Cathay General Bancorp Announces Third Quarter 2022 Results

LOS ANGELES--(BUSINESS WIRE)--October 24, 2022--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 September 30, 2022. The Company reported net income of $99.0 million, or $1.35 per share, for the third quarter of 2022.

FINANCIAL PERFORMANCE

	Three months ended
(unaudited)	September 30, 2022	June 30, 2022	September 30, 2021
Net income	$99.0 million	$89.0 million	$72.4 million
Basic earnings per common share	$1.35	$1.19	$0.93
Diluted earnings per common share	$1.35	$1.18	$0.93
Return on average assets	1.81%	1.69%	1.45%
Return on average total stockholders' equity	15.94%	14.62%	11.61%
Efficiency ratio	36.35%	39.06%	43.85%

THIRD QUARTER HIGHLIGHTS

Total loans increased to $18.1 billion, or 7.8% annualized, in the third quarter.
The net interest margin increased to 3.83% in the third quarter of 2022 from 3.22% in third quarter of 2021.
Earnings per share increased 14.1% compared to second quarter of 2022 and 45.2% when compared to same quarter in 2021.

“Net interest income for the quarter increased by 29.5% compared to the same quarter last year primarily as a result of loan growth and the higher level of interest rates. During the third quarter, we repurchased 1.08 million shares at an average cost of $42.88 per share, for a total of $46.3 million.” commented Chang M. Liu, President and Chief Executive Officer of the Company.

THIRD QUARTER INCOME STATEMENT REVIEW

Net income for the quarter ended September 30, 2022, was $99.0 million, an increase of $26.6 million, or 36.7%, compared to net income of $72.4 million for the same quarter a year ago. Diluted earnings per share for the quarter ended September 30, 2022, was $1.35 per share compared to $0.93 per share for the same quarter a year ago.

Return on average stockholders’ equity was 15.94% and return on average assets was 1.81% for the quarter ended September 30, 2022, compared to a return on average stockholders’ equity of 11.61% and a return on average assets of 1.45% for the same quarter a year ago.

Net interest income before provision for credit losses

Net interest income before provision for credit losses increased $45.0 million, or 29.5%, to $197.5 million during the third quarter of 2022, compared to $152.5 million during the same quarter a year ago. The increase was due primarily to an increase in interest income from loans and securities.

The net interest margin was 3.83% for the third quarter of 2022 compared to 3.22% for the third quarter of 2021 and 3.52% for the second quarter of 2022.

For the third quarter of 2022, the yield on average interest-earning assets was 4.38%, the cost of funds on average interest-bearing liabilities was 0.78%, and the cost of interest-bearing deposits was 0.69%. In comparison, for the third quarter of 2021, the yield on average interest-earning assets was 3.56%, the cost of funds on average interest-bearing liabilities was 0.48%, and the cost of interest-bearing deposits was 0.44%. The increase in the yield on average interest-earning assets resulted mainly from higher interest rates on loans and securities. 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 3.60% for the quarter ended September 30, 2022, compared to 3.08% for the same quarter a year ago.

Provision/(reversal) for credit losses

The Company recorded a provision for credit losses of $2.0 million in the third quarter of 2022 compared with $2.5 million in the second quarter of 2022 and $3.1 million in the third quarter of 2021. As of September 30, 2022, the allowance for loan losses increased $12.7 million to $148.8 million, or 0.82% of gross loans, compared to $136.2 million, or 0.83% of gross loans, as of December 31, 2021.

	Three months ended							Nine months ended September 30,
	September 30, 2022		June 30, 2022			September 30, 2021		2022		2021
	(In thousands) (Unaudited)
Charge-offs:
Commercial loans	$	2,091	$	50		$	2,649	$	2,362	$	19,499
Real estate loans ⁽¹⁾		137		1			3		138		3
Total charge-offs		2,228		51			2,652		2,500		19,502
Recoveries:
Commercial loans		1,576		175			121		2,109		1,545
Construction loans		—		—			76		6		76
Real estate loans⁽¹⁾		95		94			144		336		558
Total recoveries		1,671		269			341		2,451		2,179
Net charge-offs/(recoveries)	$	557	$	(218	)	$	2,311	$	49	$	17,323

(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 $9.9 million for the third quarter of 2022, a decrease of $2.3 million, or 18.9%, compared to $12.2 million for the third quarter of 2021. The decrease was primarily due to an increase of $3.7 million in unrealized losses on equity securities when compared to the same quarter a year ago.

Non-interest expense

Non-interest expense increased $3.2 million, or 4.4%, to $75.4 million in the third quarter of 2022 compared to $72.2 million in the same quarter a year ago. The increase in non-interest expense in the third quarter of 2022 was primarily due to an increase of $1.2 million in salaries and employee benefits and an increase of $1.1 million in marketing expense when compared to the same quarter a year ago. The efficiency ratio was 36.4% in the third quarter of 2022 compared to 43.9% for the same quarter a year ago.

Income taxes

The effective tax rate for the third quarter of 2022 was 23.8% compared to 19.1% for the third 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 $18.1 billion as of September 30, 2022, an increase of $1.8 billion, or 11.0%, from $16.3 billion as of December 31, 2021. The increase was primarily due to an increase of $385.0 million, or 12.9%, in commercial loans, an increase of $948.6 million, or 22.7%, in residential mortgage loans, which included $568.5 million from the acquisition of certain HSBC West Coast branches, and an increase of $534.5 million, or 6.6%, in commercial mortgage loans, offset, in part, by a decrease of $69.0 million, or 16.5%, in home equity loans. For the third quarter of 2022, total loans, increased by $318.9 million or 7.8% annualized.

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

	September 30, 2022			December 31, 2021			September 30, 2021
	(In thousands) (Unaudited)
Commercial loans	$	3,361,523		$	2,891,914		$	2,702,333
Paycheck protection program loans		5,914			90,485			169,360
Residential mortgage loans		5,130,650			4,182,006			4,144,789
Commercial mortgage loans		8,677,733			8,143,272			7,835,528
Equity lines		350,448			419,487			433,206
Real estate construction loans		573,421			611,031			688,195
Installment and other loans		7,114			4,284			3,370
Gross loans	$	18,106,803		$	16,342,479		$	15,976,781

Allowance for loan losses		(148,817	)		(136,157	)		(131,945	)
Unamortized deferred loan fees		(6,936	)		(4,321	)		(3,835	)
Total loans, net	$	17,951,050		$	16,202,001		$	15,841,001

Total deposits were $18.6 billion as of September 30, 2022, an increase of $517.8 million, or 2.9%, from $18.1 billion as of December 31, 2021. During the third quarter of 2022, our deposits increased by $288.4 million, or 6.4% annualized.

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

	September 30, 2022		December 31, 2021		September 30, 2021
	(In thousands) (Unaudited)
Non-interest-bearing demand deposits	$	4,398,152	$	4,492,054	$	4,024,504
NOW deposits		2,570,036		2,522,442		2,202,956
Money market deposits		4,935,266		4,611,579		4,132,912
Savings deposits		1,128,823		915,515		920,138
Time deposits		5,543,474		5,517,252		5,726,360
Total deposits	$	18,575,751	$	18,058,842	$	17,006,870

ASSET QUALITY REVIEW

As of September 30, 2022, total non-accrual loans were $68.1 million, an increase of $2.3 million, or 3.5%, from $65.8 million as of December 31, 2021, and a decrease of $557 thousand, or 0.8%, from $68.7 million as of September 30, 2021.

The allowance for loan losses was $148.8 million and the allowance for off-balance sheet unfunded credit commitments was $7.5 million as of September 30, 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 0.82% of period-end gross loans, and 208.7% of non-performing loans as of September 30, 2022. The comparable ratios were 0.83% of period-end gross loans, and 202.4% of non-performing loans as of December 31, 2021.

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

(Dollars in thousands) (Unaudited)	September 30, 2022			December 31, 2021			% Change		September 30, 2021			% Change
Non-performing assets
Accruing loans past due 90 days or more	$	3,172		$	1,439		120		$	4,333		(27	)
Non-accrual loans:
Construction loans		—			—		—			5,491		(100	)
Commercial mortgage loans		26,911			38,173		(30	)		36,968		(27	)
Commercial loans		26,604			16,558		61			17,098		56
Residential mortgage loans		14,601			11,115		31			9,125		60
Installment and other loans		9			—		—			—		—
Total non-accrual loans	$	68,125		$	65,846		3		$	68,682		(1	)
Total non-performing loans		71,297			67,285		6			73,015		(2	)
Other real estate owned		4,067			4,368		(7	)		5,251		(23	)
Total non-performing assets	$	75,364		$	71,653		5		$	78,266		(4	)
Accruing troubled debt restructurings (TDRs)	$	15,208		$	12,837		18		$	24,406		(38	)

Allowance for loan losses	$	148,817		$	136,157		9		$	131,945		13
Total gross loans outstanding, at period-end	$	18,106,803		$	16,342,479		11		$	15,976,781		13

Allowance for loan losses to non-performing loans, at period-end		208.73	%		202.36	%				180.71	%
Allowance for loan losses to gross loans, at period-end		0.82	%		0.83	%				0.83	%

The ratio of non-performing assets to total assets was 0.3% as of September 30, 2022, compared to 0.3% as of December 31, 2021. Total non-performing assets increased $3.7 million, or 5.2%, to $75.4 million as of September 30, 2022, compared to $71.7 million as of December 31, 2021, primarily due to an increase of $2.3 million, or 3.5%, in nonaccrual loans and an increase of $1.7 million, or 120.4%, in accruing loans past due 90 days or more, offset in part, by a decrease of $301 thousand, or 6.9%, in other real estate owned.

CAPITAL ADEQUACY REVIEW

As of September 30, 2022, the Company’s Tier 1 risk-based capital ratio of 12.06%, total risk-based capital ratio of 13.59%, and Tier 1 leverage capital ratio of 10.02%, 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%.

CONFERENCE CALL

Cathay General Bancorp will host a conference call to discuss its third quarter 2022 financial results this afternoon, Monday, October 24, 2022, 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 1-866-652-5200 and refer to Conference Code 10171990. 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 the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services. Cathay Bank currently operates 44 branches in California, 9 branches in New York State, four in Washington State, two in Illinois, two in Texas, one in Maryland, Massachusetts, Nevada, and New Jersey, one in Hong Kong, and a representative office in Taipei, Beijing, and Shanghai. Cathay Bank’s website is at www.cathaybank.com. Cathay General Bancorp’s website is at www.cathaygeneralbancorp.com. Information set forth on such websites is 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									Nine months ended September 30,
(Dollars in thousands, except per share data)	September 30, 2022			June 30, 2022			September 30, 2021			2022			2021

FINANCIAL PERFORMANCE
Net interest income before (reversal)/provision for credit losses	$	197,529		$	175,163		$	152,484		$	531,883		$	442,303
Provision/(reversal) for credit losses		2,000			2,500			3,050			13,143			(19,508	)
Net interest income after (reversal)/provision for credit losses		195,529			172,663			149,434			518,740			461,811
Non-interest income		9,876			14,618			12,216			44,726			34,799
Non-interest expense		75,388			74,123			72,215			222,208			213,325
Income before income tax expense		130,017			113,158			89,435			341,258			283,285
Income tax expense		30,982			24,180			17,038			78,217			60,305
Net income	$	99,035		$	88,978		$	72,397		$	263,041		$	222,980

Net income per common share
Basic	$	1.35		$	1.19		$	0.93		$	3.53		$	2.83
Diluted	$	1.35		$	1.18		$	0.93		$	3.52		$	2.82

Cash dividends paid per common share	$	0.34		$	0.34		$	0.31		$	1.02		$	0.93


SELECTED RATIOS
Return on average assets		1.81	%		1.69	%		1.45	%		1.66	%		1.54	%
Return on average total stockholders’ equity		15.94	%		14.62	%		11.61	%		14.35	%		12.11	%
Efficiency ratio		36.35	%		39.06	%		43.85	%		38.54	%		44.71	%
Dividend payout ratio		25.30	%		28.70	%		33.34	%		28.94	%		32.89	%


YIELD ANALYSIS (Fully taxable equivalent)
Total interest-earning assets		4.38	%		3.81	%		3.56	%		3.91	%		3.62	%
Total interest-bearing liabilities		0.78	%		0.41	%		0.48	%		0.53	%		0.56	%
Net interest spread		3.60	%		3.40	%		3.08	%		3.38	%		3.06	%
Net interest margin		3.83	%		3.52	%		3.22	%		3.54	%		3.22	%


CAPITAL RATIOS	September 30, 2022			December 31, 2021			September 30, 2021
Tier 1 risk-based capital ratio		12.06	%		12.80	%		13.29	%
Total risk-based capital ratio		13.59	%		14.41	%		14.93	%
Tier 1 leverage capital ratio		10.02	%		10.40	%		10.67	%
										.

CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In thousands, except share and per share data)	September 30, 2022			December 31, 2021			September 30, 2021

Assets
Cash and due from banks	$	200,051		$	134,141		$	156,287
Short-term investments and interest bearing deposits		1,063,294			2,315,563			1,667,875
Securities available-for-sale (amortized cost of $1,577,311 at September 30, 2022, $1,126,867 at December 31, 2021 and $1,073,074 at September 30, 2021)		1,414,411			1,127,309			1,079,216
Loans		18,106,803			16,342,479			15,976,781
Less: Allowance for loan losses		(148,817	)		(136,157	)		(131,945	)
Unamortized deferred loan fees, net		(6,936	)		(4,321	)		(3,835	)
Loans, net		17,951,050			16,202,001			15,841,001
Equity securities		23,123			22,319			20,117
Federal Home Loan Bank stock		17,250			17,250			17,250
Other real estate owned, net		4,067			4,368			5,251
Affordable housing investments and alternative energy partnerships, net		325,439			299,211			313,517
Premises and equipment, net		96,419			99,402			100,344
Customers’ liability on acceptances		6,899			8,112			13,185
Accrued interest receivable		71,177			56,994			56,844
Goodwill		375,696			372,189			372,189
Other intangible assets, net		6,948			4,627			4,831
Right-of-use assets- operating leases		30,679			27,834			29,179
Other assets		303,628			195,403			183,354
Total assets	$	21,890,131		$	20,886,723		$	19,860,440

Liabilities and Stockholders’ Equity
Deposits
Non-interest-bearing demand deposits	$	4,398,152		$	4,492,054		$	4,024,504
Interest-bearing deposits:
NOW deposits		2,570,036			2,522,442			2,202,956
Money market deposits		4,935,266			4,611,579			4,132,912
Savings deposits		1,128,823			915,515			920,138
Time deposits		5,543,474			5,517,252			5,726,360
Total deposits		18,575,751			18,058,842			17,006,870

Advances from the Federal Home Loan Bank		360,000			20,000			20,000
Other borrowings for affordable housing investments		22,651			23,145			23,197
Long-term debt		119,136			119,136			119,136
Acceptances outstanding		6,899			8,112			13,185
Lease liabilities - operating leases		33,931			30,694			32,028
Other liabilities		352,204			180,543			182,733
Total liabilities		19,470,572			18,440,472			17,397,149
Stockholders' equity		2,419,559			2,446,251			2,463,291
Total liabilities and equity	$	21,890,131		$	20,886,723		$	19,860,440

Book value per common share	$	32.96		$	32.29		$	31.89
Number of common shares outstanding		73,411,960			75,750,862			77,240,215

CATHAY GENERAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three months ended									Nine months ended September 30,
	September 30, 2022			June 30, 2022			September 30, 2021			2022		2021
	(In thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loan receivable, including loan fees	$	211,541		$	181,022		$	163,948		$	558,657	$	485,162
Investment securities		7,483			5,748			3,707			18,059		9,963
Federal Home Loan Bank stock		258			255			258			774		730
Deposits with banks		6,732			2,508			714			10,003		1,467
Total interest and dividend income		226,014			189,533			168,627			587,493		497,322

INTEREST EXPENSE
Time deposits		10,218			5,724			9,299			22,002		33,363
Other deposits		13,871			6,895			5,243			25,894		16,302
Advances from Federal Home Loan Bank		2,941			312			146			3,396		1,036
Long-term debt		1,455			1,439			1,455			4,318		4,318
Total interest expense		28,485			14,370			16,143			55,610		55,019

Net interest income before (reversal)/provision for credit losses		197,529			175,163			152,484			531,883		442,303
Provision/(reversal) for credit losses		2,000			2,500			3,050			13,143		(19,508	)
Net interest income after (reversal)/provision for credit losses		195,529			172,663			149,434			518,740		461,811

NON-INTEREST INCOME
Net (losses)/gains from equity securities		(3,661	)		(955	)		3			1,358		(3,628	)
Securities gains, net		—			—			—			—		853
Letters of credit commissions		1,609			1,602			1,764			4,767		5,236
Depository service fees		1,690			1,632			1,401			4,993		4,107
Wealth management fees		4,184			3,956			3,578			12,494		11,074
Other operating income		6,054			8,383			5,470			21,114		17,157
Total non-interest income		9,876			14,618			12,216			44,726		34,799

NON-INTEREST EXPENSE
Salaries and employee benefits		34,677			37,301			33,437			107,453		98,917
Occupancy expense		5,975			5,562			5,136			17,150		15,142
Computer and equipment expense		3,509			3,297			3,175			9,762		10,093
Professional services expense		6,337			7,704			6,232			20,738		16,698
Data processing service expense		3,484			3,420			3,524			9,813		10,422
FDIC and State assessments		2,003			2,194			1,830			5,999		5,195
Marketing expense		2,005			1,740			945			4,692		5,270
Other real estate owned expense/(income)		55			(33	)		(88	)		93		197
Amortization of investments in low income housing and alternative energy partnerships		11,949			7,235			12,411			27,471		34,663
Amortization of core deposit intangibles		250			250			172			724		515
Cost associated with debt redemption		—			—			—			—		732
Acquisition, integration and restructuring costs		59			91			476			4,086		476
Other operating expense		5,085			5,362			4,965			14,227		15,005
Total non-interest expense		75,388			74,123			72,215			222,208		213,325

Income before income tax expense		130,017			113,158			89,435			341,258		283,285
Income tax expense		30,982			24,180			17,038			78,217		60,305
Net income	$	99,035		$	88,978		$	72,397		$	263,041	$	222,980
Net income per common share:
Basic	$	1.35		$	1.19		$	0.93		$	3.53	$	2.83
Diluted	$	1.35		$	1.18		$	0.93		$	3.52	$	2.82

Cash dividends paid per common share	$	0.34		$	0.34		$	0.31		$	1.02	$	0.93
Basic average common shares outstanding		73,158,096			74,958,913			77,846,424			74,475,032		78,841,899
Diluted average common shares outstanding		73,444,096			75,268,485			78,153,408			74,799,324		79,128,644

CATHAY GENERAL BANCORP
AVERAGE BALANCES – SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)

	Three months ended
(In thousands)	September 30, 2022				June 30, 2022				September 30, 2021
Interest-earning assets	Average Balance		Average Yield/Rate ⁽¹⁾		Average Balance		Average Yield/Rate ⁽¹⁾		Average Balance		Average Yield/Rate ⁽¹⁾
Loans ⁽¹⁾	$	17,923,495	4.68	%	$	17,530,650	4.14	%	$	15,798,496	4.12	%
Taxable investment securities		1,364,013	2.18	%		1,249,679	1.84	%		1,058,004	1.39	%
FHLB stock		18,756	5.46	%		17,250	5.93	%		17,250	5.93	%
Deposits with banks		1,178,261	2.27	%		1,173,702	0.86	%		1,893,785	0.15	%
Total interest-earning assets	$	20,484,525	4.38	%	$	19,971,281	3.81	%	$	18,767,535	3.56	%

Interest-bearing liabilities
Interest-bearing demand deposits	$	2,508,526	0.30	%	$	2,459,940	0.13	%	$	2,109,632	0.10	%
Money market deposits		5,153,566	0.90	%		5,291,824	0.45	%		4,228,025	0.43	%
Savings deposits		1,151,126	0.07	%		1,183,821	0.07	%		914,540	0.07	%
Time deposits		5,013,213	0.81	%		4,881,365	0.47	%		5,882,576	0.63	%
Total interest-bearing deposits	$	13,826,431	0.69	%	$	13,816,950	0.37	%	$	13,134,773	0.44	%
Other borrowed funds		496,811	2.35	%		82,660	1.52	%		43,246	1.34	%
Long-term debt		119,136	4.85	%		119,136	4.85	%		119,136	4.84	%
Total interest-bearing liabilities		14,442,378	0.78	%		14,018,746	0.41	%		13,297,155	0.48	%

Non-interest-bearing demand deposits		4,456,214				4,391,925				3,830,485

Total deposits and other borrowed funds	$	18,898,592			$	18,410,671			$	17,127,640

Total assets	$	21,658,860			$	21,079,634			$	19,812,442
Total equity	$	2,465,193			$	2,441,128			$	2,473,166

	Nine months ended
(In thousands)	September 30, 2022				September 30, 2021
Interest-earning assets	Average Balance		Average Yield/Rate ⁽¹⁾		Average Balance		Average Yield/Rate ⁽¹⁾
Loans ⁽¹⁾	$	17,468,247	4.28	%	$	15,725,324	4.12	%
Taxable investment securities		1,263,341	1.91	%		1,010,328	1.32	%
FHLB stock		17,757	5.83	%		17,250	5.66	%
Deposits with banks		1,332,491	1.00	%		1,605,851	0.12	%
Total interest-earning assets	$	20,081,836	3.91	%	$	18,358,753	3.62	%

Interest-bearing liabilities
Interest-bearing demand deposits	$	2,456,556	0.17	%	$	1,989,833	0.12	%
Money market deposits		5,088,227	0.58	%		3,913,073	0.47	%
Savings deposits		1,137,485	0.07	%		885,863	0.09	%
Time deposits		5,060,286	0.58	%		6,105,604	0.73	%
Total interest-bearing deposits	$	13,742,554	0.47	%	$	12,894,373	0.51	%
Other borrowed funds		209,200	2.17	%		86,410	1.60	%
Long-term debt		119,136	4.85	%		119,136	4.85	%
Total interest-bearing liabilities		14,070,890	0.53	%		13,099,919	0.56	%

Non-interest-bearing demand deposits		4,403,195				3,613,026
Total deposits and other borrowed funds	$	18,474,085			$	16,712,945

Total assets	$	21,203,918			$	19,394,431
Total equity	$	2,450,650			$	2,461,895

(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.

		September 30, 2022			June 30, 2022			September 30, 2021

Stockholders' equity	(a)	$	2,419,559		$	2,431,532		$	2,463,291
Less: Goodwill			(375,696	)		(375,696	)		(372,189	)
Other intangible assets ⁽¹⁾			(6,948	)		(7,231	)		(4,831	)
Tangible equity	(b)	$	2,036,915		$	2,048,605		$	2,086,271

Total assets	(c)	$	21,890,131		$	21,235,553		$	19,860,440
Less: Goodwill			(375,696	)		(375,696	)		(372,189	)
Other intangible assets ⁽¹⁾			(6,948	)		(7,231	)		(4,831	)
Tangible assets	(d)	$	21,507,487		$	20,852,626		$	19,483,420

Number of common shares outstanding	(e)		73,411,960			74,421,884			77,240,215

Total stockholders' equity to total assets ratio	(a)/(c)		11.05	%		11.45	%		12.40	%
Tangible equity to tangible assets ratio	(b)/(d)		9.47	%		9.82	%		10.71	%
Tangible book value per share	(b)/(e)	$	27.75		$	27.53		$	27.01

		Three Months Ended									Nine Months Ended
		September 30, 2022			June 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net Income		$	99,035		$	88,978		$	72,397		$	263,041		$	222,980
Add: Amortization of other intangibles			250			277			205			724			626
Tax effect of amortization adjustments ⁽²⁾			(74	)		(82	)		(61	)		(215	)		(186	)
Tangible net income	(f)	$	99,211		$	89,173		$	72,541		$	263,550		$	223,420

Return on tangible common equity ⁽³⁾	(f)/(b)		19.48	%		17.41	%		13.91	%		17.25	%		14.28	%

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

Contacts

Heng W. Chen
(626) 279-3652