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Cathay General Bancorp Announces Third Quarter 2018 Results

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Cathay General Bancorp Announces Third Quarter 2018 Results

PR Newswire

LOS ANGELES, Oct. 17, 2018 /PRNewswire/ -- Cathay General Bancorp ((the ", Company", , ", we", , ", us", , or ", our", NASDAQ:CATY), the holding company for Cathay Bank, today announced net income of $69.8 million, or $0.85 per share, for the third quarter of 2018. 

FINANCIAL PERFORMANCE


Three months ended


September 30, 2018


June 30, 2018


September 30, 2017

Net income

$69.8 million


$73.7 million


$49.7 million

Basic earnings per common share

$0.86


$0.91


$0.62

Diluted earnings per common share

$0.85


$0.90


$0.61

Return on average assets

1.72%


1.88%


1.29%

Return on average total stockholders' equity

13.19%


14.51%


9.77%

Efficiency ratio

43.14%


42.69%


41.91%

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

 THIRD QUARTER HIGHLIGHTS

  • Total loans increased $298.9 million, or 9.3% annualized, to $13.6 billion for the quarter.
  • Diluted earnings per share increased 39.3% to $0.85 per share for the third quarter of 2018 compared to $0.61 per share for the same quarter a year ago.

"For the third quarter of 2018, our total loans increased $298.9 million or 9.3% annualized to $13.6 billion.  Also, our deposits increased $476.5 million or 15.0% annualized to $13.6 billion compared to $13.1 billion in the second quarter of 2018, mainly as a result of our summer CD promotion," commented Pin Tai, Chief Executive Officer and President of the Company.

THIRD QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended September 30, 2018, was $69.8 million, an increase of $20.1 million, or 40.4%, compared to net income of $49.7 million for the same quarter a year ago.  Diluted earnings per share for the quarter ended September 30, 2018, was $0.85 compared to $0.61 for the same quarter a year ago.  Third quarter net income included an increase of $5.4 million in amortization expense of investments in low income housing and alternative energy partnerships and a decrease of $3.1 million in acquisition and integration costs related to the FENB acquisition.

Return on average stockholders' equity was 13.19% and return on average assets was 1.72% for the quarter ended September 30, 2018, compared to a return on average stockholders' equity of 9.77% and a return on average assets of 1.29% for the same quarter a year ago.   

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $11.9 million, or 8.9%, to $145.1 million during the third quarter of 2018, compared to $133.2 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.

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

For the third quarter of 2018, the yield on average interest-earning assets was 4.67%, the cost of funds on average interest-bearing liabilities was 1.15%, and the cost of interest-bearing deposits was 1.05%.  In comparison, for the third quarter of 2017, the yield on average interest-earning assets was 4.34%, the cost of funds on average interest-bearing liabilities was 0.81%, 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 3.52% for the quarter ended September 30, 2018, compared to 3.53% for the same quarter a year ago.

Reversal for credit losses

The Company recorded a reversal for credit losses of $1.5 million in the third quarter of 2018 compared to no reversal for credit losses in the same quarter a year ago.  The reversal for credit losses was based on a review of the appropriateness of the allowance for loan losses at September 30, 2018.  The following table summarizes the charge-offs and recoveries for the periods indicated:


Three months ended


Nine months ended September 30,


September 30, 2018


June 30, 2018


September 30, 2017


2018


2017


(In thousands)

Charge-offs:










  Commercial loans

$                           123


$               488


$                             80


$      629


$  1,810

  Real estate loans (1)

-


390


305


390


860

     Total charge-offs 

123


878


385


1,019


2,670

Recoveries:










  Commercial loans

186


150


575


1,250


1,401

  Construction loans

44


44


47


132


143

  Real estate loans(1)

2,950


499


5,489

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