Cathay General Bancorp (CATY) Q4 2005 earnings summary

Executive summary

• FY 2005 net income was $104.1M, or $2.05 diluted EPS, versus $86.8M and $1.72 in 2004; organic loan growth and improved net interest margin drove results.

• Q4 2005 net income was $26.7M and diluted EPS was $0.53; gross loans rose 21.3% YoY to $4.65B and deposits increased 7.0% to $4.92B.

Financial highlights

• Net interest income was $240.4M in 2005, up from $214.8M in 2004; taxable-equivalent net interest margin rose to 4.26% from 4.09%.

• Interest income totaled $350.7M and interest expense $110.3M in 2005; non-interest income was $22.5M and non-interest expense was $96.9M.

• Provision for loan losses was a $0.5M reversal in 2005; net charge-offs were $2.1M, or 0.05% of average loans, versus $2.9M, or 0.08%, in 2004.

• Total assets increased 4.9% to $6.40B; net loans were $4.57B, securities available-for-sale $1.22B, and stockholders’ equity $773.6M at year-end.

Outlook and guidance

• The February 2006 Great Eastern Bank deal was expected to close in April 2006, subject to conditions; consideration includes $101M cash, with stock comprising 45%–60% of total consideration.

• Management expected liquidity sources to cover operating needs for the next 12 months; approximately 90% of time deposits matured within one year, with expected runoff considered replenishable through normal deposit growth.

• At year-end, a +100 bps rate shock was modeled to increase next-12-month net interest income 3.3%; a -100 bps shock was modeled to decrease it 4.4%.