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CATHAY GENERAL BANCORP

CATY
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Business Summary

Cathay General Bancorp operates as a bank holding company for Cathay Bank, a California state-chartered commercial bank, and twelve limited partnerships investing in affordable housing investments in which the Bank is the sole limited partner . The Bancorp also owns 100% of the common stock of five statutory business trusts created for the purpose of issuing capital securities . The Bancorp is regulated as a bank holding company by the Federal Reserve, and Cathay Bank is regulated by the California Department of Financial Protection and Innovation and the Federal Deposit Insurance Corporation . As of December 31, 2025, the Company had $24.23 billion in total consolidated assets, $19.94 billion in net loans, $20.89 billion in deposits, and $2.93 billion in shareholders' equity .

The Company faces substantial competition for deposits, loans and other banking services from numerous banks and financial institutions in its market areas, including one larger Chinese-American bank in California and at least two super-regional banks, as well as savings and loan associations, brokerage houses, insurance companies, mortgage companies, credit unions, and other financial and non-financial institutions . To compete, the Bank relies principally upon personal contacts by its officers, directors, employees, and stockholders, its long established relationships with the Chinese-American communities, the Bank's responsiveness to client needs, local promotional activities, availability and pricing of loan and deposit products, extended hours on weekdays, Saturday banking in certain locations, Internet banking, and other specialized services .

The Company generates revenue primarily through net interest income derived from the differential between interest earned on loans, investment securities, and other interest-earning assets, and interest paid on deposits, borrowings, and other interest-bearing liabilities . The Bank offers products and services to businesses, such as checking and deposit, lines of credits, commercial and commercial real estate loans, merchant services and payment processing, treasury management services, international banking and financing services, and other customary banking services, and offers similar services to consumers . The Bank primarily services individuals, professionals, and small to medium-sized businesses in the local markets in which its branches are located .

The Bank's loan portfolio is comprised of commercial real estate loans, which are typically secured by first deeds of trust on commercial properties and include commercial retail properties, office buildings, warehouse, and owner-occupied industrial facilities, and secondarily hotels, multiple-unit apartments, and multi-tenanted industrial properties . Commercial loans consist primarily of short-term loans to support general business purposes or to provide working capital to businesses in the form of lines of credit to finance trade . The Bank originates SBA loans under the national preferred lender status, utilizing both the 504 program and the 7(a) program . Residential mortgage loans are comprised of conforming, non-conforming, and jumbo residential mortgage loans, secured by first or subordinate liens on single-family residential properties, and the Bank generally retains all mortgage loans it originates in its portfolio . Real estate construction loans focus on providing short-term loans to individuals and developers, primarily for the construction of multi-unit projects . The Bank offers variable-rate home equity lines of credit secured by the borrower's home, and installment loans for financing the purchase of automobiles and other personal uses . Through its Cathay Wealth Management business unit, the Bank offers clients a range of investment products and services, such as stocks, bonds, mutual funds, insurance, annuities, and advisory services . As of December 31, 2025, all securities and insurance products provided by Cathay Wealth Management are offered by, and all financial consultants are registered with, Cetera Investment Services LLC .

The Bank's securities portfolio is managed in accordance with a written investment policy and is comprised of U.S. government securities, mortgage-backed securities, collateralized mortgage obligations, corporate debt instruments, and mutual funds . The Bank also invests in and/or finances certain tax-advantaged projects promoting affordable housing and renewable energy sources, designed to generate a return primarily through the realization of federal and state income tax credits and other tax benefits over specified time periods .

On June 4, 2025, the Company announced a new stock repurchase program to buy back up to $150.0 million of the Company's common stock . The previous $125.0 million shares repurchase program announced on May 28, 2024, was completed on February 28, 2025, with the repurchase of a total of 2,905,487 shares at an average cost of $43.02 . Through December 31, 2025, the Company repurchased 2,973,982 common shares for a total of $137.5 million, at an average cost of $46.24 per share under the June 2025 buyback program . On February 13, 2026, the Company declared a cash dividend of $0.38 per share for the first quarter of 2026 to common shareholders of record on February 26, 2026 . The Bank paid dividends to the Bancorp totaling $250.0 million during 2025, $216.0 million during 2024, and $134.0 million during 2023 .

For the year ended December 31, 2025, the Company reported net income of $315.1 million, or $4.54 per diluted share, compared to net income of $286.0 million, or $3.95 per diluted share, in 2024, and net income of $354.1 million, or $4.86 per diluted share, in 2023 . The $29.1 million increase in net income from 2024 to 2025 was primarily the result of an increase in net interest income and non-interest income and a decrease in non-interest expense, offset by an increase in provision for credit losses . The return on average assets in 2025 was 1.33%, compared to 1.22% in 2024, and to 1.56% in 2023 . The return on average stockholders' equity was 10.87% in 2025, compared to 10.18% in 2024, and to 13.56% in 2023 . Net interest income increased $68.4 million, or 10.1%, from $674.1 million in 2024 to $742.5 million in 2025 . Net interest margin was 3.30% in 2025 compared to 3.04% in 2024 . The efficiency ratio decreased to 43.41% in 2025 compared to 51.35% in 2024 .

Business Outlook

One of the Company's strategies is to expand beyond California into other domestic markets that have concentrations of Chinese-American individuals and businesses, and the Company currently has operations in eight other states (New York, Washington, Illinois, Texas, Maryland, Massachusetts, Nevada, and New Jersey) and in Hong Kong . The Company has engaged in expansion through acquisitions and may consider other acquisitions in the future, though there are risks associated with such expansion including incorrectly assessing asset quality, greater than anticipated integration costs, and resistance from clients or employees .

The Company's investments in tax-advantaged projects promoting affordable housing and renewable energy sources are designed to generate a return primarily through the realization of federal and state income tax credits and other tax benefits over specified time periods . The Company is subject to the risk that previously recorded tax credits, which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level, will fail to meet certain government compliance requirements and will not be able to be fully realized .The Company relies heavily on communications and information systems to conduct its business and expects to continue to adapt its information technology systems to provide new and expanded services, which could present operational issues, require significant capital spending, and disrupt the business . As of December 31, 2025, Cathay Bank employed approximately 1,268 regular full-time equivalent employees, of whom 1,229 were located in the United States and 39 were located in China, Hong Kong and Taiwan .

The Company's capital allocation activities include share repurchases under authorized programs. On June 4, 2025, the Company announced a new stock repurchase program to buy back up to $150.0 million of the Company's common stock . The Company increased the common stock dividend from $0.24 per share in the fourth quarter of 2017, to $0.31 per share in the fourth quarter of 2018, to $0.34 per share in the fourth quarter of 2021 . On February 13, 2026, the Company declared a cash dividend of $0.38 per share for the first quarter of 2026 . The amount of future dividends will depend on the Company's earnings, financial condition, capital requirements and other factors, and will be determined by the Board of Directors .

The Company faces headwinds from unfavorable or uncertain economic and market conditions, particularly in California and the other markets in which it operates, which can adversely affect its industry and business . The loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect results of operations . Adverse conditions in Asia, including the effects of rising inflation or slowing growth and volatility in the real estate and stock markets in China and other regions, could adversely affect the business as a substantial number of clients have economic and cultural ties to Asia . The Company also faces risks from changes in U.S. trade policies, legislation, treaties and tariffs, including trade policies and tariffs affecting other countries, including China, the European Union, Canada and Mexico and retaliatory tariffs by such countries .

The Company faces significant interest rate risk, as a substantial portion of its income is derived from the spread between interest earned on loans, investment securities, and other interest-earning assets, and interest paid on deposits, borrowings, and other interest-bearing liabilities . Fluctuations in interest rates could reduce net interest income and adversely affect the business . The Company also faces liquidity risk, as an inability to raise funds through deposits, FHLB advances and other borrowings, the sale of loans, the issuance of securities and other sources could have a material adverse effect on its liquidity .

Risk Factors

The Company's loan portfolio is largely secured by real estate, and a downturn in the real estate market may adversely affect results of operations, with approximately $10.90 billion in commercial real estate and construction loans at December 31, 2025 . The Company faces significant interest rate risk, as a substantial portion of income is derived from the spread between interest earned on assets and interest paid on liabilities, and fluctuations in interest rates could reduce net interest income . The Company recorded a provision for credit losses of $72.6 million in the year ended December 31, 2025, and if economic conditions worsen relative to assumptions utilized, the allowance for loan losses will increase accordingly in future periods . The Company's business is concentrated in California markets, with 46% of total CREC loans concentrated in California as of December 31, 2025, and adverse economic conditions in these regions could impair borrowers' ability to service loans and erode the value of loan collateral . The Company faces risks from adverse conditions in Asia, as a substantial number of clients have economic and cultural ties to Asia, and a significant deterioration of economic conditions in Asia could expose the Company to economic and transfer risk and an outflow of deposits .

Management Priorities

Management's message emphasizes the Company's financial performance for the year ended December 31, 2025, highlighting net income of $315.1 million, or $4.54 per diluted share, compared to net income of $286.0 million, or $3.95 per diluted share, in 2024 . The return on average assets was 1.33% in 2025, compared to 1.22% in 2024, and the return on average stockholders' equity was 10.87% in 2025, compared to 10.18% in 2024 . The efficiency ratio decreased to 43.41% in 2025 compared to 51.35% in 2024 . Management's strategic priorities include maintaining capital adequacy, with the Company's Tier 1 risk-based capital ratio of 13.27%, total risk-based capital ratio of 14.93%, and Tier 1 leverage capital ratio of 10.91% at December 31, 2025, all of which exceeded the minimum percentage requirements to be deemed well-capitalized for regulatory purposes . The Company also continues to focus on shareholder returns through share repurchases, having repurchased 2,973,982 common shares for a total of $137.5 million at an average cost of $46.24 per share under the June 2025 buyback program through December 31, 2025 , and declaring a cash dividend of $0.38 per share for the first quarter of 2026 .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Business of Bancorp
  2. [2] Item 1, Business — Business of Bancorp
  3. [3] Item 1, Business — Business of Bancorp
  4. [4] Item 1, Business — Business of Bancorp
  5. [5] Item 1, Business — Business of the Bank — Competition
  6. [6] Item 1, Business — Business of the Bank — Competition
  7. [7] Item 7, MD&A — Net Interest Income
  8. [8] Item 1, Business — Business of the Bank — General
  9. [9] Item 1, Business — Business of the Bank — General
  10. [10] Item 1, Business — Business of the Bank — Loans
  11. [11] Item 1, Business — Business of the Bank — Loans
  12. [12] Item 1, Business — Business of the Bank — Loans
  13. [13] Item 1, Business — Business of the Bank — Loans
  14. [14] Item 1, Business — Business of the Bank — Loans
  15. [15] Item 1, Business — Business of the Bank — Loans
  16. [16] Item 1, Business — Business of the Bank — General
  17. [17] Item 1, Business — Business of the Bank — General
  18. [18] Item 1, Business — Business of the Bank — Securities
  19. [19] Item 1, Business — Business of the Bank — Loans
  20. [20] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  21. [21] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  22. [22] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  23. [23] Item 7, MD&A — Dividend Policy
  24. [24] Item 7, MD&A — Dividend Policy
  25. [25] Item 7, MD&A — Results of Operations — Overview
  26. [26] Item 7, MD&A — Results of Operations — Overview
  27. [27] Item 7, MD&A — Results of Operations — Overview
  28. [28] Item 7, MD&A — Results of Operations — Overview
  29. [29] Item 7, MD&A — Net Interest Income
  30. [30] Item 7, MD&A — Net Interest Income
  31. [31] Item 7, MD&A — Results of Operations — Overview
  32. [32] Item 1A, Risk Factors — Operational Risks
  33. [33] Item 1A, Risk Factors — Operational Risks
  34. [34] Item 1, Business — Business of the Bank — Loans
  35. [35] Item 1A, Risk Factors — Operational Risks
  36. [36] Item 1A, Risk Factors — Information, Information Technology and Privacy Risks
  37. [37] Item 1, Business — Business of the Bank — Human Capital Resources
  38. [38] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  39. [39] Item 7, MD&A — Dividend Policy
  40. [40] Item 7, MD&A — Dividend Policy
  41. [41] Item 7, MD&A — Dividend Policy
  42. [42] Item 1A, Risk Factors — Market and Economic Risks
  43. [43] Item 1A, Risk Factors — Market and Economic Risks
  44. [44] Item 1A, Risk Factors — Market and Economic Risks
  45. [45] Item 1A, Risk Factors — Market and Economic Risks
  46. [46] Item 1A, Risk Factors — Credit, Interest Rate and Liquidity Risks
  47. [47] Item 1A, Risk Factors — Credit, Interest Rate and Liquidity Risks
  48. [48] Item 1A, Risk Factors — Credit, Interest Rate and Liquidity Risks
  49. [49] Item 1A, Risk Factors — Credit, Interest Rate and Liquidity Risks
  50. [50] Item 1A, Risk Factors — Credit, Interest Rate and Liquidity Risks
  51. [51] Item 1A, Risk Factors — Market and Economic Risks
  52. [52] Item 7, MD&A — Loan Concentration
  53. [53] Item 1A, Risk Factors — Market and Economic Risks
  54. [54] Item 7, MD&A — Results of Operations — Overview
  55. [55] Item 7, MD&A — Results of Operations — Overview
  56. [56] Item 7, MD&A — Results of Operations — Overview
  57. [57] Item 7, MD&A — Capital Resources — Capital Adequacy
  58. [58] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  59. [59] Item 7, MD&A — Dividend Policy
  60. [60] Item 7, MD&A — Interest-Earning Assets and Interest-Bearing Liabilities table
  61. [61] Item 7, MD&A — Interest-Earning Assets and Interest-Bearing Liabilities table
  62. [62] Item 7, MD&A — Results of Operations — Overview
  63. [63] Item 7, MD&A — Results of Operations — Overview
  64. [64] Item 7, MD&A — Provision for Credit Losses
  65. [65] Item 7, MD&A — Non-interest Income
  66. [66] Item 7, MD&A — Non-interest Expense
  67. [67] Item 7, MD&A — Results of Operations — Overview
  68. [68] Item 7, MD&A — Results of Operations — Overview
  69. [69] Item 7, MD&A — Results of Operations — Overview
  70. [70] Item 7, MD&A — Results of Operations — Overview
  71. [71] Item 7, MD&A — Net Interest Income
  72. [72] Item 7, MD&A — Allowance for Credit Losses
  73. [73] Item 7, MD&A — Allowance for Credit Losses
  74. [74] Item 7, MD&A — Provision for Credit Losses
  75. [75] Item 7, MD&A — Results of Operations — Overview
  76. [76] Item 7, MD&A — Results of Operations — Overview

Analysis on 6/21/2026