December 31, 2011 December 31, 2010
------------- ----------------- -----------------
Interest-earning assets Average Balance Average Yield/Rate (1) (2) Average Balance Average Yield/Rate (1) (2)
--------------- -------------------------- --------------- --------------------------
Loans and leases (1) $6,960,536 5.24% $6,898,876 5.52%
Taxable investment securities 2,484,629 3.34% 3,476,259 3.07%
Tax-exempt investment securities (2) 134,245 4.83% 27,258 4.82%
FHLB stock 58,999 0.30% 68,780 0.34%
Federal funds sold and securities purchased
under agreements to resell 84,493 0.10% 6,932 0.20%
Deposits with banks 113,566 1.26% 300,471 0.42%
Total interest-earning assets $9,836,468 4.63% $10,778,576 4.55%
---------- -----------
Interest-bearing liabilities
Interest-bearing demand deposits $426,252 0.18% $397,434 0.23%
Money market deposits 979,253 0.75% 966,888 0.90%
Savings deposits 411,953 0.12% 369,190 0.19%
Time deposits 4,323,833 1.24% 4,765,632 1.55%
--------- ---------
Total interest-bearing deposits $6,141,291 1.01% $6,499,144 1.29%
Federal funds purchased 27 1.29% - -
Securities sold under agreements to repurchase 1,448,363 4.19% 1,560,215 4.24%
Other borrowed funds 318,607 3.78% 843,321 4.45%
Long-term debt 171,136 2.86% 171,136 2.25%
------- ---- ------- ----
Total interest-bearing liabilities 8,079,424 1.73% 9,073,816 2.11%
Non-interest-bearing demand deposits 996,215 911,351
Total deposits and other borrowed funds $9,075,639 $9,985,167
---------- ----------
Total average assets $10,629,217 $11,489,165
Total average equity $1,485,545 $1,430,433
---------- ----------
(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%.
SOURCE Cathay General Bancorp
