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Cathay General Bancorp Announces Fourth Quarter and Full Year 2022 Results

CATY

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, 2022. The Company reported net income of $97.6 million, or $1.33 per share, for the fourth quarter of 2022, and net income of $360.6 million, or $4.83 per share, for the year ended December 31, 2022.

FINANCIAL PERFORMANCE

Three months ended Year ended December 31,
(unaudited) December 31, 2022 September 30, 2022 December 31, 2021

2022

2021

Net income $97.6 million $99.0 million $75.3 million $360.6 million $298.3 million
Basic earnings per common share

$1.33

$1.34*

$0.98

$4.85

$3.81

Diluted earnings per common share

$1.33

$1.33*

$0.98

$4.83

$3.80

Return on average assets

1.77%

1.81%

1.48%

1.69%

1.52%

Return on average total stockholders' equity

15.73%

15.94%

12.12%

14.70%

12.11%

Efficiency ratio

37.97%

36.35%

41.77%

38.38%

43.92%

*Net income per common share previously reported for the third quarter of 2022 has been corrected. The correction decreased basic and diluted net income per common share by $.01 and $.02, respectively.

HIGHLIGHTS

  • Record net income of $360.6 million and EPS of $4.83 per share in 2022.
  • Quarterly earnings per share increased 35.7% compared to same quarter in 2021.
  • Total loans increased $1.4 billion, or 8.3%, excluding HSBC purchased loans of $550.5 million, in 2022.

“Net interest income for the quarter increased by 29.8% compared to the same quarter last year primarily as a result of loan growth and the higher level of interest rates. During 2022, we repurchased 3,227,465 shares at an average cost of $43.79 per share, for a total of $141.3 million,” commented Chang M. Liu, President and Chief Executive Officer of the Company.

FOURTH QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended December 31, 2022, was $97.6 million, an increase of $22.3 million, or 29.6%, compared to net income of $75.3 million for the same quarter a year ago. Diluted earnings per share for the quarter ended December 31, 2022, increased by 35.7%, or $1.33 per share, compared to $0.98 per share for the same quarter a year ago.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $46.3 million, or 29.8%, to $201.8 million during the fourth quarter of 2022, compared to $155.5 million during the same quarter a year ago. The increase was due primarily to an increase in interest income from loans and securities which was partially offset by an increase in interest expense from deposits.

The net interest margin was 3.87% for the fourth quarter of 2022 compared to 3.23% for the fourth quarter of 2021 and 3.83% for the third quarter of 2022.

For the fourth quarter of 2022, the yield on average interest-earning assets was 5.06%, the cost of funds on average interest-bearing liabilities was 1.66%, and the cost of average interest-bearing deposits was 1.59%. In comparison, for the fourth quarter of 2021, the yield on average interest-earning assets was 3.52%, the cost of funds on average interest-bearing liabilities was 0.41%, and the cost of average interest-bearing deposits was 0.37%. 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 3.40% for the quarter ended December 31, 2022, compared to 3.11% for the same quarter a year ago.

Provision/(reversal) for credit losses

The Company recorded a provision for credit losses of $1.4 million in the fourth quarter of 2022 compared to $2.0 million in the third quarter of 2022 and $3.5 million in the fourth quarter of 2021. As of December 31, 2022, the allowance for loan losses decreased by $2.3 million to $146.5 million, or 0.80% of gross loans, compared to $148.8 million, or 0.82% of gross loans as of September 30, 2022.

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

Three months ended Year ended December 31,
December 31, 2022 September 30, 2022 December 31, 2021

2022

2021

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

$

860

$

2,091

$

552

$

3,222

$

20,051

Real estate loans (1)

2,131

137

2,268

3

Total charge-offs

2,991

2,228

552

5,490

20,054

Recoveries:
Commercial loans

356

1,576

160

2,465

1,706

Construction loans

6

76

Real estate loans (1)

99

95

104

434

661

Total recoveries

455

1,671

264

2,905

2,443

Net charge-offs/(recoveries)

$

2,536

$

557

$

288

$

2,585

$

17,611

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

Non-interest income

Non-interest income, which includes revenues from depository service fees, letters of credit commissions, securities gains (losses), wire transfer fees, and other sources of fee income, was $12.1 million for the fourth quarter of 2022, a decrease of $7.7 million, or 38.9%, compared to $19.8 million for the fourth quarter of 2021. The decrease was primarily due to an increase of $3.2 million in loss on equity securities, a decrease of $3.1 million in gain on distribution from venture capital investments, and a decrease of $1.7 million in derivative fees, when compared to the same quarter a year ago.

Non-interest expense

Non-interest expense increased $8.0 million, or 10.9%, to $81.2 million in the fourth quarter of 2022 compared to $73.2 million in the same quarter a year ago. The increase in non-interest expense in the fourth quarter of 2022 was primarily due to an increase of $3.8 million in amortization expense of investments in low-income housing and alternative energy partnerships, an increase of $1.2 million in salaries and employee benefits and an increase of $1.0 million in amortization of core deposit intangibles, when compared to the fourth quarter of 2021. 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 38.0% in the fourth quarter of 2022 compared to 41.8% for the same quarter a year ago.

Income taxes

The effective tax rate for the fourth quarter of 2022 was 25.7% compared to 23.6% for the fourth quarter of 2021. The effective tax rate includes the impact of alternative energy investments and low-income housing tax credits.

BALANCE SHEET REVIEW

Gross loans were $18.3 billion as of December 31, 2022, an increase of $2.0 billion, or 12.3%, from $16.3 billion as of December 31, 2021. The increase was primarily due to increases of $1.1 billion, or 25.6%, in residential mortgage loans, which included $548.3 million from the acquisition of certain HSBC West Coast branches, $650.4 million, or 8.0%, in commercial mortgage loans, $336.4 million, or 11.3%, in commercial loans, offset by a decrease of $94.9 million, or 22.6%, in home equity loans and $51.7 million, or 8.5%, in real estate construction loans. For the fourth quarter of 2022, gross loans, increased by $147.2 million, or 3.6% annualized.

The loan balances and composition as of December 31, 2022, compared to September 30, 2022 and December 31, 2021, are presented below:

December 31, 2022 September 30, 2022 December 31, 2021
(In thousands) (Unaudited)
Commercial loans

$

3,316,187

$

3,361,523

$

2,891,914

Paycheck protection program loans

2,591

5,914

90,485

Residential mortgage loans

5,252,952

5,130,650

4,182,006

Commercial mortgage loans

8,793,685

8,677,733

8,143,272

Equity lines

324,548

350,448

419,487

Real estate construction loans

559,372

573,421

611,031

Installment and other loans

4,689

7,114

4,284

Gross loans

$

18,254,024

$

18,106,803

$

16,342,479

Allowance for loan losses

(146,485

)

(148,817

)

(136,157

)

Unamortized deferred loan fees

(6,641

)

(6,936

)

(4,321

)

Total loans, net

$

18,100,898

$

17,951,050

$

16,202,001

Total deposits were $18.5 billion as of December 31, 2022, an increase of $446.4 million, or 2.5%, from $18.1 billion as of December 31, 2021.

The deposit balances and composition as of December 31, 2022, compared to September 30, 2022 and December 31, 2021, are presented below:

December 31, 2022

September 30, 2022

December 31, 2021

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

$

4,168,989

$

4,398,152

$

4,492,054

NOW deposits

2,509,736

2,570,036

2,522,442

Money market deposits

3,812,724

4,935,266

4,611,579

Savings deposits

1,000,460

1,128,823

915,515

Time deposits

7,013,370

5,543,474

5,517,252

Total deposits

$

18,505,279

$

18,575,751

$

18,058,842

ASSET QUALITY REVIEW

As of December 31, 2022, total non-accrual loans were $68.9 million, an increase of $3.0 million, or 4.6%, from $65.8 million as of December 31, 2021, and an increase of $729 thousand, or 1.1%, from $68.1 million as of September 30, 2022.

The allowance for loan losses was $146.5 million and the allowance for off-balance sheet unfunded credit commitments was $8.7 million as of December 31, 2022. 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 0.80% of period-end gross loans, and 182.12% of non-performing loans as of December 31, 2022. The comparable ratios were 0.83% of period-end gross loans, and 202.36% of non-performing loans as of December 31, 2021.

The changes in non-performing assets and troubled debt restructurings as of December 31, 2022, compared to December 31, 2021 and September 30, 2022, are presented below:

(Dollars in thousands) (Unaudited) December 31, 2022 December 31, 2021 %
Change
September 30, 2022 %
Change
Non-performing assets
Accruing loans past due 90 days or more

$

11,580

$

1,439

705

$

3,172

265

Non-accrual loans:
Construction loans

Commercial mortgage loans

34,096

38,173

(11

)

26,911

27

Commercial loans

25,772

16,558

56

26,604

(3

)

Residential mortgage loans

8,978

11,115

(19

)

14,601

(39

)

Installment and other loans

8

9

(11

)
Total non-accrual loans:

$

68,854

$

65,846

5

$

68,125

1

Total non-performing loans

80,434

67,285

20

71,297

13

Other real estate owned

4,067

4,368

(7

)

4,067

Total non-performing assets

$

84,501

$

71,653

18

$

75,364

12

Accruing troubled debt restructurings (TDRs)

$

15,145

$

12,837

18

$

15,208

(0

)

Allowance for loan losses

$

146,485

$

136,157

8

$

148,817

(2

)

Total gross loans outstanding, at period-end

$

18,254,024

$

16,342,479

12

$

18,106,803

1

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

182.12

%

202.36

%

208.73

%

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

0.80

%

0.83

%

0.82

%

The ratio of non-performing assets to total assets was 0.4% as of December 31, 2022, compared to 0.3% as of December 31, 2021. Total non-performing assets increased $12.8 million, or 17.9%, to $84.5 million as of December 31, 2022, compared to $71.7 million as of December 31, 2021, primarily due to an increase of $10.1 million, or 704.7%, in accruing loans past due 90 days or more and an increase of $3.0 million, or 4.6%, in non-accrual loans.

CAPITAL ADEQUACY REVIEW

As of December 31, 2022, the Company’s Tier 1 risk-based capital ratio of 12.19%, total risk-based capital ratio of 13.71%, and Tier 1 leverage capital ratio of 10.08%, 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, 2021, the Company’s Tier 1 risk-based capital ratio was 12.80%, total risk-based capital ratio was 14.41%, and Tier 1 leverage capital ratio was 10.40%.

FULL YEAR REVIEW

Net income for the year ended December 31, 2022, was $360.6 million, an increase of $62.3 million, or 20.9%, compared to net income of $298.3 million for the year ended December 31, 2021. Diluted earnings per share for the year ended December 31, 2022 was $4.83 compared to $3.80 per share for the year ended December 31, 2021. The net interest margin for the year ended December 31, 2022 was 3.63% compared to 3.22% for the year ended December 31, 2021.

Return on average stockholders’ equity was 14.70% and return on average assets was 1.69% for the year ended December 31, 2022, compared to a return on average stockholders’ equity of 12.11% and a return on average assets of 1.52% for the year ended December 31, 2021. The efficiency ratio for the year ended December 31, 2022, was 38.38% compared to 43.92% for the year ended December 31, 2021.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its fourth quarter and year-end 2022 financial results this afternoon, Wednesday, January 25, 2023, 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 10174540. 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 operate 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 a representative office 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 are 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 (such as the COVID-19 pandemic) 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 including the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act; 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 (such as the COVID-19 pandemic) 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, 2021 (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, 2022 September 30, 2022 December 31, 2021

2022

2021

FINANCIAL PERFORMANCE
Net interest income before (reversal)/provision for credit losses

$

201,814

$

197,529

$

155,452

$

733,697

$

597,755

Provision/(reversal) for credit losses

1,400

2,000

3,500

14,543

(16,008

)

Net interest income after (reversal)/provision for credit losses

200,414

195,529

151,952

719,154

613,763

Non-interest income

12,088

9,876

19,804

56,814

54,603

Non-interest expense

81,224

75,388

73,197

303,432

286,523

Income before income tax expense

131,278

130,017

98,559

472,536

381,843

Income tax expense

33,677

30,982

23,234

111,894

83,539

Net income

$

97,601

$

99,035

$

75,325

$

360,642

$

298,304

Net income per common share
Basic

$

1.33

$

1.34

*

$

0.98

$

4.85

$

3.81

Diluted

$

1.33

$

1.33

*

$

0.98

$

4.83

$

3.80

Cash dividends paid per common share

$

0.34

$

0.34

$

0.34

$

1.36

$

1.27

SELECTED RATIOS
Return on average assets

1.77

%

1.81

%

1.48

%

1.69

%

1.52

%

Return on average total stockholders’ equity

15.73

%

15.94

%

12.12

%

14.70

%

12.11

%

Efficiency ratio

37.97

%

36.35

%

41.77

%

38.38

%

43.92

%

Dividend payout ratio

25.45

%

25.30

%

34.50

%

27.99

%

33.30

%

YIELD ANALYSIS (Fully taxable equivalent)
Total interest-earning assets

5.06

%

4.38

%

3.52

%

4.21

%

3.59

%

Total interest-bearing liabilities

1.66

%

0.78

%

0.41

%

0.82

%

0.52

%

Net interest spread

3.40

%

3.60

%

3.11

%

3.39

%

3.07

%

Net interest margin

3.87

%

3.83

%

3.23

%

3.63

%

3.22

%

CAPITAL RATIOS December 31, 2022 September 30, 2022 December 31, 2021
Tier 1 risk-based capital ratio

12.19

%

12.06

%

12.80

%

Total risk-based capital ratio

13.71

%

13.59

%

14.41

%

Tier 1 leverage capital ratio

10.08

%

10.02

%

10.40

%

. . .
*Net income per common share previously reported for the third quarter of 2022 has been corrected. The correction decreased basic and diluted net income per common share by $.01 and $.02, respectively.

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data) December 31, 2022 September 30, 2022 December 31, 2021
Assets
Cash and due from banks

$

195,440

$

200,051

$

134,141

Short-term investments and interest bearing deposits

958,731

1,063,294

2,315,563

Securities available-for-sale (amortized cost of $1,622,173 at December 31, 2022, $1,577,311 at September 30, 2022 and $1,126,867 at December 31, 2021)

1,473,348

1,414,411

1,127,309

Loans

18,254,024

18,106,803

16,342,479

Less: Allowance for loan losses

(146,485

)

(148,817

)

(136,157

)

Unamortized deferred loan fees, net

(6,641

)

(6,936

)

(4,321

)

Loans, net

18,100,898

17,951,050

16,202,001

Equity securities

22,158

23,123

22,319

Federal Home Loan Bank stock

17,250

17,250

17,250

Other real estate owned, net

4,067

4,067

4,368

Affordable housing investments and alternative energy partnerships, net

327,128

325,439

299,211

Premises and equipment, net

94,776

96,419

99,402

Customers’ liability on acceptances

2,372

6,899

8,112

Accrued interest receivable

82,428

71,177

56,994

Goodwill

375,696

375,696

372,189

Other intangible assets, net

5,757

6,948

4,627

Right-of-use assets- operating leases

29,627

30,679

27,834

Other assets

296,077

303,628

195,403

Total assets

$

21,985,753

$

21,890,131

$

20,886,723

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

$

4,168,989

$

4,398,152

$

4,492,054

Interest-bearing deposits:
NOW deposits

2,509,736

2,570,036

2,522,442

Money market deposits

3,812,724

4,935,266

4,611,579

Savings deposits

1,000,460

1,128,823

915,515

Time deposits

7,013,370

5,543,474

5,517,252

Total deposits

18,505,279

18,575,751

18,058,842

Advances from the Federal Home Loan Bank

485,000

360,000

20,000

Other borrowings for affordable housing investments

22,600

22,651

23,145

Long-term debt

119,136

119,136

119,136

Acceptances outstanding

2,372

6,899

8,112

Lease liabilities - operating leases

32,518

33,931

30,694

Other liabilities

344,808

352,204

180,543

Total liabilities

19,511,713

19,470,572

18,440,472

Stockholders' equity

2,474,040

2,419,559

2,446,251

Total liabilities and equity

$

21,985,753

$

21,890,131

$

20,886,723

Book value per common share

$

34.01

$

32.96

$

32.29

Number of common shares outstanding

72,742,151

73,411,960

75,750,862

CATHAY GENERAL BANCORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended Year ended December 31,
December 31, 2022 September 30, 2022 December 31, 2021

2022

2021

(In thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loan receivable, including loan fees

$

243,324

$

211,541

$

164,062

$

801,981

$

649,224

Investment securities

10,181

7,483

4,188

28,240

14,151

Federal Home Loan Bank stock

329

258

261

1,103

991

Deposits with banks

9,954

6,732

678

19,957

2,145

Total interest and dividend income

263,788

226,014

169,189

851,281

666,511

INTEREST EXPENSE
Time deposits

34,352

10,218

7,179

56,354

40,542

Other deposits

23,048

13,871

4,957

48,942

21,259

Advances from Federal Home Loan Bank

2,484

2,941

146

5,880

1,182

Long-term debt

1,228

1,455

1,455

5,546

5,773

Short-term borrowings

862

862

Total interest expense

61,974

28,485

13,737

117,584

68,756

Net interest income before (reversal)/provision for credit losses

201,814

197,529

155,452

733,697

597,755

Provision/(reversal) for credit losses

1,400

2,000

3,500

14,543

(16,008

)

Net interest income after (reversal)/provision for credit losses

200,414

195,529

151,952

719,154

613,763

NON-INTEREST INCOME
Net (losses)/gains from equity securities

(966

)

(3,661

)

2,202

392

(1,426

)

Securities gains, net

853

Letters of credit commissions

1,584

1,609

1,867

6,351

7,103

Depository service fees

1,530

1,690

1,477

6,523

5,584

Wealth management fees

3,942

4,184

3,982

16,436

15,056

Other operating income

5,998

6,054

10,276

27,112

27,433

Total non-interest income

12,088

9,876

19,804

56,814

54,603

NON-INTEREST EXPENSE
Salaries and employee benefits

35,093

34,677

33,878

142,546

132,795

Occupancy expense

5,658

5,975

5,176

22,808

20,318

Computer and equipment expense

3,842

3,509

3,456

13,604

13,549

Professional services expense

7,529

6,337

6,968

28,267

23,666

Data processing service expense

3,368

3,484

3,185

13,181

13,607

FDIC and State assessments

2,038

2,003

1,937

8,037

7,132

Marketing expense

2,171

2,005

1,643

6,863

6,913

Other real estate owned expense/(income)

34

55

146

127

343

Amortization of investments in low income housing and
alternative energy partnerships

14,594

11,949

10,784

42,065

45,447

Amortization of core deposit intangibles

1,168

250

172

1,892

687

Cost associated with debt redemption

732

Acquisition, integration and reorganization costs

59

949

4,086

1,425

Other operating expense

5,729

5,085

4,903

19,956

19,909

Total non-interest expense

81,224

75,388

73,197

303,432

286,523

Income before income tax expense

131,278

130,017

98,559

472,536

381,843

Income tax expense

33,677

30,982

23,234

111,894

83,539

Net income

$

97,601

$

99,035

$

75,325

$

360,642

$

298,304

Net income per common share:
Basic

$

1.33

$

1.34

*

$

0.98

$

4.85

$

3.81

Diluted

$

1.33

$

1.33

*

$

0.98

$

4.83

$

3.80

Cash dividends paid per common share

$

0.34

$

0.34

$

0.34

$

1.36

$

1.27

Basic average common shares outstanding

73,130,500

73,956,052

*

76,566,481

74,337,265

78,268,369

Diluted average common shares outstanding

73,467,401

74,242,052

*

76,914,817

74,664,735

78,570,638

*Net income per common share, basic and diluted average shares outstanding previously reported for the third quarter of 2022 has been corrected. The correction decreased basic and diluted net income per common share by $.01 and $.02, respectively and increased basic and diluted average common shares by 797,956 shares.

CATHAY GENERAL BANCORP

AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Unaudited)

Three months ended
(In thousands) December 31, 2022 September 30, 2022 December 31, 2021
Interest-earning assets Average
Balance
Average
Yield/Rate (1)
Average
Balance
Average
Yield/Rate (1)
Average
Balance
Average
Yield/Rate (1)
Loans (1)

$

18,117,692

5.33

%

$

17,923,495

4.68

%

$

16,130,896

4.04

%

Taxable investment securities

1,493,472

2.70

%

1,364,013

2.18

%

1,152,596

1.44

%

FHLB stock

17,250

7.57

%

18,756

5.46

%

17,250

6.00

%

Deposits with banks

1,052,161

3.75

%

1,178,261

2.27

%

1,779,275

0.15

%

Total interest-earning assets

$

20,680,575

5.06

%

$

20,484,525

4.38

%

$

19,080,017

3.52

%

Interest-bearing liabilities
Interest-bearing demand deposits

$

2,514,877

0.78

%

$

2,508,526

0.30

%

$

2,217,341

0.08

%

Money market deposits

4,350,804

1.63

%

5,153,566

0.90

%

4,393,816

0.39

%

Savings deposits

1,064,019

0.09

%

1,151,126

0.07

%

932,678

0.08

%

Time deposits

6,403,334

2.13

%

5,013,213

0.81

%

5,604,073

0.51

%

Total interest-bearing deposits

$

14,333,034

1.59

%

$

13,826,431

0.69

%

$

13,147,908

0.37

%

Other borrowed funds

358,840

3.70

%

498,234

2.34

%

43,186

1.34

%

Long-term debt

119,136

4.09

%

119,136

4.85

%

119,136

4.85

%

Total interest-bearing liabilities

14,811,010

1.66

%

14,443,801

0.78

%

13,310,230

0.41

%

Non-interest-bearing demand deposits

4,337,065

4,456,214

4,162,906

Total deposits and other borrowed funds

$

19,148,075

$

18,900,015

$

17,473,136

Total average assets

$

21,917,339

$

21,658,860

$

20,176,429

Total average equity

$

2,461,524

$

2,465,192

$

2,466,363

Year ended
(In thousands) December 31, 2022 December 31, 2021
Interest-earning assets Average
Balance
Average
Yield/Rate (1)
Average
Balance
Average
Yield/Rate (1)
Loans (1)

$

17,631,943

4.55

%

$

15,827,550

4.10

%

Taxable investment securities

1,321,346

2.14

%

1,046,187

1.35

%

FHLB stock

17,629

6.26

%

17,250

5.74

%

Deposits with banks

1,261,833

1.58

%

1,649,564

0.13

%

Total interest-earning assets

$

20,232,751

4.21

%

$

18,540,551

3.59

%

Interest-bearing liabilities
Interest-bearing demand deposits

$

2,471,256

0.33

%

$

2,047,177

0.11

%

Money market deposits

4,902,357

0.81

%

4,034,246

0.45

%

Savings deposits

1,118,967

0.08

%

897,663

0.09

%

Time deposits

5,398,808

1.04

%

5,979,191

0.68

%

Total interest-bearing deposits

$

13,891,388

0.76

%

$

12,958,277

0.48

%

Other borrowed funds

247,276

2.73

%

75,516

1.57

%

Long-term debt

119,136

4.66

%

119,136

4.85

%

Total interest-bearing liabilities

14,257,800

0.82

%

13,152,929

0.52

%

Non-interest-bearing demand deposits

4,386,526

3,751,626

Total deposits and other borrowed funds

$

18,644,326

$

16,904,555

Total average assets

$

21,383,739

$

19,591,537

Total average equity

$

2,453,391

$

2,463,021

(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 more 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.

(In thousands, except share and per share data)

December 31, 2022

September 30, 2022

December 31, 2021

Stockholders' equity (a)

$

2,474,040

$

2,419,559

$

2,446,251

Less: Goodwill

(375,696

)

(375,696

)

(372,189

)

Other intangible assets (1)

(5,757

)

(6,948

)

(4,627

)

Tangible equity (b)

$

2,092,587

$

2,036,915

$

2,069,435

Total assets (c)

$

21,985,753

$

21,890,131

$

20,886,723

Less: Goodwill

(375,696

)

(375,696

)

(372,189

)

Other intangible assets (1)

(5,757

)

(6,948

)

(4,627

)

Tangible assets (d)

$

21,604,300

$

21,507,487

$

20,509,907

Number of common shares outstanding (e)

72,742,151

73,411,960

75,750,862

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

11.25

%

11.05

%

11.71

%

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

9.69

%

9.47

%

10.09

%

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

$

28.77

$

27.75

$

27.32

Three Months Ended Twelve Months Ended
(In thousands, except share and per share data)

December 31, 2022

September 30, 2022

December 31, 2021

December 31, 2022

December 31, 2021

Net Income

$

97,601

$

99,035

$

75,325

$

360,642

$

298,304

Add: Amortization of other intangibles

1,191

250

203

2,007

828

Tax effect of amortization adjustments (2)

(353

)

(74

)

(60

)

(595

)

(246

)

Tangible net income (f)

$

98,439

$

99,211

$

75,468

$

362,054

$

298,886

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

18.82

%

19.48

%

14.59

%

17.30

%

14.44

%

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