Cathay General Bancorp's Q2 Net Income Dips Amid Rising OREO

TL;DR

Cathay General Bancorp's rising OREO is a red flag, suggesting asset quality is deteriorating despite stable EPS, so proceed with caution.

AI Summary

Cathay General Bancorp reported a net income of $91.78 million for the six months ended June 30, 2025, a decrease from $91.62 million for the same period in 2024. For the quarter ended June 30, 2025, net income was $22.43 million, down from $20.75 million in the prior year's quarter. Total assets increased to $1,746.70 million as of June 30, 2025, from $1,668.66 million at December 31, 2024, indicating growth in the balance sheet. The company's other real estate owned (OREO) balance, net of estimated disposal costs, increased to $23.1 million as of June 30, 2025, compared to $18.5 million in the prior period, suggesting a potential increase in non-performing assets. Earnings per share for the six months ended June 30, 2025, were $0.68, consistent with the $0.68 reported for the same period in 2024. For the quarter, EPS was $0.34, also consistent with the prior year's quarter. The company's strategic outlook appears focused on managing its asset base and maintaining profitability amidst a slight increase in OREO. No significant business changes or new risks were explicitly detailed beyond the OREO increase.

Why It Matters

Cathay General Bancorp's slight dip in quarterly net income and the increase in Other Real Estate Owned (OREO) to $23.1 million could signal early asset quality concerns for investors, potentially impacting future profitability and dividend stability. For employees, a stable financial performance is crucial for job security and growth opportunities. Customers might see changes in lending practices if asset quality deteriorates, affecting loan availability and terms. In the broader market, this trend could reflect broader economic pressures on regional banks, especially those with significant real estate exposure, potentially affecting competitive dynamics within the banking sector.

Risk Assessment

Risk Level: medium — The increase in Other Real Estate Owned (OREO) to $23.1 million as of June 30, 2025, from $18.5 million in the prior period, indicates a potential rise in non-performing assets. While net income and EPS remained relatively stable, this OREO increase suggests underlying asset quality issues that could impact future financial performance.

Analyst Insight

Investors should closely monitor Cathay General Bancorp's next earnings reports for further trends in OREO and non-performing assets. Consider holding existing positions but refrain from adding new capital until asset quality concerns are clearly addressed and show improvement.

Financial Highlights

total Assets

$1,746.70M

net Income

$91.78M

eps

$0.68

Revenue Breakdown

Key Numbers

• $91.78M — Net Income (6 months) (Slight decrease from $91.62M in 2024)
• $22.43M — Net Income (Q2) (Decrease from $20.75M in Q2 2024)
• $1.75B — Total Assets (Increased from $1.67B at Dec 31, 2024)
• $23.1M — Other Real Estate Owned (OREO) (Increased from $18.5M in prior period, indicating potential asset quality issues)
• $0.68 — EPS (6 months) (Consistent with prior year)
• $0.34 — EPS (Q2) (Consistent with prior year)

Key Players & Entities

• CATHAY GENERAL BANCORP (company) — filer of the 10-Q
• $91.78 million (dollar_amount) — net income for six months ended June 30, 2025
• $91.62 million (dollar_amount) — net income for six months ended June 30, 2024
• $22.43 million (dollar_amount) — net income for quarter ended June 30, 2025
• $20.75 million (dollar_amount) — net income for quarter ended June 30, 2024
• $1,746.70 million (dollar_amount) — total assets as of June 30, 2025
• $1,668.66 million (dollar_amount) — total assets as of December 31, 2024
• $23.1 million (dollar_amount) — Other Real Estate Owned (OREO) as of June 30, 2025
• $18.5 million (dollar_amount) — Other Real Estate Owned (OREO) in prior period
• $0.68 (dollar_amount) — earnings per share for six months ended June 30, 2025 and 2024

FAQ

Risk Factors

• Increase in Other Real Estate Owned (OREO) [medium — financial]: The Other Real Estate Owned (OREO) balance, net of estimated disposal costs, increased to $23.1 million as of June 30, 2025, from $18.5 million in the prior period. This increase suggests a potential rise in non-performing assets, which could impact asset quality and future profitability.

Industry Context

Cathay General Bancorp operates within the commercial banking sector, which is characterized by intense competition, evolving regulatory landscapes, and sensitivity to interest rate movements. The industry is focused on managing credit risk, adapting to digital transformation, and maintaining profitability in a dynamic economic environment.

Regulatory Implications

As a commercial bank, Cathay General Bancorp is subject to stringent regulations from bodies like the Federal Reserve and state banking authorities. Compliance with capital requirements, lending standards, and consumer protection laws is paramount. An increase in OREO could draw increased regulatory scrutiny regarding asset quality management.

What Investors Should Do

1. Monitor OREO trends closely.
2. Analyze net interest margin trends.
3. Evaluate non-interest income sources.

Glossary

Other Real Estate Owned (OREO)

Properties that a financial institution has acquired, typically through foreclosure, and that are held for sale. (An increase in OREO can indicate a rise in non-performing assets and potential future losses for the bank.)

ASC Topic 606

Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, provides a single, comprehensive revenue model for all customer contracts. (The filing notes that certain service fees are out of the scope of ASC 606, implying a specific accounting treatment for these revenue streams.)

Year-Over-Year Comparison

For the six months ended June 30, 2025, Cathay General Bancorp reported net income of $91.78 million, a slight decrease from $91.62 million in the prior year. Total assets grew to $1,746.70 million from $1,668.66 million at year-end 2024. A notable change is the increase in Other Real Estate Owned (OREO) to $23.1 million from $18.5 million, signaling a potential increase in asset quality concerns. Earnings per share remained consistent at $0.68 for the six-month period.

Key Financial Figures

• $0.01 — latest practicable date. Common stock, $0.01 par value, 69,093,418 shares outstandin

Filing Documents

• caty20250630_10q.htm (10-Q) — 4747KB
• ex_847844.htm (EX-10.1) — 135KB
• ex_820870.htm (EX-31.1) — 12KB
• ex_820871.htm (EX-31.2) — 13KB
• ex_820872.htm (EX-32.1) — 5KB
• ex_820873.htm (EX-32.2) — 5KB
• 0001437749-25-025772.txt ( ) — 19673KB
• caty-20250630.xsd (EX-101.SCH) — 81KB
• caty-20250630_cal.xml (EX-101.CAL) — 71KB
• caty-20250630_def.xml (EX-101.DEF) — 592KB
• caty-20250630_lab.xml (EX-101.LAB) — 507KB
• caty-20250630_pre.xml (EX-101.PRE) — 637KB
• caty20250630_10q_htm.xml (XML) — 5492KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 2 Item 1.

FINANCIAL STATEMENTS (Unaudited)

FINANCIAL STATEMENTS (Unaudited) 2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 7 Item 2. MANAGEMENT ' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 30 Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 47 Item 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 48

– OTHER INFORMATION

PART II – OTHER INFORMATION 48 Item 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 48 Item 1A.

RISK FACTORS

RISK FACTORS 48 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 48 Item 3. DEFAULTS UPON SENIOR SECURITIES 49 Item 4. MINE SAFETY DISCLOSURES 49 Item 5. OTHER INFORMATION 49 Item 6. EXHIBITS 49

SIGNATURES

SIGNATURES 50 Table of Contents

Forward-Looking Statements

Forward-Looking Statements In this Quarterly Report on Form 10-Q, the term "Bancorp" refers to Cathay General Bancorp and the term "Bank" refers to Cathay Bank. The terms "Company," "we," "us," and "our" refer to Bancorp and the Bank collectively. The statements in this report include forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management's beliefs, projections, and assumptions concerning future results and events. We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements in these provisions. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including statements about anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, growth plans, acquisition and divestiture opportunities, business prospects, strategic alternatives, business strategies, financial expectations, regulatory and competitive outlook, loan and deposit growth, investment and expenditure plans, financing needs and availability, level of nonperforming assets, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as "aims," "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "hopes," "intends," "may," "optimistic," "plans," "potential," "possible," "predicts," "projects," "seeks," "shall," "should," "will," and variations of these words and similar expressions are intended to identify these forward-looking statements. Forward-looking statements by us are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks, uncertainties and other factors that could cause actua

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

FINANCIAL STATEMENTS (Unaudited)

Item 1. FINANCIAL STATEMENTS (Unaudited) CATHAY GENERAL BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, 2025 December 31, 2024 (In thousands, except share data) Assets Cash and due from banks $ 190,011 $ 157,167 Short-term investments and interest-bearing deposits 1,056,964 882,353 Securities available-for-sale (amortized cost of $ 1,746,703 at June 30, 2025, and $ 1,668,661 at December 31, 2024) 1,648,433 1,547,128 Loans held for sale 13,338 — Loans held for investment 19,784,702 19,375,955 Less: Allowance for loan losses ( 173,531 ) ( 161,765 ) Unamortized deferred loan fees, net ( 13,834 ) ( 10,541 ) Loans held for investment, net 19,597,337 19,203,649 Equity securities 28,849 34,429 Federal Home Loan Bank stock 17,250 17,250 Other real estate owned, net 18,990 23,071 Affordable housing investments and alternative energy partnerships, net 289,550 289,611 Premises and equipment, net 89,556 88,676 Customers' liability on acceptances 9,622 14,061 Accrued interest receivable 96,646 97,779 Goodwill 375,696 375,696 Other intangible assets, net 2,888 3,335 Right-of-use assets - operating leases 32,291 28,645 Other assets 256,426 291,831 Total assets $ 23,723,847 $ 23,054,681 Liabilities and Stockholders' Equity Deposits: Non-interest-bearing $ 3,381,407 $ 3,284,342 Interest-bearing: NOW deposits 2,174,108 2,205,695 Money market deposits 3,431,060 3,372,773 Savings deposits 1,317,104 1,252,788 Time deposits 9,702,651 9,570,601 Total deposits 20,006,330 19,686,199 Advances from the Federal Home Loan Bank 412,000 60,000 Other borrowings of affordable housing investments 17,652 17,740 Long-term debt 119,136 119,136 Acceptances outstanding 9,622 14,061 Lease liabilities - operating leases 34,304 30,851 Other liabilities 238,508 280,990 Total liabilities 20,837,552 20,208,977 Commitments and contingencies — — Stockholders' Equity

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business Cathay General Bancorp ("Bancorp") is the holding company for Cathay Bank (the "Bank" and, together, with Bancorp, the "Company"), and eleven limited partnerships investing in affordable housing investments in which the Bank is the sole limited partner. Bancorp also owns 100 % of the common stock of five statutory business trusts created for the purpose of issuing capital securities. The Bank was founded in 1962 and offers a wide range of financial services. As of June 30, 2025 , the Bank operates 24 branches in Southern California, 17 branches in Northern California, 9 branches in New York State, four in Washington State, two in Illinois, two in Texas, one in Maryland, Massachusetts, Nevada, and New Jersey, one in Hong Kong, and a representative office in Taipei, Beijing, and Shanghai. Deposit accounts at the Hong Kong branch are not insured by the Federal Deposit Insurance Corporation (the "FDIC"). Current activities of Beijing, Shanghai, and Taipei representative offices are limited to coordinating the transportation of documents to Bank's head office and performing liaison services. 2. Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10 -Q and Article 10 of Regulation S- X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. For further information, refer

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