Cathay General Bancorp (CATY) Q4 2003 earnings summary

Executive summary

• FY03 net income reached a record $55.6M, up 14.1% YoY; diluted EPS was $2.85. Growth reflected merger-driven asset expansion and higher securities gains.

• The October 20 GBC Bancorp merger more than doubled year-end assets and materially expanded loans, deposits and construction lending.

Financial highlights

• Net interest income before provision rose 22.1% to $127.1M; provision for loan losses was $7.15M versus $6.0M in 2002.

• Non-interest income increased 42.2% to $23.0M, including $9.89M securities gains; non-interest expense rose 27.3% to $55.1M, mainly reflecting the merger.

• Q4 net income was $16.764M and diluted EPS $0.71, versus $12.069M and $0.67 in Q4 2002.

• Year-end assets were $5.54B, loans $3.31B, deposits $4.43B and stockholders’ equity $619.3M.

Outlook and guidance

• Integration efforts continued; six branches were planned for closure and consolidation in or after April 2004 as part of post-merger integration.

• Management expected time-deposit maturities to cause some outflows, but anticipated they would not be significant and could be replenished through normal deposit growth; liquidity was viewed as adequate for 12 months.

• No REIT tax benefits were expected in 2004; repayment of prior RIC tax benefits, interest and penalties remained possible if the FTB position prevailed.