Cathay General Bancorp (NASDAQ:CATY) Q3 2020 Earnings Conference Call - Final Transcript

Oct 26, 2020 • 06:00 pm ET

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Cathay General Bancorp (NASDAQ:CATY) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Heng W. Chen

of 2020. Approximately $1.5 billion, $2.6 billion and $0.9 billion of our CDs will mature during the fourth quarter of 2020, and the first and second quarters of 2021, with average rates of 1.51%, 1.47% and 0.88% respectively. We are targeting renewing retail CDs in the 50 to 60 basis point range.

Non-interest income during third quarter of 2020 decreased by $0.4 million to $10 million when compared to the third quarter of 2019. Non-interest expense increased by $10 million or 15.9% to $76 million in third quarter of 2020, when compared to $65.6 million in the same quarter a year ago. Excluding the amortization of low income housing and alternative energy partnerships, non-interest expense only increased by $1.2 million or 2% through the third quarter of 2020 when compared to the third quarter of 2019. For the third quarter of 2020, the increase in non-interest expense was primarily due to a $7.5 million increase in amortization of investments in low-income housing and alternative energy partnerships, a $1.4 million increase in salaries and benefits, and $1 million increase in the reserve for unfunded commitments.

The effective tax rate for the third quarter of 2020 was 3.7%, compared to 22.4% for the third quarter of 2019. We completed our investment in a solar tax credit fund in the second quarter, which we project will lower our full-year effective tax rate to approximately 8%. Solar tax credit amortization was $10.8 million in the third quarter of 2020 and is expected to be $10 million in the fourth quarter of 2020. As of September 30, 2020, our Tier 1 leverage capital ratio decreased to 10.51% as compared to 10.83% as of December 31, 2019. Our Tier 1 risk-based capital ratio increased to 13.22% from 12.51% as of December 31, 2019. And our total risk-based capital ratio increased to 15.23% from 14.11% as of December 31, 2019. We expect to resume our stock buyback program during the fourth quarter of 2020.

Executive
Chang M. Liu

Thank you, Heng. We will now proceed to the questions-and-answer portion of the call.