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Cathay General Bancorp Announces Second Quarter 2018 Results

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Cathay General Bancorp Announces Second Quarter 2018 Results

PR Newswire

LOS ANGELES, July 18, 2018 /PRNewswire/ -- Cathay General Bancorp ((the ", Company", , ", we", , ", us", , or ", our", NASDAQ:CATY), the holding company for Cathay Bank, today announced net income of $73.7 million, or $0.90 per share, for the second quarter of 2018.  Second quarter 2018 results included $1.7 million in acquisition and integration costs related to the Far East National Bank ("FENB") acquisition, which reduced earnings per share by $0.015.

FINANCIAL PERFORMANCE



Three months ended


June 30, 2018


March 31, 2018


June 30, 2017

Net income

$73.7 million


$63.8 million


$51.4 million

Basic earnings per common share

$0.91


$0.79


$0.64

Diluted earnings per common share

$0.90


$0.78


$0.64

Return on average assets

1.88%


1.65%


1.48%

Return on average total stockholders' equity

14.51%


12.99%


10.96%

Efficiency ratio

42.69%


43.35%


45.88%

Cathay General Bancorp (PRNewsFoto/Cathay General Bancorp) (PRNewsfoto/Cathay General Bancorp)

SECOND QUARTER HIGHLIGHTS

  • Total loans increased $334.2 million, or 10.3% annualized, to $13.3 billion for the quarter.
  • Net interest margin for the second quarter increased to 3.83% compared to 3.63% in the second quarter of 2017 and 3.75% in the first quarter of 2018.
  • Diluted earnings per share increased 40.6% to $0.90 per share for the second quarter of 2018 compared to $0.64 per share for the same quarter a year ago.

"For the second quarter of 2018, in spite of a large amount of commercial real estate loan payoffs, our total loans increased $334.2 million or 10.3% annualized to $13.3 billion.  Also, our net interest margin increased to 3.83% during the second quarter compared to 3.75% in the first quarter of 2018 as our loans repriced more than our deposits," commented Pin Tai, Chief Executive Officer and President of the Company.

SECOND QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended June 30, 2018, was $73.7 million, an increase of $22.3 million, or 43.4%, compared to net income of $51.4 million for the same quarter a year ago.  Diluted earnings per share for the quarter ended June 30, 2018, was $0.90 compared to $0.64 for the same quarter a year ago.  Second quarter net income included $1.7 million in acquisition and integration costs related to the FENB acquisition and a $1.1 million decrease in the fair value of equity securities.

Return on average stockholders' equity was 14.51% and return on average assets was 1.88% for the quarter ended June 30, 2018, compared to a return on average stockholders' equity of 10.96% and a return on average assets of 1.48% for the same quarter a year ago.   

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $22.6 million, or 19.3%, to $140.0 million during the second quarter of 2018, compared to $117.4 million during the same quarter a year ago.  The increase was due primarily to an increase in interest income from loans and securities, offset by increases in interest expense from time deposits and long-term debt.

The net interest margin was 3.83% for the second quarter of 2018 compared to 3.63% for the second quarter of 2017 and 3.75% for the first quarter of 2018. 

For the second quarter of 2018, the yield on average interest-earning assets was 4.58%, the cost of funds on average interest-bearing liabilities was 1.03%, and the cost of interest-bearing deposits was 0.92%.  In comparison, for the second quarter of 2017, the yield on average interest-earning assets was 4.19%, the cost of funds on average interest-bearing liabilities was 0.78%, and the cost of interest-bearing deposits was 0.68%. The increase in the yield on average interest earning assets resulted mainly from higher rates on loans.  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 3.55% for the quarter ended June 30, 2018, compared to 3.41% for the same quarter a year ago.

Reversal for credit losses

There was no reversal for credit losses for the second quarter of 2018 or 2017.  The reversal for credit losses was based on a review of the appropriateness of the allowance for loan losses at June 30, 2018.  The following table summarizes the charge-offs and recoveries for the periods indicated:


Three months ended


Six months ended June 30,


June 30, 2018


March 31, 2018


June 30, 2017


2018


2017


(In thousands)

Charge-offs:










  Commercial loans

$               488


$                    19


$               527


$      507


$ 1,730

  Real estate loans (1)

390


-


-


390


555

     Total charge-offs 

878


19


527


897


2,285

Recoveries:










  Commercial loans

150


913


335


1,063


826

  Construction loans

44


44


47


88


96

  Real estate loans(1)

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