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

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.

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