Good afternoon, ladies and gentlemen, and welcome to the Cathay General Bancorp First Quarter 2015 Earnings Conference Call. My name is Karen and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there’ll be a question-and-answer session. [Operator Instructions] Today’s call is being recorded and will be available for reply at www.cathaygeneralbancorp.com. Now, I would like to turn the call over to Monica Chen, Investor Relations for Cathay General Bancorp.

Thank you, Karen, and good afternoon. Here to discuss the financial results today are Mr. Dunson Cheng, our Chairman of the Board and Chief Executive Officer; and Mr. Heng Chen, our Executive Vice-President and Chief Financial Officer. Before we begin, we wish to remind you that the speakers of this call may make forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 concerning future results and event, and that these statements are subject to certain risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are further described in the company’s annual report on Form 10-K for the year ended December 31, 2014, at item 1A in particular, and in other reports and filings with the Securities and Exchange Commission from time to time. As such, we caution you not to place undue reliance on such forward-looking statements which speak only as of the date of this presentation. We undertake no obligation to update any forward-looking statements to reflect future developments or events, except as required by law. I would also like to inform you that Cathay has filed a Form S-4 registration statement that includes a prospect and proxy statement of Asia Bancshares regarding the merger that we announced in January 2015. You are urged to read this document because it contains important information about the merger. In addition, Cathay and Asia Bancshares and their directors and officers may be deemed to be participating in a solicitation of proxies in favor of the proposed merger. You can find the information about the Cathay directors and executive officers in our proxy statement filed with the SEC. You obtain a copy of these documents through the SEC website, Cathay’s website or by request from our Investor Relations department. This afternoon, Cathay General Bancorp issued an earnings release outlining its first quarter 2015 results. To obtain a copy, please visit our website at www.cathaygeneralbancorp.com. After comments by management today, we will open up this call for questions. I will now turn the call over to our Chairman of the Board and CEO, Mr. Dunson Cheng.

Thank you, Monica, and good afternoon. Welcome to our 2015 first quarter earnings conference call. This after we reported net income 36 million for the first quarter of 2015 and 15.1% increase when compared to a net income of 31.3 million for the first quarter 2014. Diluted earnings per share increased 15.4% to 0.45 per share for the first quarter of 2015 compared to 0.39 per share for the same quarter a year ago. In the first quarter 2015, we had a solid loan growth of 320 million or 3.5% quarter-over-quarter. This brings our March 31, 2015 total loan balance to 9.2 billion. Loans increased in every category with CRE loans increased at 177 million; commercial loans at 52 million; construction loans at 47 million and residential mortgages by 30 million. We continue to see our loan growth in 2015 I the range of 10%. For the first quarter of 2015, our total deposit increased by 330 million to 9.1 billion. This represents an increase of 3.80% quarter-over-quarter or 15% on an annualized basis. Our core deposits increased by 79 million or 6.15% on an annual basis from December 31, 2014. During the last quarter’s conference call, we announced the signing of a merger agreement with Asia Bancshares. We are looking forward to the completion of the merger with Asia Bancshares which we now expect to occur in the third quarter of 2015. With that, I will turn the floor over to our Executive Vice President and CFO, Heng Chen, to discuss the first quarter 2015 financials in more detail.

Thank you, Dunson, and good afternoon everyone. For the first quarter, we announced net income of 36 million or 0.45 per share. Our net interest margin was 3.41% in the first quarter of 2015 compared to 3.36% in the fourth quarter of 2014 and compared to 3.38% for the first quarter of 2014. In both the first quarter of 2015 and the fourth quarter of 2014, interest recoveries and prepayment penalties added 4 basis points to the net interest margin. An additional 50 million of structure repurchase agreement of 3.5% matured on January 8, 2015 adding additional 4 basis points to the net interest margin for the first quarter of 2015. Non-interest income during the first quarter 2015 was 8.5 million. Non-interest expense decrease by 4 million or 8.2% to 44.1 million in the first quarter of 2015 compared to 48.1 million in the same quarter a year ago. The decrease was mainly due to cost associate with debt, debt redemption incurred in the first quarter of 2014 of 3.4 million as well as a 835,000 decrease in the amount of employee salaries and benefits expense in the first quarter of 2015. The effective tax rate for the first quarter of 2015 was 37.3%. As a result of an investment in the renewable energy tax credit fund made on April 14, 2015, we expect that our effective tax rate for the full year of 2015 will be between 30% and 28%. The additional pre-tax amortization expense for these investments would be between 15 million and 18 million for the last three quarters of 2015. The second quarter income tax provision will reflect a catch-up adjustment to reflect the lower effective tax rate for the full-year 2015, resulting from the investment in the renewable energy tax credit funds. At March 31,…

Thank you, Heng. We will now proceed to the Q&A portion of the call.

Thank you. Ladies and gentlemen, we are ready to open up the lines for your questions. [Operator Instructions] Our first question comes from the line of Aaron Deer from Sandler O'Neill & Partners.

Hi, good afternoon everyone.

Hi, Aaron.

Hi, Aaron.

Gentlemen, congratulations are in order [ph] since I know that you’ve been aiming for a 3.40 [ph] margin for some time and you finally punched through that level this quarter. So I’m glad to see that.

Thank you.

Sticking with the theme of the margin, I was wondering if you could give some color behind your expectations for the current quarter. I know that it seems like you’re sitting on a fair bit of cash at this point which can maybe get deployed but it seems like you’re also becoming a little bit reliant on CDs or at least that was the case this past quarter. If you kind of look at the funding mix going forward and some additional run-offs and maybe some higher cost items as well as the new loans that are coming on, what are your expectations for the margin going forward?

Yeah, this is Heng Chen. We think that the margin probably would decline slightly. You know, the first quarter is a short quarter. And so, for the mortgage-backed securities and loans, in February, we earn a full month of interest compared to when there is only 28 actual days. In terms of the cash levels, it’s just temporary near the end of the quarter. So the average cash levels were quite a bit lower. So that should have a pretty low impact on the margin. And then we did have more reliance on CDs in the first quarter. We borrowed 50 million from the State of California, that was at 22 basis points. And we hope to be borrowing 50 million a quarter for the rest of the year. And then we also had about 120 million of broker CDs. It was due in part to our very strong loan growth in the first quarter and then seasonally, particularly, in the month of February, we have some of our depositors wiring funds back to mainland China or to Taiwan during the Chinese New Year holidays. So, we think in the second quarter that we’ll get better core deposit growth. That’s something that we saw last year. And then on the loan, Dunson, maybe you want to talk about what rates we’re getting on new loans in the first and second quarter?

I think that centralized pricing is going through [ph] and we don’t see any more deterioration of pricing and typically, for C&I loans, we are getting anywhere from Wall Street [ph] +0 to Wall Street [ph] +0.5. And for construction loans, the pricing is much more favorable and for that the pricing will vary anywhere from Wall Street [ph] +1 to 1.5 with floors and higher level. And CRE loans, there’s been a little bit more request for fix-rate loans but however the pricing of that is for five years is around about 4 [indiscernible] for quarter.

Quarter [ph].

In that area. And for our floating rates we are getting roughly Wall Street [ph] +0.5, somewhere. And then resident mortgage, we’re seeing just a slight drift each quarter as mainly because we stopped making 30-year fixed rate residential mortgage starting in March of last year.

Okay. And then as follow up, you mentioned a [indiscernible] pricing. It seemed like that was the book that really saw some impressive growth this quarter. Are there any particular categories of real-estate where that’s getting the most traction or is there anything particularly that drove that strength this quarter?

This is Dunson Cheng. As I looked through the new CRE loan booked in the quarter, it’s really all over the place. For example, we had loans to finance warehouse for our import customers. We also have loans to office building and, of course, we have some for hotel. It’s really very varied in terms of category. And there is no one particular category that stand up.

Yeah, and then, I think geographically, New York [ph], the east coast region still continues to be the fastest growing region for us in the first quarter.

That’s by percentage, not in dollar terms or is that in the same dollar terms?

Right, percentage. Percentage.

Right, okay.

Yeah.

All right, great. Thanks for taking my questions.

Great. Thank you, Aaron.

Thank you. Our next question comes from the line of Joe Morford from RBC Capital Markets.

Thanks. Good afternoon, guys.

Hi, Joe.

And, Heng, also congratulations on the margin.

Yes, we will not give any more guidance.

If you [ph] can throw out a 3.50 [ph] number, I’d take it.

No.

I guess, just following up, one question on the loan side, I was curious just how your - if you could comment on the trade finance portfolio and maybe how that performed this quarter and is there any impact from the stronger dollar on your customers and/or the port delays.

Joe, this is Dunson. And I really don’t see it as yet. And you may recall that our first quarter usually sees a lot of pay down [ph]. We do see that pay down [ph]. And on the other hand we are also booking more new loans and as a result of that is the increase of these [indiscernible] loans was 52 million.

Okay. All right. And then, I guess, the other question is just on the Asia Banc merger. I was just kind of curious what might be causing some of the delays then and when exactly might you be looking to close that and is there any discussions until about possibly repurchasing some of the shares being issued in that transaction?

Yes, Joe, this is Heng Chen. In terms of the timing, we moved it to the third quarter just because we’re not sure. You may have seen that we filed our S-4 back in early April. And then, we’ve been notified that it’s being reviewed. So that process, it could take certainly at least one round of comments. And we don’t know how long it takes for the SEC to actually review the response. And the lastly, once the S-4 is cleared under New York law, there needs to be a 20 business day period between when the S-4 and proxy is mailed to when the shareholder vote can occur. And then we would close. It looks like the shareholder vote is the one that’s going to take a longer time. So we hope to close shortly after that. Then in terms of buying back the stock, we have, in the S-4, there is a copy of the merger agreement. We have collars. The collars were struck back in January when banks stocks were much lower. So the top of the collar is at $27 per share, price at the close. So we’re not sure. And then the floating exchange ratio where, at least, 45% of the deal will be stock but up to 55% will be - but no more than 55% will be stock. So our guess is that there’ll be over 2 million shares less issued. And we would think as to buy those back depending on where our stock is trading. And we would probably do that later this year or early next year.

Okay. That’s really helpful. Thanks so much for the color, Heng.

Yes, thank you, Joe.

Thank you. Our next question comes from the line of Julianna Balicka from KBW.

Good afternoon [ph].

Hi.

I wanted to follow up, Heng, on the margin once again. In terms of forward pipeline [ph] of potential future interest over rate recoveries, you’ve had a good one this quarter in your provision or negative provision. So are you looking at anymore larger outside resolution for the rest of the year and how would it impact on your provisions and/or interest income and therefore margin.

Yes, we have a pipeline. I mean, just this week, we have one of the B-notes pay off as we did a series of A-B note splits during the recession and once again there is a good size when that paid off this week. And so we have several more that may pay off in the next couple of years. Well, all of them are tied to commercial real-estate. And we see commercial real-estate being very strong. So the prospects are good. And then, interest recoveries, it was 4 basis points this quarter. We see a steady stream of that. We had loans that were charged off or partially charged off a couple of years ago or they were on non-accrual where we applied interest collected to the principal. And so, you can have a fairly small charge off bring almost the equal size interest recovery. So it’s still a fairly a large pipeline but we can’t predict when it happens. But given where our reserve is, any gross recovery we have will a negative provision, which is, that’s what happened in the first quarter.

Right. So it looks like we may have several more quarters of negative or zero provisions ongoing?

It’s possible.

Great. Then on the tax adjustments that you’ve referenced that we will see in the second quarter, have you sized up what the tax adjustments would be for the tax investment that you just made?

Yes, I tried to cover it in my comment.

Just the catch up in the second quarter.

Oh, the catch up.

Yes.

Well, I guess, in ballpark, the full quarter impact would be around roughly about 0.10 in EPS. And so we can see maybe 0.04 or 0.05 in Q2. Well, the catch up would be probably 0.02 to 0.03. That would just be the catch up in EPS.

Right. Okay, very good. And then, previously, you discussed redeploying securities Treasuries into 15-year MBS. And so I wanted to check in and see where that is in progress?

Yes, actually, we’re pleasantly surprised. At the end of 2014, we had 1.3 billion [ph] securities [indiscernible]. Of that 664 million was in Treasuries which yielded 30 basis points. And we have reduced that 350 million at the end of March. And our plan is to do more of that. And we had, at the end of December, we had 425 million of 30-year MBS. And at the end of March, we had blocked that down to 17 million. And in April, we sold the remaining 17 million. So we have no 30-year MBS. And you can see in the P&L, there was basically no hit, no security losses on a net basis from reducing our interest rate exposure. And so we are, in terms of 15-year MBS, it was 190 million in December. It’s now up to, at the end of March, it’s up to 743 million and we see that going up to about 900 million in Q2.

Great. And what kind of yields are you putting that on?

We’re buying the 15-year threes [ph]. We were buying the 2.5s. So the 15-year threes [ph] there’d be about, maybe, 2.10 [ph] in yield or something like that.

Got it. And then final question and I’ll step back. Anymore color in the increase to your non-accruals, please?

Oh, yes, it was mainly one land loan that was reserved for. So we took a small charge off in the first quarter. And as a result, it was a TVR in December and now it’s non-accrual. But it’s just one land loan that’s well reserved.

Got it. Where is it?

It’s on the east coast.

Okay. Thank you very much. I’ll step back now.

Thank you. [Operator Instructions] Our next question comes from the line of Lana Chan from BMO Capital Markets.

My questions have been answered. Thank you.

Thank you. And I see no additional questions at this time. [Operator Instructions] And I have no further questions. I would like to turn the conference back to Cathay General Bancorp’s management for closing comments.

Thank you for joining us for this call and we look forward to talking with you at our next quarter earnings release date. Thank you.