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Cathay General Bancorp Announces Fourth Quarter and Full Year 2018 Results

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LOS ANGELES, Jan. 23, 2019 /PRNewswire/ -- 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, 2018.  The Company reported net income of $64.9 million, or $0.80 per share, for the fourth quarter of 2018, and net income of $272.2 million, or $3.34 per share, for the year ended December 31, 2018.

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

FINANCIAL PERFORMANCE


Three months ended


Year ended December 31,


December 31, 2018


September 30, 2018


December 31, 2017


2018


2017

Net income

$64.9 million


$69.8 million


$25.9 million


$272.2 million


$176.0 million

Basic earnings per common share

$0.80


$0.86


$0.32


$3.35


$2.19

Diluted earnings per common share

$0.80


$0.85


$0.32


$3.34


$2.17

Return on average assets

1.57%


1.72%


0.66%


1.70%


1.19%

Return on average total stockholders' equity

12.13%


13.19%


5.18%


13.19%


9.10%

Efficiency ratio

47.16%


43.14%


46.27%


44.13%


44.40%

FULL YEAR HIGHLIGHTS

  • Total loans increased for the year by $1.1 billion, or 8.5%, to $14.0 billion from $12.9 billion in 2017.
  • Net interest margin for 2018 increased to 3.79% compared to 3.63% in 2017.

"We reported record net income of $272.2 million and record EPS of $3.34 in 2018.  Strong loan growth of $1.1 billion in 2018 or 8.5% was a major contributor to the record results. In light of recent stock market weakness, we resumed our stock buyback program and repurchased 1.1 million shares of our common stock at an average price of $38.25," commented Pin Tai, Chief Executive Officer and President of the Company. 

FOURTH QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended December 31, 2018, was $64.9 million, an increase of $39.0 million, or 150.6%, compared to net income of $25.9 million for the same quarter a year ago, which included $22.3 million of additional tax expense related to the revaluation of the Company's deferred tax assets and a $2.6 million pretax write-down of low income housing tax credit investments as a result of the enactment of the Tax Cuts and Jobs Act.  Diluted earnings per share for the quarter ended December 31, 2018, was $0.80 compared to $0.32 for the same quarter a year ago.  Net income for the quarter ended December 31, 2018 included a $6.2 million increase in amortization expense of investments in low income housing and alternative energy partnerships and a decrease of $1.9 million in income from other real estate owned compared to the same quarter in prior year.

Return on average stockholders' equity was 12.1% and return on average assets was 1.57% for the quarter ended December 31, 2018, compared to a return on average stockholders' equity of 5.18% and a return on average assets of 0.66% for the same quarter a year ago.    

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $12.1 million, or 9.1%, to $145.4 million during the fourth quarter of 2018, compared to $133.3 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 3.77% for the fourth quarter of 2018 compared to 3.65% for the fourth quarter of 2017 and 3.83% for the third quarter of 2018. 

For the fourth quarter of 2018, the yield on average interest-earning assets was 4.76%, the cost of funds on average interest-bearing liabilities was 1.36%, and the cost of interest-bearing deposits was 1.29%.  In comparison, for the fourth quarter of 2017, the yield on average interest-earning assets was 4.27%, the cost of funds on average interest-bearing liabilities was 0.84%, and the cost of interest-bearing deposits was 0.73%. 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 3.40% for the quarter ended December 31, 2018, compared to 3.43% for the same quarter a year ago.

Provision for credit losses

The Company did not record a provision for credit losses in the fourth quarter of 2018 or 2017, based on a review of the appropriateness of the allowance for loan losses at December 31, 2018.  The following table summarizes the charge-offs and recoveries for the periods indicated:


Three months ended


Year ended December 31,


December 31, 2018


September 30, 2018


December 31, 2017


2018


2017


(In thousands) (Unaudited)

Charge-offs:










  Commercial loans

$                          -


$                        122


$                   1,503


$      629


$   3,313

  Real estate loans (1)

2,186


-


-


2,576


860

     Total charge-offs 

2,186


122


1,503


3,205


4,173

Recoveries:






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