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Cathay General Bancorp Announces First Quarter 2019 Results

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LOS ANGELES, April 17, 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 ended March 31, 2019.  The Company reported net income of $66.7 million, or $0.83 per share, for the first quarter of 2019. 

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

FINANCIAL PERFORMANCE


Three months ended

(unaudited)

March 31, 2019


December 31, 2018


March 31, 2018

Net income

$66.7 million


$64.6 million


$63.8 million

Basic earnings per common share

$0.83


$0.80


$0.79

Diluted earnings per common share

$0.83


$0.80


$0.78

Return on average assets

1.61%


1.56%


1.65%

Return on average total stockholders' equity

12.57%


12.07%


12.99%

Efficiency ratio

45.42%


47.62%


43.35%

FIRST QUARTER HIGHLIGHTS

  • Diluted earnings per share increased 6.4% to $0.83 per share for the first quarter of 2019 compared to $0.78 per share for the same quarter a year ago.
  • Total loans increased $281.6 million, or 8.0% annualized, to $14.3 billion from $14.0 billion at December 31, 2018.

"For the first quarter of 2019, our total loans increased $281.6 million, or 8.0% annualized, to $14.3 billion.  We continued our stock buyback program in the first quarter and repurchased 233,700 shares of our common stock at an average cost of $36.80," commented Pin Tai, Chief Executive Officer and President of the Company.

FIRST QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended March 31, 2019, was $66.7 million, an increase of $2.9 million, or 4.5%, compared to net income of $63.8 million for the same quarter a year ago. Diluted earnings per share for the quarter ended March 31, 2019, was $0.83 compared to $0.78 for the same quarter a year ago.  

Return on average stockholders' equity was 12.57% and return on average assets was 1.61% for the quarter ended March 31, 2019, compared to a return on average stockholders' equity of 12.99% and a return on average assets of 1.65% for the same quarter a year ago.    

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $8.0 million, or 5.9%, to $143.3 million during the first quarter of 2019, compared to $135.3 million during the same quarter a year ago.  The increase was due primarily to increases in interest income from loans and securities, offset by an increase in interest expense from time deposits.

The net interest margin was 3.70% for the first quarter of 2019 compared to 3.75% for the first quarter of 2018 and 3.77% for the fourth quarter of 2018. 

For the first quarter of 2019, the yield on average interest-earning assets was 4.85%, the cost of funds on average interest-bearing liabilities was 1.55%, and the cost of interest-bearing deposits was 1.46%.  In comparison, for the first quarter of 2018, the yield on average interest-earning assets was 4.42%, the cost of funds on average interest-bearing liabilities was 0.92%, and the cost of interest-bearing deposits was 0.81%. 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 3.30% for the quarter ended March 31, 2019, compared to 3.50% for the same quarter a year ago.

Provision/(reversal) for credit losses

The Company did not record a provision for credit losses in the first quarter of 2019 compared to a reversal for credit losses of $3.0 million for the first quarter of 2018.  The provision for credit losses was based on a review of the appropriateness of the allowance for loan losses at March 31, 2019.  The following table summarizes the charge-offs and recoveries for the periods indicated:


Three months ended


March 31, 2019


December 31, 2018


March 31, 2018


(In thousands) (Unaudited)

Charge-offs:






  Commercial loans

$              1,231


$                             -


$                    19

  Real estate loans (1)

-


2,186


-

     Total charge-offs 

1,231


2,186


19

Recoveries:






  Commercial loans

41


625


913

  Construction loans

1,044


44


44

  Real estate loans(1)

310


451


867

     Total recoveries

1,395


1,120


1,824

Net (recoveries)/charge-offs

$                (164)


$                      1,066


$            (1,805)







(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, equity securities gains (losses), wire transfer fees, and other sources of fee income, was $12.9 million for the first quarter of 2019, an increase of $7.6 million, or 143.4%, compared to $5.3 million for the first quarter of 2018, primarily due to an increase in the value of equity securities during 2019 of $4.2 million compared to a decrease in the value of equity securities during 2018 of $3.8 million.

Non-interest expense

Non-interest expense increased $10.0 million, or 16.4%, to $71.0 million in the first quarter of 2019 compared to $61.0 million in the same quarter a year ago.  The increase in non-interest expense in the first quarter of 2019 was primarily due to a $1.8 million increase in salaries and employee benefits expense, a $1.3 million increase in marketing expense, a $5.0 million increase in amortization expense for investments in low income housing and alternative energy partnerships and a $1.6 million increase in provision for unfunded commitments, when compared to the same quarter a year ago.  The efficiency ratio was 45.4% in the first quarter of 2019 compared to 43.4% for the same quarter a year ago.   

Income taxes

The effective tax rate for the first quarter of 2019 was 21.8% compared to 22.8% for the first quarter of 2018.  The effective tax rate includes the impact of low-income housing and alternative energy investment tax credits.  Income tax expense for the first quarter of 2019 was reduced by $0.5 million in benefits from the distribution of restricted stock units.

BALANCE SHEET REVIEW

Gross loans, were $14.3 billion at March 31, 2019, an increase of $281.6 million, or 2.0%, from $14.0 billion at December 31, 2018.  The increase was primarily due to increases of

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