CATHAY
GENERAL BANCORP
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
95-4274680
|
|
(State
of other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
777
North Broadway, Los Angeles, California
|
90012
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Large
accelerated filer R
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
PART
I - FINANCIAL INFORMATION
|
4
|
Item
1. FINANCIAL STATEMENTS (Unaudited)
|
4
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
|
7
|
Item
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATIONS
|
17
|
Item
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
40
|
Item
4. CONTROLS AND PROCEDURES
|
41
|
PART
II - OTHER INFORMATION
|
41
|
Item
1. LEGAL PROCEEDINGS
|
41
|
Item
1A.RISK FACTORS
|
42
|
Item
2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
42
|
Item
3. DEFAULTS UPON SENIOR SECURITIES
|
43
|
Item
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
43
|
Item
5. OTHER INFORMATION
|
43
|
Item
6. EXHIBITS
|
44
|
SIGNATURES
|
45
|
·
|
expansion
into new market areas;
|
·
|
acquisitions
of other banks, if any;
|
·
|
fluctuations
in interest rates;
|
·
|
demographic
changes;
|
·
|
earthquake
or other natural disasters;
|
·
|
competitive
pressures;
|
·
|
deterioration
in asset or credit quality;
|
· |
legislative
and regulatory developments;
|
·
|
changes
in business strategy; and
|
·
|
general
economic or business conditions in California and other regions where
the
Bank has operations.
|
September
30, 2007
|
December
31, 2006
|
%
change
|
||||||||
(In
thousands, except share and per share data)
|
||||||||||
Assets
|
||||||||||
Cash
and due from banks
|
$
|
83,276
|
$
|
114,798
|
(27
|
)
|
||||
Federal
funds sold
|
-
|
18,000
|
(100
|
)
|
||||||
Cash
and cash equivalents
|
83,276
|
132,798
|
(37
|
)
|
||||||
Short-term
investments
|
17,152
|
16,379
|
5
|
|||||||
Securities
purchased under agreements to resell
|
360,000
|
-
|
100
|
|||||||
Long-term
certificates of deposit
|
50,000
|
-
|
100
|
|||||||
Securities
available-for sale, at fair value (amortized cost of $2,060,542
at
September 30, 2007 and $1,543,667 at December 31,
2006)
|
2,043,529
|
1,522,223
|
34
|
|||||||
Trading
securities
|
10,171
|
5,309
|
92
|
|||||||
Loans
|
6,439,407
|
5,747,546
|
12
|
|||||||
Less:
Allowance for loan losses
|
(66,277
|
)
|
(64,689
|
)
|
2
|
|||||
Unamortized
deferred loan fees, net
|
(11,054
|
)
|
(11,984
|
)
|
(8
|
)
|
||||
Loans,
net
|
6,362,076
|
5,670,873
|
12
|
|||||||
Federal
Home Loan Bank stock
|
51,620
|
34,348
|
50
|
|||||||
Other
real estate owned, net
|
374
|
5,259
|
(93
|
)
|
||||||
Affordable
housing investments, net
|
94,669
|
87,289
|
8
|
|||||||
Premises
and equipment, net
|
74,905
|
72,934
|
3
|
|||||||
Customers’
liability on acceptances
|
32,685
|
27,040
|
21
|
|||||||
Accrued
interest receivable
|
54,313
|
39,267
|
38
|
|||||||
Goodwill
|
319,873
|
316,752
|
1
|
|||||||
Other
intangible assets, net
|
37,883
|
42,987
|
(12
|
)
|
||||||
Other
assets
|
35,854
|
53,050
|
(32
|
)
|
||||||
Total
assets
|
$
|
9,628,380
|
$
|
8,026,508
|
20
|
|||||
Liabilities
and Stockholders’ Equity
|
||||||||||
Deposits
|
||||||||||
Non-interest-bearing
demand deposits
|
$
|
778,690
|
$
|
781,492
|
(0
|
)
|
||||
Interest-bearing
deposits:
|
||||||||||
NOW
deposits
|
228,659
|
239,589
|
(5
|
)
|
||||||
Money
market deposits
|
697,721
|
657,689
|
6
|
|||||||
Savings
deposits
|
336,743
|
358,827
|
(6
|
)
|
||||||
Time
deposits under $100,000
|
1,095,348
|
1,007,637
|
9
|
|||||||
Time
deposits of $100,000 or more
|
2,933,645
|
2,630,072
|
12
|
|||||||
Total
deposits
|
6,070,806
|
5,675,306
|
7
|
|||||||
Federal
funds purchased
|
98,000
|
50,000
|
96
|
|||||||
Securities
sold under agreement to repurchase
|
1,108,710
|
400,000
|
177
|
|||||||
Advances
from the Federal Home Loan Bank
|
1,089,680
|
714,680
|
52
|
|||||||
Other
borrowings
|
3,351
|
10,000
|
(66
|
)
|
||||||
Other
borrowings for affordable housing investments
|
19,670
|
19,981
|
(2
|
)
|
||||||
Long-term
debt
|
171,136
|
104,125
|
64
|
|||||||
Acceptances
outstanding
|
32,685
|
27,040
|
21
|
|||||||
Minority
interest in consolidated subsidiary
|
8,500
|
8,500
|
-
|
|||||||
Other
liabilities
|
76,923
|
73,802
|
4
|
|||||||
Total
liabilities
|
8,679,461
|
7,083,434
|
23
|
|||||||
Commitments
and contingencies
|
-
|
-
|
-
|
|||||||
Stockholders’
Equity
|
||||||||||
Preferred
stock, $0.01 par value; 10,000,000 shares authorized, none
issued
|
-
|
-
|
-
|
|||||||
Common
stock, $0.01 par value, 100,000,000 shares authorized, 53,471,096
issued
and 49,813,181 outstanding at September 30, 2007 and 53,309,317
issued and
51,930,955 outstanding at December 31, 2006
|
535
|
533
|
0
|
|||||||
Additional
paid-in-capital
|
477,039
|
467,591
|
2
|
|||||||
Accumulated
other comprehensive loss, net
|
(9,860
|
)
|
(12,428
|
)
|
(21
|
)
|
||||
Retained
earnings
|
591,424
|
520,689
|
14
|
|||||||
Treasury
stock, at cost (3,657,915 shares at September 30, 2007 and 1,378,362
shares at December 31, 2006)
|
(110,219
|
)
|
(33,311
|
)
|
231
|
|||||
Total
stockholders’ equity
|
948,919
|
943,074
|
1
|
|||||||
Total
liabilities and stockholders’ equity
|
$
|
9,628,380
|
$
|
8,026,508
|
20
|
Three
months ended September 30,
|
Nine
months ended September 30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(In
thousands, except share and per share data)
|
|||||||||||||
INTEREST
AND DIVIDEND INCOME
|
|||||||||||||
Loan
receivable, including loan fees
|
$
|
123,925
|
$
|
110,321
|
$
|
356,841
|
$
|
304,566
|
|||||
Investment
securities- taxable
|
25,127
|
17,779
|
71,381
|
46,305
|
|||||||||
Investment
securities- nontaxable
|
443
|
687
|
1,625
|
2,116
|
|||||||||
Federal
Home Loan Bank stock
|
639
|
383
|
1,689
|
1,100
|
|||||||||
Agency
preferred stock
|
174
|
295
|
512
|
799
|
|||||||||
Federal
funds sold and securities purchased under agreements to
resell
|
7,615
|
30
|
15,382
|
160
|
|||||||||
Deposits
with banks
|
1,248
|
105
|
3,288
|
259
|
|||||||||
|
|||||||||||||
Total
interest and dividend income
|
159,171
|
129,600
|
450,718
|
355,305
|
|||||||||
|
|||||||||||||
INTEREST
EXPENSE
|
|||||||||||||
Time
deposits of $100,000 or more
|
34,475
|
27,983
|
97,527
|
73,810
|
|||||||||
Other
deposits
|
20,068
|
15,376
|
56,739
|
37,983
|
|||||||||
Securities
sold under agreements to repurchase
|
9,865
|
4,658
|
23,126
|
11,183
|
|||||||||
Advances
from Federal Home Loan Bank
|
11,472
|
8,621
|
34,930
|
19,315
|
|||||||||
Long-term
debt
|
3,182
|
1,207
|
8,057
|
3,359
|
|||||||||
Short-term
borrowings
|
282
|
1,072
|
1,263
|
2,780
|
|||||||||
|
|||||||||||||
Total
interest expense
|
79,344
|
58,917
|
221,642
|
148,430
|
|||||||||
|
|||||||||||||
Net
interest income before provision for loan losses
|
79,827
|
70,683
|
229,076
|
206,875
|
|||||||||
Provision/(Reversal)
for loan losses
|
2,200
|
(1,000
|
)
|
5,300
|
2,000
|
||||||||
|
|||||||||||||
Net
interest income after provision for loan losses
|
77,627
|
71,683
|
223,776
|
204,875
|
|||||||||
NON-INTEREST
INCOME
|
|||||||||||||
Securities
gains, net
|
88
|
206
|
268
|
236
|
|||||||||
Letters
of credit commissions
|
1,622
|
1,441
|
4,349
|
4,046
|
|||||||||
Depository
service fees
|
1,146
|
1,138
|
3,529
|
3,630
|
|||||||||
Gains
from sale of premises and equipment
|
2,705
|
-
|
2,714
|
-
|
|||||||||
Other
operating income
|
3,298
|
2,619
|
10,045
|
8,317
|
|||||||||
|
|||||||||||||
Total
non-interest income
|
8,859
|
5,404
|
20,905
|
16,229
|
|||||||||
|
|||||||||||||
NON-INTEREST
EXPENSE
|
|||||||||||||
Salaries
and employee benefits
|
16,893
|
15,949
|
50,756
|
46,060
|
|||||||||
Occupancy
expense
|
3,159
|
2,637
|
9,035
|
7,444
|
|||||||||
Computer
and equipment expense
|
2,432
|
1,876
|
7,209
|
5,544
|
|||||||||
Professional
services expense
|
2,388
|
2,176
|
6,659
|
5,396
|
|||||||||
FDIC
and State assessments
|
284
|
259
|
804
|
761
|
|||||||||
Marketing
expense
|
608
|
723
|
2,413
|
2,328
|
|||||||||
Other
real estate owned expense
|
23
|
16
|
284
|
513
|
|||||||||
Operations
of affordable housing investments
|
2,540
|
1,429
|
4,928
|
4,027
|
|||||||||
Amortization
of core deposit intangibles
|
1,767
|
1,801
|
5,298
|
4,778
|
|||||||||
Other
operating expense
|
3,128
|
2,517
|
8,350
|
6,928
|
|||||||||
|
|||||||||||||
Total
non-interest expense
|
33,222
|
29,383
|
95,736
|
83,779
|
|||||||||
|
|||||||||||||
Income
before income tax expense
|
53,264
|
47,704
|
148,945
|
137,325
|
|||||||||
Income
tax expense
|
19,258
|
17,046
|
54,392
|
50,279
|
|||||||||
Net
income
|
34,006
|
30,658
|
94,553
|
87,046
|
|||||||||
Other
comprehensive income, net of tax
|
|||||||||||||
Unrealized
holding gains arising during the period
|
5,968
|
12,181
|
2,358
|
1,040
|
|||||||||
Less:
reclassification adjustments included in net income
|
(10
|
)
|
133
|
(210
|
)
|
109
|
|||||||
Total
other comprehensive income, net of tax
|
5,978
|
12,048
|
2,568
|
931
|
|||||||||
Total
comprehensive income
|
$
|
39,984
|
$
|
42,706
|
$
|
97,121
|
$
|
87,977
|
|||||
|
|||||||||||||
Net
income per common share:
|
|||||||||||||
Basic
|
$
|
0.68
|
$
|
0.60
|
$
|
1.87
|
$
|
1.71
|
|||||
Diluted
|
$
|
0.67
|
$
|
0.59
|
$
|
1.84
|
$
|
1.69
|
|||||
|
|||||||||||||
Cash
dividends paid per common share
|
$
|
0.105
|
$
|
0.090
|
$
|
0.300
|
$
|
0.270
|
|||||
Basic
average common shares outstanding
|
49,828,379
|
51,507,434
|
50,683,650
|
51,046,270
|
|||||||||
Diluted
average common shares outstanding
|
50,417,332
|
52,111,032
|
51,283,317
|
51,637,975
|
Nine
Months Ended September 30
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Cash
Flows from Operating Activities
|
|||||||
Net
income
|
$
|
94,553
|
$
|
87,046
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Provision
for loan losses
|
5,300
|
2,000
|
|||||
Provision
for losses on other real estate owned
|
210
|
283
|
|||||
Deferred
tax benefit
|
(3,162
|
)
|
(1,938
|
)
|
|||
Depreciation
|
3,183
|
2,698
|
|||||
Net
gains on sale of other real estate owned
|
(29
|
)
|
-
|
||||
Net
gains on sale of loans held for sale
|
(125
|
)
|
(213
|
)
|
|||
Proceeds
from sale of loans held for sale
|
2,532
|
4,232
|
|||||
Originations
of loans held for sale
|
(2,375
|
)
|
(3,934
|
)
|
|||
Purchase
of trading securities
|
(5,000
|
)
|
-
|
||||
Write-downs
on venture capital investments
|
630
|
876
|
|||||
Gain
on sales and calls of securities
|
(268
|
)
|
(236
|
)
|
|||
Decrease
/ (increase) in fair value of warrants
|
90
|
(909
|
)
|
||||
Other
non-cash interest
|
190
|
860
|
|||||
Amortization
of security premiums, net
|
1,310
|
2,806
|
|||||
Amortization
of intangibles
|
5,474
|
4,865
|
|||||
Excess
tax benefit from stock options
|
(503
|
)
|
(411
|
)
|
|||
Stock
based compensation expense
|
5,694
|
6,016
|
|||||
Gain
on sale of premises and equipment
|
(2,714
|
)
|
-
|
||||
Increase
in accrued interest receivable
|
(14,775
|
)
|
(8,074
|
)
|
|||
Decrease
in other assets, net
|
2,238
|
3,618
|
|||||
Increase
in other liabilities
|
10,447
|
7,504
|
|||||
|
|||||||
Net
cash provided by operating activities
|
102,900
|
107,089
|
|||||
|
|||||||
Cash
Flows from Investing Activities
|
|||||||
Increase
in short-term investments
|
(773
|
)
|
-
|
||||
Increase
in long-term certificates of deposit
|
(50,000
|
)
|
-
|
||||
Increase
in securities purchased under agreements to resell
|
(360,000
|
)
|
-
|
||||
Purchase
of investment securities available-for-sale
|
(944,144
|
)
|
(388,101
|
)
|
|||
Proceeds
from maturity and call of investment securities
available-for-sale
|
231,465
|
78,175
|
|||||
Proceeds
from sale of investment securities available-for-sale
|
101,169
|
5,408
|
|||||
Proceeds
from repayment and sale of mortgage-backed securities
available-for-sale
|
107,909
|
124,167
|
|||||
Exercise
of warrants to acquire common stock
|
-
|
(2,209
|
)
|
||||
Proceeds
from sale of common stock acquired from exercise of
warrants
|
-
|
3,679
|
|||||
Purchase
of Federal Home Loan Bank stock
|
(15,248
|
)
|
(5,312
|
)
|
|||
Redemption
of Federal Home Loan Bank stock
|
1,093
|
1,295
|
|||||
Net
increase in loans
|
(654,072
|
)
|
(660,002
|
)
|
|||
Purchase
of premises and equipment
|
(6,907
|
)
|
(17,208
|
)
|
|||
Proceeds
from sales of premises and equipment
|
6,948
|
-
|
|||||
Proceeds
from sale of other real estate owned
|
1,717
|
-
|
|||||
Net
increase in investment in affordable housing
|
(10,873
|
)
|
(5,668
|
)
|
|||
Acquisitions,
net of cash acquired
|
(3,655
|
)
|
(25,810
|
)
|
|||
|
|||||||
Net
cash used in investing activities
|
(1,595,371
|
)
|
(891,586
|
)
|
|||
|
|||||||
Cash
Flows from Financing Activities
|
|||||||
Net
decrease in demand deposits, NOW accounts, money market and saving
deposits
|
(10,769
|
)
|
(64,210
|
)
|
|||
Net
increase in time deposits
|
352,103
|
321,401
|
|||||
Net
increase in federal funds purchased and securities sold under agreement
to
repurchase
|
756,710
|
91,000
|
|||||
Advances
from Federal Home Loan Bank
|
2,668,000
|
2,097,230
|
|||||
Repayment
of Federal Home Loan Bank borrowings
|
(2,293,000
|
)
|
(1,717,050
|
)
|
|||
Cash
dividends
|
(15,294
|
)
|
(13,786
|
)
|
|||
Proceeds
from other borrowings
|
22,351
|
15,000
|
|||||
Repayment
of other borrowings
|
(29,000
|
)
|
-
|
||||
Issuance
of long term debt
|
65,000
|
50,000
|
|||||
Proceeds
from shares issued to Dividend Reinvestment Plan
|
1,837
|
2,002
|
|||||
Proceeds
from exercise of stock options
|
1,416
|
1,873
|
|||||
Excess
tax benefits from share-based payment arrangements
|
503
|
411
|
|||||
Purchases
of treasury stock
|
(76,908
|
)
|
-
|
||||
|
|||||||
Net
cash provided by financing activities
|
1,442,949
|
783,871
|
|||||
|
|||||||
Decrease
in cash and cash equivalents
|
(49,522
|
)
|
(626
|
)
|
|||
Cash
and cash equivalents, beginning of the period
|
132,798
|
109,275
|
|||||
|
|||||||
Cash
and cash equivalents, end of the year
|
$
|
83,276
|
$
|
108,649
|
|||
|
|||||||
|
|||||||
Supplemental
disclosure of cash flow information
|
|||||||
Cash
paid during the period:
|
|||||||
Interest
|
$
|
217,353
|
$
|
138,921
|
|||
Income
taxes
|
$
|
51,679
|
$
|
53,134
|
|||
Non-cash
investing and financing activities:
|
|||||||
Net
change in unrealized holding loss on securities available-for-sale,
net of
tax
|
$
|
2,568
|
$
|
931
|
|||
Cumulative
effect adjustment as result of adoption of FASB Interpretation
No. 48
Accounting for Uncertainty in Income Taxes
|
$
|
(8,524
|
)
|
$
|
-
|
||
Transfers
to other real estate owned
|
$
|
373
|
$
|
3,087
|
|||
Loans
to facilitate the sale of other real estate owned
|
$
|
3,360
|
$
|
-
|
|||
Loans
to facilitate the sale of fixed assets
|
$
|
1,940
|
$
|
-
|
United
Heritage Bank
|
||||
Assets
acquired:
|
|
|||
Cash
and cash equivalents
|
$
|
5,745
|
||
Securities
available-for-sale
|
14,305
|
|||
Loans,
net
|
37,681
|
|||
Premises
and equipment, net
|
432
|
|||
Goodwill
|
3,878
|
|||
Core
deposit intangible
|
341
|
|||
Other
assets
|
2,371
|
|||
|
||||
Total
assets acquired
|
64,753
|
|||
Liabilities
assumed:
|
||||
Deposits
|
54,166
|
|||
Accrued
interest payable
|
9
|
|||
Other
liabilities
|
1,178
|
|||
Total
liabilities assumed
|
55,353
|
|||
Net
assets acquired and cash paid
|
$
|
9,400
|
|
Severance
and
|
Asset
|
Legal
and
|
Lease
|
||||||||||||
(Dollar
in thousands)
|
Employee-related
|
Write-downs
|
Professional
Fees
|
Liability
|
Total
|
|||||||||||
Balance
at December 31, 2006
|
$
|
37
|
$
|
-
|
$
|
5
|
$
|
778
|
$
|
820
|
||||||
United
Heritage Bank acquisition
|
300
|
17
|
421
|
-
|
738
|
|||||||||||
Non-cash
write-downs and other
|
-
|
(17
|
)
|
-
|
-
|
(17
|
)
|
|||||||||
Cash
outlays
|
(49
|
)
|
-
|
(426
|
)
|
(118
|
)
|
(593
|
)
|
|||||||
Balance
at September 30, 2007
|
$
|
288
|
$
|
-
|
$
|
-
|
$
|
660
|
$
|
948
|
For
the three months ended September 30,
|
For
the nine months ended September 30,
|
||||||||||||
(Dollars
in thousands, except share and per share data)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Net
income
|
$
|
34,006
|
$
|
30,658
|
$
|
94,553
|
$
|
87,046
|
|||||
Weighted-average
shares:
|
|||||||||||||
Basic
weighted-average number of common shares outstanding
|
49,828,379
|
51,507,434
|
50,683,650
|
51,046,270
|
|||||||||
Dilutive
effect of weighted-average outstanding common shares
equivalents
|
|||||||||||||
Stock
Options
|
580,602
|
597,959
|
593,503
|
586,044
|
|||||||||
Restricted
Stock
|
8,351
|
5,639
|
6,164
|
5,661
|
|||||||||
Diluted
weighted-average number of common shares outstanding
|
50,417,332
|
52,111,032
|
51,283,317
|
51,637,975
|
|||||||||
Average
shares of stock options with anti-dilutive effect
|
1,438,436
|
1,481,394
|
1,446,152
|
1,526,181
|
|||||||||
Earnings
per share:
|
|||||||||||||
Basic
|
$
|
0.68
|
$
|
0.60
|
$
|
1.87
|
$
|
1.71
|
|||||
Diluted
|
$
|
0.67
|
$
|
0.59
|
$
|
1.84
|
$
|
1.69
|
Nine
months ended
|
||||
September
30, 2006
|
||||
Expected
life- number of years
|
6.50
|
|||
Risk-free
interest rate
|
4.39
|
%
|
||
Volatility
|
33.17
|
%
|
||
Dividend
yield
|
1.20
|
%
|
For
the three months ended September 30,
|
For
the nine months ended September 30,
|
||||||||||||
(In
thousands, except shares)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Shares
of option exercised
|
6,000
|
18,694
|
84,236
|
89,776
|
|||||||||
Cash
received from option exercised
|
$
|
75
|
$
|
377
|
$
|
1,416
|
$
|
1,873
|
|||||
Aggregate
intrinsic value for option exercised
|
$
|
132
|
$
|
315
|
$
|
1,420
|
$
|
1,442
|
2007
|
2006
|
||||||||||||
(In
thousands, except shares)
|
Vested
Shares
|
Fair
Value
|
Vested
Shares
|
Fair
Value
|
|||||||||
1st
Quarter
|
504,539
|
$
|
5,079
|
514,398
|
$
|
4,393
|
|||||||
2nd
Quarter
|
11,000
|
$
|
108
|
9,200
|
$
|
73
|
|||||||
3rd
Quarter
|
-
|
$
|
-
|
-
|
$
|
-
|
|
Weighted-Average
|
Aggregate
|
|||||||||||
Weighted-Average
|
Remaining
Contractual
|
Intrinsic
|
|||||||||||
Shares
|
Exercise
Price
|
Life
(in years)
|
Value
(in thousands)
|
||||||||||
Balance
at December 31, 2006
|
4,783,027
|
$
|
28.09
|
7.0
|
$
|
34,011
|
|||||||
|
|||||||||||||
Granted
|
-
|
-
|
|||||||||||
Forfeited
|
(9,706
|
)
|
36.19
|
||||||||||
Exercised
|
(63,522
|
)
|
16.22
|
||||||||||
|
|||||||||||||
Balance
at March 31, 2007
|
4,709,799
|
$
|
28.24
|
6.8
|
$
|
31,114
|
|||||||
|
|||||||||||||
Granted
|
-
|
-
|
|||||||||||
Forfeited
|
(17,642
|
)
|
32.67
|
||||||||||
Exercised
|
(14,714
|
)
|
21.06
|
||||||||||
|
|||||||||||||
Balance
at June 30, 2007
|
4,677,443
|
$
|
28.24
|
6.5
|
$
|
30,869
|
|||||||
|
|||||||||||||
Granted
|
-
|
-
|
|||||||||||
Forfeited
|
(11,026
|
)
|
36.42
|
||||||||||
Exercised
|
(6,000
|
)
|
12.56
|
||||||||||
|
|||||||||||||
Balance
at September 30, 2007
|
4,660,417
|
$
|
28.24
|
6.3
|
$
|
29,160
|
|||||||
|
|||||||||||||
Exercisable
at September 30, 2007
|
2,761,629
|
$
|
25.42
|
5.6
|
$
|
20,978
|
Grant
date
|
Grant
date
|
||||||
January
25, 2006
|
January
31, 2007
|
||||||
Grant
shares
|
30,000
|
20,000
|
|||||
Vested
ratably over
|
3
years
|
2
years
|
|||||
Price
per share at grant
|
$
|
36.24
|
$
|
34.66
|
|||
Vested
shares
|
10,000
|
-
|
|||||
Unvested
shares
|
20,000
|
20,000
|
For
the three months ended September 30,
|
For
the nine months ended September 30,
|
||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
|
|||||||||||||
Benefit
of tax deductions in excess of grant-date fair value
|
$
|
53
|
$
|
48
|
$
|
503
|
$
|
411
|
|||||
Benefit
of tax deductions on
|
|||||||||||||
grant-date
fair value
|
3
|
84
|
94
|
195
|
|||||||||
Total
benefit of tax deductions
|
$
|
56
|
$
|
132
|
$
|
597
|
$
|
606
|
(In
thousands)
|
At
September 30, 2007
|
At
December 31, 2006
|
|||||
Commitments
to extend credit
|
$
|
2,330,514
|
$
|
2,178,640
|
|||
Standby
letters of credit
|
69,085
|
81,292
|
|||||
Other
letters of credit
|
86,017
|
79,803
|
|||||
Bill
of lading guarantees
|
646
|
223
|
|||||
Total
|
$
|
2,486,262
|
$
|
2,339,958
|
·
|
Third
quarter earnings increased $3.3 million, or 10.9%, compared to the
same
quarter a year ago.
|
·
|
Third
quarter diluted earnings per share reached $0.67, increasing 13.6%,
compared to $0.59 per share the same quarter a year
ago.
|
·
|
Return
on average assets was 1.46% for the quarter ended September 30, 2007,
compared to 1.40% for the quarter ended June 30, 2007 and compared
to
1.60% for the same quarter a year
ago.
|
·
|
Return
on average stockholders’ equity was 14.45% for the quarter ended September
30, 2007, compared to 13.13% for the quarter ended June 30, 2007,
and
compared to 13.76% for the same quarter a year
ago.
|
·
|
Gross
loans increased by $264.6 million, or 4.3%, from $6.2 billion at
June 30,
2007, to $6.4 billion at September 30,
2007.
|
·
|
Deposits
totaled $6.1 billion at September 30, 2007, which increased by $228.8
million, or 3.9%, from $5.8 billion at June
30.
|
Third
Quarter 2007
|
Third
Quarter 2006
|
||||||
Net
income
|
$
|
34.0
million
|
$
|
30.7
million
|
|||
Basic
earnings per share
|
$
|
0.68
|
$
|
0.60
|
|||
Diluted
earnings per share
|
$
|
0.67
|
$
|
0.59
|
|||
Return
on average assets
|
1.46
|
%
|
1.60
|
%
|
|||
Return
on average stockholders’ equity
|
14.45
|
%
|
13.76
|
%
|
|||
Efficiency
ratio
|
37.46
|
%
|
38.62
|
%
|
Interest-Earning
Assets and Interest-Bearing
Liabilities
|
Three
months ended September 30,
|
2007
|
2006
|
|||||||||||||||||
|
Interest
|
Average
|
Interest
|
Average
|
|||||||||||||||
Taxable-equivalent
basis
|
Average
|
Income/
|
Yield/
|
Average
|
Income/
|
Yield/
|
|||||||||||||
(Dollars
in thousands)
|
Balance
|
Expense
|
Rate
(1)(2)
|
Balance
|
Expense
|
Rate
(1)(2)
|
|||||||||||||
Interest
Earning Assets
|
|||||||||||||||||||
Commercial
loans
|
$
|
1,320,611
|
$
|
27,110
|
8.14
|
%
|
$
|
1,126,348
|
$
|
23,755
|
8.37
|
%
|
|||||||
Residential
mortgage
|
622,793
|
9,769
|
6.27
|
499,690
|
7,454
|
5.97
|
|||||||||||||
Commercial
mortgage
|
3,560,243
|
68,869
|
7.67
|
3,165,728
|
62,608
|
7.85
|
|||||||||||||
Real
estate construction loans
|
768,117
|
17,801
|
9.19
|
656,995
|
16,242
|
9.81
|
|||||||||||||
Other
loans and leases
|
26,688
|
376
|
5.59
|
30,195
|
262
|
3.44
|
|||||||||||||
Total
loans and leases (1)
|
6,298,452
|
123,925
|
7.81
|
5,478,956
|
110,321
|
7.99
|
|||||||||||||
Taxable
securities
|
1,769,245
|
25,127
|
5.63
|
1,345,854
|
17,779
|
5.24
|
|||||||||||||
Tax-exempt
securities (3)
|
55,217
|
921
|
6.62
|
83,368
|
1,463
|
6.96
|
|||||||||||||
FHLB
& FRB Stock
|
50,297
|
639
|
5.04
|
34,974
|
383
|
4.34
|
|||||||||||||
Interest
bearing deposits
|
71,843
|
1,248
|
6.89
|
10,837
|
105
|
3.84
|
|||||||||||||
Federal
funds sold & securities purchased
|
|||||||||||||||||||
under
agreements to resell
|
371,413
|
7,615
|
8.13
|
2,293
|
30
|
5.19
|
|||||||||||||
Total
interest-earning assets
|
8,616,467
|
159,475
|
7.34
|
6,956,282
|
130,081
|
7.42
|
|||||||||||||
Non-interest
earning assets
|
|||||||||||||||||||
Cash
and due from banks
|
84,176
|
100,869
|
|||||||||||||||||
Other
non-earning assets
|
639,999
|
601,042
|
|||||||||||||||||
Total
non-interest earning assets
|
724,175
|
701,911
|
|||||||||||||||||
Less:
Allowance for loan losses
|
(65,902
|
)
|
(65,743
|
)
|
|||||||||||||||
Deferred
loan fees
|
(11,584
|
)
|
(13,385
|
)
|
|||||||||||||||
Total
assets
|
$
|
9,263,156
|
$
|
7,579,065
|
|||||||||||||||
Interest
bearing liabilities:
|
|||||||||||||||||||
Interest
bearing demand accounts
|
$
|
233,116
|
$
|
755
|
1.28
|
$
|
228,854
|
$
|
726
|
1.26
|
|||||||||
Money
market accounts
|
699,679
|
5,610
|
3.18
|
606,914
|
4,352
|
2.84
|
|||||||||||||
Savings
accounts
|
342,971
|
873
|
1.01
|
375,043
|
904
|
0.96
|
|||||||||||||
Time
deposits
|
3,935,125
|
47,305
|
4.77
|
3,409,894
|
37,377
|
4.35
|
|||||||||||||
Total
interest-bearing deposits
|
5,210,891
|
54,543
|
4.15
|
4,620,705
|
43,359
|
3.72
|
|||||||||||||
Federal
funds purchased
|
22,863
|
279
|
4.84
|
39,359
|
531
|
5.35
|
|||||||||||||
Securities
sold under agreement to repurchase
|
1,041,577
|
9,865
|
3.76
|
415,652
|
4,658
|
4.45
|
|||||||||||||
Other
borrowings
|
978,759
|
11,475
|
4.65
|
695,321
|
9,162
|
5.23
|
|||||||||||||
Long-term
debt
|
171,136
|
3,182
|
7.38
|
55,101
|
1,207
|
8.69
|
|||||||||||||
Total
interest-bearing liabilities
|
7,425,226
|
79,344
|
4.24
|
5,826,138
|
58,917
|
4.01
|
|||||||||||||
Non-interest
bearing liabilities
|
|||||||||||||||||||
Demand
deposits
|
774,513
|
767,217
|
|||||||||||||||||
Other
liabilities
|
129,855
|
101,888
|
|||||||||||||||||
Stockholders'
equity
|
933,562
|
883,822
|
|||||||||||||||||
Total
liabilities and stockholders' equity
|
$
|
9,263,156
|
$
|
7,579,065
|
|||||||||||||||
Net
interest spread (4)
|
3.10
|
%
|
3.41
|
%
|
|||||||||||||||
Net
interest income (4)
|
$
|
80,131
|
$
|
71,164
|
|||||||||||||||
Net
interest margin (4)
|
3.69
|
%
|
4.06
|
%
|
(1) |
Yields
and amounts of interest earned include loan fees. Non-accrual loans
are
included in the average balance.
|
(2) |
Calculated
by dividing net interest income by average outstanding interest-earning
assets.
|
(3) |
The
average yield has been adjusted to a fully taxable-equivalent basis
for
certain securities of states and political subdivisions and other
securities held using a statutory Federal income tax rate of 35%.
|
(4) |
Net
interest income, net interest spread, and net interest margin on
interest-earning assets have been adjusted to a fully taxable-equivalent
basis using a statutory Federal income tax rate of 35%.
|
Taxable-Equivalent
Net Interest Income — Changes Due to Rate and
Volume(1)
|
Three
months ended September 30,
|
||||||||||
|
2007-2006
|
|||||||||
Increase
(Decrease) in
|
||||||||||
Net
Interest Income Due to:
|
||||||||||
(Dollars
in thousands)
|
Changes
in Volume
|
Changes
in Rate
|
Total
Change
|
|||||||
Interest-Earning
Assets:
|
||||||||||
Loans
and leases
|
16,138
|
(2,534
|
)
|
13,604
|
||||||
Taxable
securities
|
5,932
|
1,416
|
7,348
|
|||||||
Tax-exempt
securities (2)
|
(473
|
)
|
(69
|
)
|
(542
|
)
|
||||
FHLB
and FRB stocks
|
187
|
69
|
256
|
|||||||
Deposits
with other banks
|
1,002
|
141
|
1,143
|
|||||||
Federal
funds sold and securities purchased
|
||||||||||
under
agreements to resell
|
7,558
|
27
|
7,585
|
|||||||
Total
increase in interest income
|
30,344
|
(950
|
)
|
29,394
|
||||||
Interest-Bearing
Liabilities:
|
||||||||||
Interest
bearing demand accounts
|
14
|
15
|
29
|
|||||||
Money
market accounts
|
710
|
548
|
1,258
|
|||||||
Savings
accounts
|
(79
|
)
|
48
|
(31
|
)
|
|||||
Time
deposits
|
6,099
|
3,829
|
9,928
|
|||||||
Federal
funds purchased
|
(205
|
)
|
(47
|
)
|
(252
|
)
|
||||
Securities
sold under agreement to repurchase
|
6,019
|
(812
|
)
|
5,207
|
||||||
Other
borrowed funds
|
3,398
|
(1,085
|
)
|
2,313
|
||||||
Long-term
debt
|
2,180
|
(205
|
)
|
1,975
|
||||||
Total
increase in interest expense
|
18,136
|
2,291
|
20,427
|
|||||||
Changes
in net interest income
|
$
|
12,208
|
$
|
(3,241
|
)
|
$
|
8,967
|
(1) |
Changes
in interest income and interest expense attributable to changes
in both
volume and rate have been allocated proportionately to changes
due to
volume and changes due to rate.
|
(2) |
The
amount of interest earned on certain securities of states and
political
subdivisions and other securities held has been adjusted to a
fully
taxable-equivalent basis, using a statutory federal income tax
rate of
35%.
|
For
the three months ended September 30,
|
For
the nine months ended September 30,
|
||||||||||||
(Dollars
in thousands)
|
2007
|
2006
|
2007
|
2006
|
|||||||||
Charge-offs:
|
|||||||||||||
Commercial
loans
|
$
|
511
|
$
|
33
|
$
|
6,253
|
$
|
838
|
|||||
Construction
loans
|
-
|
-
|
190
|
-
|
|||||||||
Real
estate loans
|
912
|
3
|
1,030
|
3
|
|||||||||
Installment
and other loans
|
-
|
-
|
1
|
4
|
|||||||||
Total
charge-offs
|
1,423
|
36
|
7,474
|
845
|
|||||||||
Recoveries:
|
|||||||||||||
Commercial
loans
|
138
|
300
|
2,911
|
944
|
|||||||||
Construction
loans
|
-
|
190
|
-
|
||||||||||
Real
estate loans
|
-
|
1
|
202
|
4
|
|||||||||
Installment
and other loans
|
2
|
9
|
27
|
25
|
|||||||||
Total
recoveries
|
140
|
310
|
3,330
|
973
|
|||||||||
Net
Charge-offs / (Recoveries)
|
$
|
1,283
|
$
|
(274
|
)
|
$
|
4,144
|
$
|
(128
|
)
|
·
|
Salaries
and employee benefits increased $944,000, or 5.9%, due primarily
to the
Company’s acquisitions and the hiring of additional staff.
|
·
|
Occupancy
expense increased $522,000, or 19.8%, primarily due to the additions
of
new branches through acquisitions and new branch openings.
|
·
|
Computer
and equipment expense increased $556,000, or 29.6%, primarily due
to a
$474,000 increase in software license fees under new data processing
contracts.
|
·
|
Professional
services expense increased $212,000, or 9.7%, due primarily to increases
of $146,000 in consulting expenses related to a new telephone
system.
|
·
|
Expense
from operations of affordable housing investments increased
$1.1 million, or 77.7%, to $2.5 million compared to $1.4 million
in the
same quarter a year ago as a result of a $752,000 adjustment for
additional prior year’s operating losses and additional investments in
affordable housing projects.
|
·
|
Other
operating expense increased $611,000, or 24.3%, primarily due to
increases
in training expenses of $165,000 related to the new Hong Kong branch,
increases in postage expenses of $164,000, and a write-off of $295,000
of
previously capitalized due diligence costs related to the proposed
investment in First Sino Bank which the Company is no longer
pursuing.
|
Interest-Earning
Assets and Interest-Bearing
Liabilities
|
Nine
months ended September 30,
|
2007
|
2006
|
|||||||||||||||||
|
Interest
|
Average
|
Interest
|
Average
|
|||||||||||||||
Taxable-equivalent
basis
|
Average
|
Income/
|
Yield/
|
Average
|
Income/
|
Yield/
|
|||||||||||||
(Dollars
in thousands)
|
Balance
|
Expense
|
Rate
(1)(2)
|
Balance
|
Expense
|
Rate
(1)(2)
|
|||||||||||||
Interest
Earning Assets
|
|||||||||||||||||||
Commercial
loans
|
$
|
1,274,468
|
$
|
77,969
|
8.18
|
%
|
$
|
1,094,120
|
$
|
65,421
|
7.99
|
%
|
|||||||
Residential
mortgage
|
598,438
|
27,931
|
6.22
|
462,411
|
20,627
|
5.95
|
|||||||||||||
Commercial
mortgage
|
3,404,720
|
198,193
|
7.78
|
3,007,743
|
173,997
|
7.73
|
|||||||||||||
Real
estate construction loans
|
729,250
|
51,739
|
9.49
|
608,320
|
43,789
|
9.62
|
|||||||||||||
Other
loans and leases
|
27,450
|
1,009
|
4.91
|
30,699
|
732
|
3.19
|
|||||||||||||
Total
loans and leases (1)
|
6,034,326
|
356,841
|
7.91
|
5,203,293
|
304,566
|
7.83
|
|||||||||||||
Taxable
securities
|
1,694,897
|
71,381
|
5.63
|
1,257,303
|
46,305
|
4.92
|
|||||||||||||
Tax-exempt
securities (3)
|
65,583
|
3,205
|
6.54
|
85,160
|
4,356
|
6.84
|
|||||||||||||
FHLB
and FRB stocks
|
48,493
|
1,689
|
4.66
|
31,653
|
1,100
|
4.64
|
|||||||||||||
Interest
bearing deposits
|
62,702
|
3,288
|
7.01
|
15,773
|
259
|
2.20
|
|||||||||||||
Federal
funds sold & securities purchased
|
|||||||||||||||||||
under
agreements to resell
|
269,137
|
15,382
|
7.64
|
4,878
|
160
|
4.39
|
|||||||||||||
Total
interest-earning assets
|
8,175,138
|
451,786
|
7.39
|
6,598,060
|
356,746
|
7.23
|
|||||||||||||
Non-interest
earning assets
|
|||||||||||||||||||
Cash
and due from banks
|
88,915
|
100,107
|
|||||||||||||||||
Other
non-earning assets
|
630,396
|
555,039
|
|||||||||||||||||
Total
non-interest earning assets
|
719,311
|
655,146
|
|||||||||||||||||
Less:
Allowance for loan losses
|
(65,877
|
)
|
(63,469
|
)
|
|||||||||||||||
Deferred
loan fees
|
(11,890
|
)
|
(12,948
|
)
|
|||||||||||||||
Total
assets
|
$
|
8,816,682
|
$
|
7,176,789
|
|||||||||||||||
Interest
bearing liabilities:
|
|||||||||||||||||||
Interest
bearing demand accounts
|
$
|
233,012
|
$
|
2,230
|
1.28
|
$
|
239,033
|
$
|
2,057
|
1.15
|
|||||||||
Money
market accounts
|
680,751
|
15,882
|
3.12
|
586,764
|
11,430
|
2.60
|
|||||||||||||
Savings
accounts
|
346,951
|
2,606
|
1.00
|
379,516
|
2,517
|
0.89
|
|||||||||||||
Time
deposits
|
3,758,715
|
133,548
|
4.75
|
3,255,741
|
95,789
|
3.93
|
|||||||||||||
Total
interest-bearing deposits
|
5,019,429
|
154,266
|
4.11
|
4,461,054
|
111,793
|
3.35
|
|||||||||||||
Federal
funds purchased
|
27,621
|
1,075
|
5.20
|
43,227
|
1,597
|
4.94
|
|||||||||||||
Securities
sold under agreement to repurchase
|
831,430
|
23,126
|
3.72
|
365,714
|
11,183
|
4.09
|
|||||||||||||
Other
borrowings
|
961,589
|
35,118
|
4.88
|
558,969
|
20,498
|
4.90
|
|||||||||||||
Junior
subordinated notes
|
144,853
|
8,057
|
7.44
|
54,364
|
3,359
|
8.26
|
|||||||||||||
Total
interest-bearing liabilities
|
6,984,922
|
221,642
|
4.24
|
5,483,328
|
148,430
|
3.62
|
|||||||||||||
Non-interest
bearing liabilities
|
|||||||||||||||||||
Demand
deposits
|
776,946
|
753,855
|
|||||||||||||||||
Other
liabilities
|
117,457
|
98,181
|
|||||||||||||||||
Stockholders'
equity
|
937,357
|
841,425
|
|||||||||||||||||
Total
liabilities and stockholders' equity
|
$
|
8,816,682
|
$
|
7,176,789
|
|||||||||||||||
Net
interest spread (4)
|
3.15
|
%
|
3.61
|
%
|
|||||||||||||||
Net
interest income (4)
|
$
|
230,144
|
$
|
208,316
|
|||||||||||||||
Net
interest margin (4)
|
3.76
|
%
|
4.22
|
%
|
(1) |
Yields
and amounts of interest earned include loan fees. Non-accrual
loans are
included in the average balance.
|
(2) |
Calculated
by dividing net interest income by average outstanding interest-earning
assets.
|
(3) |
The
average yield has been adjusted to a fully taxable-equivalent
basis for
certain securities of states and political subdivisions and other
securities held using a statutory Federal income tax rate of
35%.
|
(4) |
Net
interest income, net interest spread, and net interest margin
on
interest-earning assets have been adjusted to a fully taxable-equivalent
basis using a statutory Federal income tax rate of 35%.
|
Taxable-Equivalent
Net Interest Income — Changes Due to Rate and
Volume(1)
|
Nine
months ended September 30,
|
||||||||||
|
2007-2006
|
|||||||||
Increase
(Decrease) in
|
||||||||||
Net
Interest Income Due to:
|
||||||||||
(Dollars
in thousands)
|
Changes
in Volume
|
Changes
in Rate
|
Total
Change
|
|||||||
|
||||||||||
Interest-Earning
Assets:
|
||||||||||
Loans
and leases
|
49,113
|
3,162
|
52,275
|
|||||||
Taxable
securities
|
17,754
|
7,322
|
25,076
|
|||||||
Tax-exempt
securities (2)
|
(969
|
)
|
(182
|
)
|
(1,151
|
)
|
||||
FHLB
and FRB stocks
|
584
|
5
|
589
|
|||||||
Deposits
with other banks
|
1,744
|
1,285
|
3,029
|
|||||||
Federal
funds sold and securities purchased uncer agreements to
resell
|
15,016
|
206
|
15,222
|
|||||||
Total
increase in interest income
|
83,242
|
11,798
|
95,040
|
|||||||
Interest-Bearing
Liabilities:
|
||||||||||
Interest
bearing demand accounts
|
(53
|
)
|
226
|
173
|
||||||
Money
market accounts
|
1,993
|
2,459
|
4,452
|
|||||||
Savings
accounts
|
(228
|
)
|
317
|
89
|
||||||
Time
deposits
|
16,109
|
21,650
|
37,759
|
|||||||
Federal
funds purchased
|
(604
|
)
|
82
|
(522
|
)
|
|||||
Securities
sold under agreement to repurchase
|
13,044
|
(1,101
|
)
|
11,943
|
||||||
Other
borrowed funds
|
14,705
|
(85
|
)
|
14,620
|
||||||
Long-term
debt
|
5,066
|
(368
|
)
|
4,698
|
||||||
Total
increase in interest expense
|
50,032
|
23,180
|
73,212
|
|||||||
Changes
in net interest income
|
$
|
33,210
|
$
|
(11,382
|
)
|
$
|
21,828
|
(1) |
Changes
in interest income and interest expense attributable to changes
in both
volume and rate have been allocated proportionately to changes
due to
volume and changes due to rate.
|
(2) |
The
amount of interest earned on certain securities of states and political
subdivisions and other securities held has been adjusted to a fully
taxable-equivalent basis, using a statutory federal income tax
rate of
35%.
|
September
30, 2007
|
|||||||||||||
Gross
|
Gross
|
||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
|||||||||||
Cost
|
Gains
|
Losses
|
Fair
Value
|
||||||||||
(In
thousands)
|
|||||||||||||
U.S.
government sponsored entities
|
$
|
790,034
|
$
|
1,645
|
$
|
240
|
$
|
791,439
|
|||||
State
and municipal securities
|
34,750
|
377
|
47
|
35,080
|
|||||||||
Mortgage-backed
securities
|
683,094
|
833
|
13,834
|
670,093
|
|||||||||
Commercial
mortgage-backed securities
|
15,991
|
-
|
446
|
15,545
|
|||||||||
Collateralized
mortgage obligations
|
222,753
|
47
|
6,378
|
216,422
|
|||||||||
Asset-backed
securities
|
636
|
-
|
2
|
634
|
|||||||||
Corporate
bonds
|
201,534
|
203
|
696
|
201,041
|
|||||||||
Preferred
stock of government sponsored entities
|
11,750
|
1,725
|
-
|
13,475
|
|||||||||
Foreign
corporate bonds
|
100,000
|
13
|
213
|
99,800
|
|||||||||
Total
|
$
|
2,060,542
|
$
|
4,843
|
$
|
21,856
|
$
|
2,043,529
|
December
31, 2006
|
|||||||||||||
Gross
|
Gross
|
||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
|||||||||||
Cost
|
Gains
|
Losses
|
Fair
Value
|
||||||||||
(In
thousands)
|
|||||||||||||
U.S.
treasury securities
|
$
|
994
|
$
|
-
|
$
|
1
|
$
|
993
|
|||||
U.S.
government sponsored entities
|
364,988
|
67
|
3,556
|
361,499
|
|||||||||
State
and municipal securities
|
54,843
|
769
|
80
|
55,532
|
|||||||||
Mortgage-backed
securities
|
549,150
|
687
|
15,070
|
534,767
|
|||||||||
Commercial
mortgage-backed securities
|
20,554
|
-
|
588
|
19,966
|
|||||||||
Collateralized
mortgage obligations
|
251,997
|
46
|
6,417
|
245,626
|
|||||||||
Asset-backed
securities
|
783
|
-
|
3
|
780
|
|||||||||
Corporate
bonds
|
206,008
|
325
|
396
|
205,937
|
|||||||||
Preferred
stock of government sponsored entities
|
19,350
|
2,660
|
-
|
22,010
|
|||||||||
Foreign
corporate bonds
|
75,000
|
126
|
13
|
75,113
|
|||||||||
Total
|
$
|
1,543,667
|
$
|
4,680
|
$
|
26,124
|
$
|
1,522,223
|
Maturity
Distribution
|
||||||||||||||||
As
of September 30, 2007
|
||||||||||||||||
|
After
One
|
After
Five
|
||||||||||||||
One
Year
|
Year
to
|
Years
to
|
Over
Ten
|
|||||||||||||
or
Less
|
Five
Years
|
Ten
Years
|
Years
|
Total
|
||||||||||||
(Dollars
in thousands)
|
||||||||||||||||
U.S.
government sponsored entities
|
$
|
12,288
|
$
|
773,917
|
$
|
3,992
|
$
|
1,242
|
$
|
791,439
|
||||||
State
and municipal securities
|
1,091
|
8,011
|
21,673
|
4,305
|
35,080
|
|||||||||||
Mortgage-backed
securities(1)
|
118
|
22,562
|
2,392
|
645,021
|
670,093
|
|||||||||||
Commercial
mortgage-backed securities(1)
|
-
|
-
|
-
|
15,545
|
15,545
|
|||||||||||
Collateralized
mortgage obligations(1)
|
-
|
-
|
6,864
|
209,558
|
216,422
|
|||||||||||
Asset-backed
securities(1)
|
-
|
-
|
-
|
634
|
634
|
|||||||||||
Corporate
bonds
|
1,276
|
249
|
199,516
|
-
|
201,041
|
|||||||||||
Preferred
stock of government sponsored entities (2)
|
-
|
-
|
-
|
13,475
|
13,475
|
|||||||||||
Foreign
corporate bonds
|
-
|
-
|
99,800
|
-
|
99,800
|
|||||||||||
|
||||||||||||||||
Total
|
$
|
14,773
|
$
|
804,739
|
$
|
334,237
|
$
|
889,780
|
$
|
2,043,529
|
(1) |
Securities
reflect stated maturities and do not reflect the impact of
anticipated
prepayments.
|
(2)
|
These
securities have no final maturity
date.
|
Temporarily
Impaired Securities as of September 30, 2007
|
||||||||||||||||||||||||||||
Less
than 12 months
|
12
months or longer
|
Total
|
||||||||||||||||||||||||||
Fair
|
Unrealized
|
No.
of
|
Fair
|
Unrealized
|
No.
of
|
Fair
|
Unrealized
|
No.
of
|
||||||||||||||||||||
Value
|
Losses
|
Issuances
|
Value
|
Losses
|
Issuances
|
Value
|
Losses
|
Issuances
|
||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||
Description
of securities
|
||||||||||||||||||||||||||||
U.S.
government sponsored entities
|
$
|
727
|
$
|
25
|
4
|
$
|
26,766
|
$
|
215
|
2
|
$
|
27,493
|
$
|
240
|
6
|
|||||||||||||
State
and municipal securities
|
764
|
9
|
2
|
1,448
|
38
|
3
|
2,212
|
47
|
5
|
|||||||||||||||||||
Mortgage-backed
securities
|
105,392
|
185
|
18
|
397,868
|
13,649
|
73
|
503,260
|
13,834
|
91
|
|||||||||||||||||||
Commercial
mortgage-backed securities
|
-
|
-
|
-
|
15,545
|
446
|
2
|
15,545
|
446
|
2
|
|||||||||||||||||||
Collateralized
mortgage obligations
|
6,645
|
89
|
3
|
207,375
|
6,290
|
32
|
214,020
|
6,379
|
35
|
|||||||||||||||||||
Asset-backed
securities
|
-
|
-
|
-
|
634
|
2
|
2
|
634
|
2
|
2
|
|||||||||||||||||||
Corporate
bonds
|
125,189
|
696
|
10
|
-
|
-
|
-
|
125,189
|
696
|
10
|
|||||||||||||||||||
Foreign
corporate bonds
|
49,788
|
212
|
2
|
-
|
-
|
-
|
49,788
|
212
|
2
|
|||||||||||||||||||
Total
|
$
|
288,505
|
$
|
1,216
|
39
|
$
|
649,636
|
$
|
20,640
|
114
|
$
|
938,141
|
$
|
21,856
|
153
|
(Dollars
in thousands)
|
September
30, 2007
|
%
of Gross Loans
|
December
31, 2006
|
%
of Gross Loans
|
%
Change
|
|||||||||||
Type
of Loans
|
||||||||||||||||
Commercial
|
$
|
1,372,554
|
21.3
|
%
|
$
|
1,243,756
|
21.7
|
%
|
10.4
|
%
|
||||||
Residential
mortgage
|
537,565
|
8.3
|
455,949
|
7.9
|
17.9
|
|||||||||||
Commercial
mortgage
|
3,644,371
|
56.6
|
3,226,658
|
56.1
|
12.9
|
|||||||||||
Equity
lines
|
101,825
|
1.6
|
118,473
|
2.1
|
(14.1
|
)
|
||||||||||
Real
estate construction
|
763,403
|
11.9
|
685,206
|
11.9
|
11.4
|
|||||||||||
Installment
|
16,949
|
0.3
|
13,257
|
0.2
|
27.8
|
|||||||||||
Other
|
2,740
|
0.0
|
4,247
|
0.1
|
(35.5
|
)
|
||||||||||
Gross
loans and leases
|
$
|
6,439,407
|
100
|
%
|
$
|
5,747,546
|
100
|
%
|
12.0
|
%
|
||||||
Allowance
for loan losses
|
(66,277
|
)
|
(64,689
|
)
|
2.5
|
|||||||||||
Unamortized
deferred loan fees
|
(11,054
|
)
|
(11,984
|
)
|
(7.8
|
)
|
||||||||||
Total
loans and leases, net
|
$
|
6,362,076
|
$
|
5,670,873
|
12.2
|
%
|
(Dollars
in thousands)
|
September
30, 2007
|
December
31, 2006
|
|||||
Non-performing
assets
|
|||||||
Accruing
loans past due 90 days or more
|
$
|
3,903
|
$
|
8,008
|
|||
Non-accrual
loans:
|
|||||||
Construction
|
19,082
|
5,786
|
|||||
Commercial
real estate
|
21,098
|
1,276
|
|||||
Commercial
|
4,592
|
14,424
|
|||||
Real
Estate mortgage
|
1,529
|
836
|
|||||
Other
|
17
|
-
|
|||||
Total
non-accrual loans:
|
46,318
|
22,322
|
|||||
Total
non-performing loans
|
50,221
|
30,330
|
|||||
Other
real estate owned
|
374
|
5,259
|
|||||
Total
non-performing assets
|
$
|
50,595
|
$
|
35,589
|
|||
Troubled
debt restructurings
|
$
|
13,176
|
$
|
955
|
|||
Non-performing
assets as a percentage of gross loans and OREO
|
0.79
|
%
|
0.62
|
%
|
|||
Allowance
for loan losses as a percentage of gross loans and leases
|
1.03
|
%
|
1.13
|
%
|
|||
Allowance
for loan losses as a percentage of non-performing loans
|
131.97
|
%
|
213.28
|
%
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
Real
|
Real
|
|||||||||||||||
Estate
(1)
|
Commercial
|
Other
|
Estate
(1)
|
Commercial
|
||||||||||||
(In
thousands)
|
||||||||||||||||
Type
of Collateral
|
||||||||||||||||
Single/
multi-family residence
|
$
|
28,306
|
$
|
277
|
$
|
-
|
$
|
7,111
|
$
|
180
|
||||||
Commercial
real estate
|
12,669
|
-
|
-
|
674
|
1,265
|
|||||||||||
Land
|
734
|
-
|
-
|
113
|
-
|
|||||||||||
UCC
|
-
|
4,243
|
-
|
-
|
12,779
|
|||||||||||
Unsecured
|
-
|
72
|
17
|
-
|
200
|
|||||||||||
Total
|
$
|
41,709
|
$
|
4,592
|
$
|
17
|
$
|
7,898
|
$
|
14,424
|
(1)
|
Real
estate includes commercial mortgage loans, real estate construction
loans,
and residential mortgage
loans.
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||
Real
|
Real
|
|||||||||||||||
Estate
(1)
|
Commercial
|
Other
|
Estate
(1)
|
Commercial
|
||||||||||||
(In
thousands)
|
||||||||||||||||
Type
of Business
|
||||||||||||||||
Real
estate development
|
$
|
39,561
|
$
|
-
|
$
|
-
|
$
|
6,651
|
$
|
-
|
||||||
Wholesale/Retail
|
618
|
1,899
|
17
|
130
|
8,631
|
|||||||||||
Food/Restaurant
|
-
|
92
|
-
|
282
|
3,126
|
|||||||||||
Import/Export
|
-
|
2,601
|
-
|
-
|
2,667
|
|||||||||||
Other
|
1,530
|
-
|
-
|
835
|
-
|
|||||||||||
Total
|
$
|
41,709
|
$
|
4,592
|
$
|
17
|
$
|
7,898
|
$
|
14,424
|
(1) |
Real
estate includes commercial mortgage loans, real estate construction
loans,
and residential mortgage
loans.
|
At
September 30, 2007
|
At
December 31, 2006
|
||||||
(In
thousands)
|
|||||||
Balance
of impaired loans with no allocated allowance
|
$
|
42,335
|
$
|
10,522
|
|||
Balance
of impaired loans with an allocated allowance
|
3,983
|
11,800
|
|||||
|
|||||||
Total
recorded investment in impaired loans
|
$
|
46,318
|
$
|
22,322
|
|||
|
|||||||
Amount
of the allowance allocated to impaired loans
|
$
|
2,652
|
$
|
4,310
|
For
the nine months ended
September
30, 2007
|
For
the year ended
December
31, 2006
|
||||||
(Dollars
in thousands)
|
|||||||
Balance
at beginning of period
|
$
|
64,689
|
$
|
60,251
|
|||
Provision
of loan losses
|
5,300
|
2,000
|
|||||
Loans
charged off
|
(7,474
|
)
|
(2,030
|
)
|
|||
Recoveries
of loans charged off
|
3,330
|
1,315
|
|||||
Allowance
from acquisitions
|
432
|
3,153
|
|||||
Balance
at end of period
|
$
|
66,277
|
$
|
64,689
|
|||
Average
loans outstanding during the period
|
$
|
6,034,326
|
$
|
5,310,564
|
|||
Total
gross loans outstanding, at period-end
|
$
|
6,439,407
|
$
|
5,747,546
|
|||
Total
non-performing loans, at period-end
|
$
|
50,221
|
$
|
30,330
|
|||
Ratio
of net charge-offs to average loans outstanding during the period
(annualized)
|
0.09
|
%
|
0.01
|
%
|
|||
Provision
for loan losses to average loans outstanding during the period
(annualized)
|
0.12
|
%
|
0.04
|
%
|
|||
Allowance
to non-performing loans, at period-end
|
131.97
|
%
|
213.28
|
%
|
|||
Allowance
to gross loans, at period-end
|
1.03
|
%
|
1.13
|
%
|
(Dollars
in thousands)
|
September
30, 2007
|
December
31, 2006
|
|||||||||||
Percentage
of
|
Percentage
of
|
||||||||||||
Loans
in Each
|
Loans
in Each
|
||||||||||||
Category
|
Category
|
||||||||||||
to
Average
|
to
Average
|
||||||||||||
Type
of Loans:
|
Amount
|
Gross
Loans
|
Amount
|
Gross
Loans
|
|||||||||
Commercial
loans
|
$
|
30,414
|
21.1
|
%
|
$
|
35,569
|
20.9
|
%
|
|||||
Residential
mortgage loans
|
1,268
|
9.9
|
1,510
|
9.1
|
|||||||||
Commercial
mortgage loans
|
25,443
|
56.4
|
22,160
|
57.6
|
|||||||||
Real
estate construction loans
|
9,113
|
12.1
|
5,431
|
11.8
|
|||||||||
Installment
loans
|
39
|
0.3
|
10
|
0.3
|
|||||||||
Other
loans
|
-
|
0.2
|
9
|
0.3
|
|||||||||
Total
|
$
|
66,277
|
100
|
%
|
$
|
64,689
|
100
|
%
|
September
30, 2007
|
%
of Total
|
December
31, 2006
|
%
of Total
|
%
Change
|
||||||||||||
Deposits
|
(Dollars
in thousands)
|
|||||||||||||||
Non-interest-bearing
demand
|
$
|
778,690
|
12.8
|
%
|
$
|
781,492
|
13.8
|
%
|
(0.4
|
)%
|
||||||
NOW
|
228,659
|
3.8
|
239,589
|
4.2
|
(4.6
|
)
|
||||||||||
Money
market
|
697,721
|
11.5
|
657,689
|
11.6
|
6.1
|
|||||||||||
Savings
|
336,743
|
5.6
|
358,827
|
6.3
|
(6.2
|
)
|
||||||||||
Time
deposits under $100,000
|
1,095,348
|
18.0
|
1,007,637
|
17.8
|
8.7
|
|||||||||||
Time
deposits of $100,000 or more
|
2,933,645
|
48.3
|
2,630,072
|
46.3
|
11.5
|
|||||||||||
Total
deposits
|
$
|
6,070,806
|
100.0
|
%
|
$
|
5,675,306
|
100.0
|
%
|
7.0
|
%
|
Payment
Due by Period
|
||||||||||||||||
More
than
|
3
years or
|
|||||||||||||||
1
year but
|
more
but
|
|||||||||||||||
1
year
|
less
than
|
less
than
|
5
years
|
|||||||||||||
or
less
|
3
years
|
5
years
|
or
more
|
Total
|
||||||||||||
(Dollars
in thousands)
|
||||||||||||||||
Contractual
obligations:
|
||||||||||||||||
Deposits
with stated maturity dates
|
$
|
3,939,771
|
$
|
87,344
|
$
|
1,867
|
$
|
11
|
$
|
4,028,993
|
||||||
Federal
funds purchased
|
98,000
|
-
|
-
|
-
|
98,000
|
|||||||||||
Securities
sold under agreements to repurchase (1)
|
108,710
|
-
|
150,000
|
850,000
|
1,108,710
|
|||||||||||
Advances
from the Federal Home Loan Bank (2)
|
244,500
|
-
|
145,180
|
700,000
|
1,089,680
|
|||||||||||
Other
borrowings
|
3,351
|
-
|
-
|
19,670
|
23,021
|
|||||||||||
Long-term
debt
|
-
|
-
|
-
|
171,136
|
171,136
|
|||||||||||
Operating
leases
|
7,231
|
10,184
|
6,256
|
6,380
|
30,051
|
|||||||||||
Total
contractual obligations and other commitments
|
$
|
4,401,563
|
$
|
97,528
|
$
|
303,303
|
$
|
1,747,197
|
$
|
6,549,591
|
(1) |
These
repurchase agreements have a final maturity of 5-year, 7-year
and 10-year
from origination date but are callable on a quarterly basis after
the six
months or one year anniversary according to agreements.
|
(2) |
FHLB
advances of $700.0 million that mature in 2012 have a callable
option. On
a quarterly basis, $300.0 million are callable on the first anniversary
date and $400.0 million are callable on the second anniversary
date.
|
(Dollars
in thousands)
|
Nine
months ended
|
|||
September
30, 2007
|
||||
Net
income
|
$
|
94,553
|
||
Proceeds
from shares issued to the Dividend Reinvestment Plan
|
1,837
|
|||
Proceeds
from exercise of stock options
|
1,416
|
|||
Tax
benefits from stock-based compensation expense
|
503
|
|||
Share-based
compensation
|
5,694
|
|||
Purchase
of treasury stock
|
(76,908
|
)
|
||
Changes
in other comprehensive income
|
2,568
|
|||
Cumulative
effect adjustment as a result of adoption of FASB Interpretation
|
||||
No.
48 - Accounting for Uncertainty in Income Taxes
|
(8,524
|
)
|
||
Cash
dividends paid
|
(15,294
|
)
|
||
Net
increase in stockholders' equity
|
$
|
5,845
|
Cathay
General Bancorp
|
Cathay
Bank
|
||||||||||||||||||||||||
September
30, 2007
|
December
31, 2006
|
September
30, 2007
|
December
31, 2006
|
||||||||||||||||||||||
(Dollars
in thousands)
|
Balance
|
%
|
Balance
|
%
|
Balance
|
%
|
Balance
|
%
|
|||||||||||||||||
Tier
1 capital (to risk-weighted assets)
|
$
|
741,736
|
9.22
|
$
|
673,705
|
9.40
|
$
|
730,284
|
9.08
|
$
|
670,206
|
9.37
|
|||||||||||||
Tier
1 capital minimum requirement
|
321,968
|
4.00
|
286,744
|
4.00
|
321,600
|
4.00
|
286,238
|
4.00
|
|||||||||||||||||
Excess
|
$
|
419,768
|
5.22
|
$
|
386,961
|
5.40
|
$
|
408,684
|
5.08
|
$
|
383,968
|
5.37
|
|||||||||||||
Total
capital (to risk-weighted assets)
|
$
|
857,482
|
10.65
|
$
|
788,284
|
11.00
|
$
|
847,337
|
10.54
|
$
|
786,092
|
10.99
|
|||||||||||||
Total
capital minimum requirement
|
643,937
|
8.00
|
573,488
|
8.00
|
643,201
|
8.00
|
572,476
|
8.00
|
|||||||||||||||||
Excess
|
$
|
213,545
|
2.65
|
$
|
214,796
|
3.00
|
$
|
204,136
|
2.54
|
$
|
213,616
|
2.99
|
|||||||||||||
Tier
1 capital (to average assets) - Leverage ratio
|
$
|
741,736
|
8.32
|
$
|
673,705
|
8.98
|
$
|
730,284
|
8.20
|
$
|
670,206
|
8.95
|
|||||||||||||
Minimum
leverage requirement
|
356,806
|
4.00
|
300,055
|
4.00
|
356,107
|
4.00
|
299,409
|
4.00
|
|||||||||||||||||
Excess
|
$
|
384,930
|
4.32
|
$
|
373,650
|
4.98
|
$
|
374,177
|
4.20
|
$
|
370,797
|
4.95
|
|||||||||||||
Risk-weighted
assets
|
$
|
8,049,212
|
$
|
7,168,601
|
$
|
8,040,007
|
$
|
7,155,951
|
|||||||||||||||||
Total
average assets (1)
|
$
|
8,920,152
|
$
|
7,501,371
|
$
|
8,902,667
|
$
|
7,485,214
|
(1) |
The
quarterly total average assets reflect all debt securities at
amortized
cost, equity security with readily determinable fair values at
the lower
of cost or fair value, and equity securities without readily
determinable
fair values at historical cost.
|
|
|||||||
Net
Interest
|
Market
Value
|
||||||
Income
|
of
Equity
|
||||||
Volatility
(1)
|
Volatility
(2)
|
||||||
Change
in Interest Rate (Basis Points)
|
September
30, 2007
|
September
30, 2007
|
|||||
+200
|
-12.40
|
-22.54
|
|||||
+100
|
-5.28
|
-11.38
|
|||||
-100
|
-2.69
|
1.68
|
|||||
-200
|
-6.55
|
3.46
|
|||||
(1) |
The
percentage change in this column represents net interest income
of the
Company for 12 months in a stable interest rate environment versus
the net
interest income in the various rate scenarios.
|
(2) |
The
percentage change in this column represents net portfolio value
of the
Company in a stable interest rate environment versus the net
portfolio
value in the various rate scenarios.
|
ISSUER
PURCHASES OF EQUITY SECURITIES
|
||||
Period
|
(a)
Total Number of Shares (or Units) Purchased
|
(b)
Average Price Paid per Share (or Unit)
|
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced
Plans or Programs
|
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units)
that May
Yet Be Purchased Under the Plans or Programs
|
Month
#1 (July 1, 2007 - July 31, 2007)
|
NONE
|
347,650
|
||
Month
#2 (August 1, 2007 - August 31, 2007)
|
175,500
|
$30.77
|
|
172,150
|
Month
#3 (September 1, 2007 - September 30, 2007)
|
NONE
|
172,150
|
||
Total
|
175,500
|
$30.77
|
172,150
|
(i) |
Exhibit
10.6.1 Amended
and Restated Bonus Deferral Agreement.
*
|
(ii) |
Exhibit
10.8.1 Amended
and Restated Cathay General Bancorp 2005 Incentive Plan.
*
|
(iii) |
Exhibit
31.1 Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
(iv) |
Exhibit
31.2 Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
(v) |
Exhibit
32.1 Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
(vi) |
Exhibit
32.2 Certification
of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
Cathay
General Bancorp
(Registrant)
|
||
|
|
|
Date:
November 9, 2007
|
By: | /s/ Dunson K. Cheng |
Dunson
K. Cheng
Chairman,
President, and Chief
Executive Officer
|
||
|
|
|
Date:
November 9, 2007
|
By: | /s/ Heng W. Chen |
Heng
W. Chen
Executive
Vice President and Chief
Financial Officer
|
||