Breaking Down Cathay General Bancorp (CATY) Financial Health: Key Insights for Investors

You're looking for a clear signal on regional bank stability, and Cathay General Bancorp (CATY) offers a mixed, but defintely actionable, picture as we close out 2025. The bank delivered a solid Q3 2025, reporting net income of $77.7 million and diluted earnings per share (EPS) of $1.13, which beat consensus estimates and pushed the full-year 2025 EPS forecast to around $4.47. This earnings strength is powered by a rising net interest margin (NIM), which hit 3.31% in Q3, a notable jump from the previous quarter. But, still, the elephant in the room is the bank's significant exposure to Commercial Real Estate (CRE) loans, a key risk factor that analysts are watching closely, even as management continues to execute disciplined capital allocation, repurchasing 1.07 million shares for $50.1 million in Q3. We need to cut through the noise and see if the expanding margin can offset the loan book concentration.

Revenue Analysis

You need a clear picture of Cathay General Bancorp (CATY)'s top line, and the direct takeaway is this: the revenue engine is slowing, but the core business-Net Interest Income (NII)-is showing resilience in a tough rate environment. The Trailing Twelve Months (TTM) revenue for Cathay General Bancorp as of late 2025 stands at approximately $711.62 million. That's a small dip, with a year-over-year (YoY) TTM revenue growth rate of -1.68%. Honestly, in this market, holding near-flat is defintely a win.

The vast majority of Cathay General Bancorp's revenue comes from Net Interest Income (NII), which is the difference between what the bank earns on loans and securities and what it pays out on deposits. This is the lifeblood of any bank. For the third quarter of 2025 (Q3 2025), NII before provision for credit losses was a strong $189.6 million. The secondary, but growing, stream is Non-Interest Income, which includes fees from depository services, letters of credit commissions, and wealth management.

Looking at the historical trend, the 2025 TTM figure of $711.62 million shows a stabilization after a sharper drop in the prior year. For context, the 2024 annual revenue was $692.22 million, which was an -11.71% decrease from 2023's revenue of roughly $0.81 billion. So, while the growth rate is negative, the magnitude of the decline has dramatically lessened. The bank is managing its cost of funds well, which is key.

Here's the quick math on how the two main segments contributed to the bank's total revenue (NII plus Non-Interest Income) in the first three quarters of 2025. This shows you where the focus needs to be as you analyze the bank's core profitability, which you can read more about in our full analysis: Breaking Down Cathay General Bancorp (CATY) Financial Health: Key Insights for Investors.

What this table clearly shows is a positive trend in both revenue streams throughout 2025. This is a significant change. Net Interest Margin (NIM)-the measure of how profitable a bank's lending is-increased to 3.31% in Q3 2025, up from 3.27% in Q2 2025. This margin expansion is critical and is a direct result of lower funding costs. Also, Non-Interest Income has been a bright spot, growing to $21.0 million in Q3 2025, up from $20.4 million in Q3 2024. This segment is showing momentum, driven by fees from interest rate swaps and a decrease in losses on equity securities.

• NII is the core, but Non-Interest Income is the growth lever.
• Q3 2025 NII was $189.6 million, a strong base.
• Q3 2025 Non-Interest Income hit $21.0 million, showing growth.
• NIM improved to 3.31% in Q3 2025, a key efficiency indicator.

Your next step: Dive into the loan portfolio composition-Commercial Real Estate is the largest segment-to map the risk behind this NII growth.

Profitability Metrics

You need to know if Cathay General Bancorp (CATY) is making money efficiently, and the quick answer is yes, their profitability is trending up in 2025, largely due to strong cost control and an expanding net interest margin. This is a sign of a well-run regional bank.

For a bank, we look at Net Interest Income (NII) instead of traditional gross profit. CATY's NII before the provision for credit losses hit $189.6 million in the third quarter of 2025, a solid 4.6% jump from the previous quarter. This is the core of their business-the profit from lending money versus the cost of deposits.

The Net Interest Margin (NIM)-the bank's version of a gross profit margin-increased to 3.31% in Q3 2025 from 3.27% in Q2 2025. This expansion is defintely a positive trend, driven by a lower cost of funds and better loan yields. A rising NIM means they are getting more for their loans without the cost of deposits rising as fast. Breaking Down Cathay General Bancorp (CATY) Financial Health: Key Insights for Investors

Operational Efficiency and Margins

Operational efficiency is where Cathay General Bancorp really shines. The best metric here is the efficiency ratio (non-interest expense divided by total revenue), and CATY's is exceptional. Lower is better, and their Q3 2025 ratio was just 41.84%. This means that for every dollar of revenue, only about 42 cents go toward operating costs like salaries and rent. This places the bank in the top tier for efficiency among peers with over $10 billion in assets.

The closest equivalent to an operating profit margin for a bank is the Pre-Provision Net Revenue (PPNR) margin. Based on Q3 2025 total revenue of approximately $210.6 million and non-interest expenses of about $88.13 million, the PPNR was roughly $122.47 million, giving us a PPNR margin of around 58.15%. That's a huge cushion to absorb potential credit losses before hitting the net income line.

• Net Income (Q3 2025): $77.7 million.
• Efficiency Ratio (Q3 2025): 41.84%.
• Net Profit Margin (Projected Annual): 42.8%.

Net Profit and Industry Comparison

The net profit margin is the bottom line, and the trend is favorable. Cathay General Bancorp's net profit margin is projected at 42.8% for the full year, a clear improvement over the 39.8% from the prior year. This shows their margin-boosting strategies-like share buybacks and digital capability enhancements-are working.

When you compare this to the broader market, CATY looks attractive. Their Price-to-Earnings (P/E) multiple of 10.3x is below the US Banks industry average of 11.2x and their peer average of 11.7x. This suggests the market is not yet fully pricing in their operational strength and margin improvements. Here is the quick math on their recent performance:

The improving efficiency ratio is the key takeaway here. It shows management is controlling costs even as they grow their loan book. Your next step should be to look at their asset quality-specifically, the provision for credit losses-to see if this profitability is sustainable.

Debt vs. Equity Structure

You want to know how Cathay General Bancorp (CATY) funds its operations, and the short answer is: very conservatively, relying heavily on equity and customer deposits rather than external debt. This is a crucial distinction for a bank, where deposits are the primary liability, not standard corporate debt.

The company maintains a low debt footprint relative to its capital base, a sign of financial strength. As of the third quarter of 2025 (Q3 2025), Cathay General Bancorp's total stockholders' equity stood at approximately $2.90 billion, a strong foundation that supports its $24.08 billion in total assets.

The company's debt profile is remarkably lean for a financial institution, especially when isolating non-deposit borrowings.

• Long-Term Debt: The balance sheet shows a relatively small amount of traditional long-term debt, approximately $119.14 million as of mid-2025.
• Short-Term Debt: Short-term debt and capital lease obligations were reported at nearly $0.0 million in Q3 2025, indicating minimal reliance on immediate, short-cycle financing.
• Total Borrowings: When including advances from the Federal Home Loan Bank (FHLB) and other non-deposit borrowings, the total non-deposit debt is still modest, around $548.8 million in Q2 2025.

Here's the quick math on leverage: The Debt-to-Equity (D/E) ratio for Cathay General Bancorp is reported at approximately 0.11. This is exceptionally low when compared to the average for the Banks - Regional industry, which sits closer to 0.5 as of November 2025. A low ratio like this means Cathay General Bancorp is financing its assets primarily with equity and its large deposit base, not with external interest-bearing debt, which reduces financial risk. It's defintely a conservative approach.

The company's capital allocation strategy in 2025 shows a clear bias toward returning capital to shareholders, which reduces total equity. In Q3 2025 alone, Cathay General Bancorp repurchased 1.07 million shares for $50.1 million under its $150 million stock buyback program. This share repurchase activity, a form of equity funding management, signals management's confidence that the stock is undervalued and that they have excess capital beyond regulatory requirements. This is a deliberate, active choice to manage the equity side of the balance sheet.

While the bank's current debt usage is minimal, its ability to tap into debt markets remains high. Cathay General Bancorp maintains massive unused borrowing capacity, including $7.2 billion from the Federal Home Loan Bank (FHLB) and another $1.5 billion from the Federal Reserve Bank (FRB). This access to liquidity provides a substantial safety net for managing short-term funding needs or capitalizing on sudden growth opportunities without having to issue new, costly debt in the public market.

To dive deeper into who holds this low-risk equity, you should read Exploring Cathay General Bancorp (CATY) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You want to know if Cathay General Bancorp (CATY) has the cash to cover its short-term obligations, and honestly, the picture for this regional bank is defintely strong. For a financial institution, traditional liquidity ratios aren't the whole story-it's more about deposit stability and access to emergency funding. Still, the headline numbers are solid: the quick ratio is currently at a healthy 1.05, and the current ratio sits at 1.04.

A quick ratio of 1.05 means Cathay General Bancorp has slightly more than a dollar of highly liquid assets for every dollar of short-term liabilities, excluding inventory (which banks don't have much of anyway). That's a green light for immediate liquidity. But let's look at the real engine of a bank's working capital: deposits and loans. The trend here is positive, showing strong growth in funding and asset deployment.

• Total deposits grew by $514.8 million in the third quarter of 2025 (Q3 2025), reaching $20.52 billion.
• Total gross loans also increased by $320 million, or 6.6% annualized, in Q3 2025, bringing the total to $20.10 billion.
• Management raised the full-year 2025 loan and deposit growth guidance to a range of 3.5%-5%.

This deposit growth is the lifeblood of working capital, and the increase shows the bank's ability to attract and retain funding, even in a competitive rate environment. Plus, the loan growth demonstrates effective capital deployment, which is a good sign for future net interest income.

Cash Flow: Operating, Investing, and Financing Trends

Since a bank's balance sheet is dominated by loans and deposits, its cash flow statement looks different from a manufacturer's. Operating cash flow is primarily driven by net income and changes in assets and liabilities, like deposits. The trend is upward: net income for Q3 2025 was $77.7 million, a slight increase from $77.5 million in Q2 2025. Here's the quick math on financing activity, which is a clear signal of management's confidence:

The $50.1 million spent on repurchasing 1,070,000 common shares in Q3 2025 is a direct use of cash flow to return capital to shareholders. This action, paired with a maintained quarterly dividend of $0.34 per share, suggests a strong, sustainable cash position. If you want to dive deeper into who's trading the stock, you can check out Exploring Cathay General Bancorp (CATY) Investor Profile: Who's Buying and Why?

Liquidity Strengths and Near-Term Risks

The real strength of Cathay General Bancorp's liquidity isn't just in the ratios; it's in their backup funding. As of September 30, 2025, the bank's total uninsured and uncollateralized deposits stood at $9.1 billion. That's a number to watch, but here's the critical part: their available, unused borrowing capacity is massive and more than covers it.

The bank has access to over $10.2 billion in contingent liquidity, which is more than 100% of those uninsured deposits.

• Federal Home Loan Bank (FHLB) availability: $7.2 billion
• Federal Reserve Bank (FRB) borrowing capacity: $1.5 billion
• Unpledged securities: $1.5 billion

That is a huge cushion. Still, a key risk remains the concentration in Commercial Real Estate (CRE) loans, which make up over 50% of the loan book. The Q3 2025 provision for credit losses was $28.7 million, including an additional reserve of $9.1 million specifically for two movie theatre loans. This shows management is proactively reserving for potential credit issues, which is a prudent use of capital, but it highlights the need to monitor that CRE exposure closely.

Valuation Analysis

You're looking at Cathay General Bancorp (CATY) and wondering if the market has it right. Is it a bargain regional bank, or is the current price a trap? The short answer is that, based on a blend of 2025 fiscal year data, Cathay General Bancorp looks fairly valued to slightly undervalued, but it's not a screaming buy right now.

The consensus rating from analysts is a 'Hold,' with an average target price around $50.60 to $52.22. With the stock trading near $45.69 in mid-November 2025, that suggests an implied upside of about 10% to 14%, which is decent, but defintely not a massive discount. This is a bank, so we focus on tangible assets and earnings power.

Is Cathay General Bancorp Overvalued or Undervalued?

To gauge its true value, we look at three key multiples. For a bank like Cathay General Bancorp, the Price-to-Book (P/B) ratio is the most critical metric. Here's the quick math on where the stock stands:

• Price-to-Earnings (P/E): The P/E ratio for the 2025 fiscal year is sitting between 10.18 and 11.38. This is generally below the broader market average and often signals a value opportunity in the financial sector, suggesting the stock isn't overpriced relative to its earnings power.
• Price-to-Book (P/B): The P/B ratio is approximately 1.1x to 1.30x. A P/B ratio near 1.0x means the market values the company at its net asset value (what shareholders would get if the bank liquidated its assets). Trading slightly above 1.0x indicates the market is willing to pay a small premium for its return on equity (ROE) and future growth prospects.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is less traditional for banks, but it's around 6.83. This is a low multiple, especially compared to non-financial sectors, and further supports the argument that the stock is not expensive on an operational cash-flow basis.

The low P/E and P/B just barely above 1.0x point to a stock that is, at worst, fairly priced, and potentially undervalued if you believe in their ability to grow their loan and deposit bases, which you can read more about in their Mission Statement, Vision, & Core Values of Cathay General Bancorp (CATY).

Stock Performance and Income Metrics

The stock's performance over the past year has been challenging, reflecting broader regional banking concerns and higher interest rate environments. Over the last 12 months leading up to November 2025, the stock price has fallen by approximately 8.29% to 12.28%. The 52-week trading range of $36.06 to $55.29 shows significant volatility, so you need a strong stomach for this one.

For income-focused investors, the dividend picture is stable. Cathay General Bancorp currently offers an annual dividend of $1.36 per share, which translates to a dividend yield of roughly 2.88% to 3.01%. The payout ratio-the portion of earnings paid out as dividends-is conservative at about 31.2% to 32.85%. That low payout ratio means the dividend is well-covered by earnings, giving the bank plenty of capital to support loan growth or weather any unexpected economic bumps.

Here is a summary of the valuation landscape:

The action item here is clear: look for a catalyst. The valuation is compelling, but the market is waiting for a clear signal of sustained net interest margin expansion or a definitive end to the regional banking stress. Until then, it's a 'Hold' for current shareholders and a 'Wait for a Dip' for new capital.

Risk Factors

You need to know the risks for Cathay General Bancorp (CATY) are shifting from interest rate volatility to core credit quality and intense deposit competition. Honestly, while the bank posted a solid net income of $77.7 million and diluted earnings per share (EPS) of $1.13 in Q3 2025, the rise in credit provisions is the number one watch item. That's the near-term reality.

The most immediate internal risk is asset quality, specifically in their loan book. The provision for credit losses was notably high, with a Q3 2025 total of $28.7 million, which included specific allocations like $9.1 million for acquired movie theater loans and a $3.8 million adjustment from the Current Expected Credit Losses (CECL) model. This elevated provisioning signals management's defintely cautious stance on future defaults.

Operational and strategic risks are also present, though less acute than credit concerns. The bank operates in a highly competitive regional market, and deposit competition remains intense, which pressures their funding costs. Plus, the pace of new commercial mortgage loan pipeline activity has been moderating, which could slow future revenue growth. You can see how they are managing their capital and market position in Exploring Cathay General Bancorp (CATY) Investor Profile: Who's Buying and Why?

Here's the quick math on the external risks: Geopolitical and economic uncertainty are driving real-world credit issues. Management estimated in Q1 2025 that approximately 1.4% of total loans could be adversely impacted by proposed tariffs and trade policy shifts. That's a measurable exposure that warrants attention, especially for a bank with a strong focus on the Asian-American community and international trade.

To be fair, Cathay General Bancorp (CATY) is actively working to mitigate these threats. Their strategies focus on shoring up the balance sheet and returning capital to shareholders:

• Credit Risk Mitigation: The Commercial Real Estate (CRE) portfolio, which is a key concentration, maintains a weighted average loan-to-value (LTV) ratio of just 49%, offering a substantial equity cushion against market downturns.
• Interest Rate Risk Management: They have structured their loan portfolio so that about 60% of loans are fixed-rate or hybrid-in-fixed periods, which helps support net interest margin (NIM) as market interest rates are anticipated to decline.
• Capital Allocation: The bank is executing a disciplined capital return plan, repurchasing a total of 1,874,179 shares for $85.66 million since June 2025.

What this estimate hides is the potential for classified loans (those with well-defined weaknesses) to rise from the six specific relationships management is currently monitoring. That's the next credit shoe to watch drop.

The table below summarizes the key financial risk indicators from the most recent 2025 data:

Your next step is to monitor the trend in special mention and classified loans in the next quarterly filing. Finance: track the migration of those six specific relationships by year-end.

Growth Opportunities

You're looking for a clear map of where Cathay General Bancorp (CATY) is heading, and the picture is one of disciplined, niche-driven growth. The core takeaway is that their competitive advantage-a deep focus on the Chinese-American community-is fueling loan demand, plus their strategic capital management is boosting shareholder returns. It's a bank that knows its lane and is accelerating in it.

For 2025, the consensus analyst estimate puts their full-year earnings per share (EPS) at around $4.46. Here's the quick math on recent performance: Cathay General Bancorp reported net income of $77.7 million for the third quarter of 2025, translating to a diluted EPS of $1.13. That Q3 revenue came in at $210.6 million, beating Wall Street expectations. This is not explosive growth, but it is defintely a steady, high-quality trajectory.

Key Growth Drivers and Strategic Focus

The company's growth isn't about chasing every market trend; it's about deepening its roots. Their strategic focus is clear: strong loan generation in core urban markets and margin expansion as interest rate cycles turn. Management has raised its full-year 2025 guidance for both loan and deposit growth to a range of 3.5% to 5.0%. This growth is concentrated in two areas:

• Commercial Real Estate (CRE) and residential lending in key markets like California and New York.
• Net Interest Margin (NIM) expansion, which hit 3.31% in Q3 2025, driven by lower funding costs.

In Q3 2025 alone, total gross loans increased by an annualized 6.6%, with CRE and residential loans each contributing an increase of over $120 million. That's a concrete sign of robust demand within their targeted demographic.

Competitive Edge and Capital Strategy

Cathay General Bancorp's most significant competitive advantage is its community-centric business model. This niche focus on the Chinese-American community gives them a loyal customer base and a unique market position, supported by a comprehensive suite of services that includes international banking and wealth management.

Beyond the niche, their capital position is a major strength. As of Q3 2025, total equity reached $2.90 billion, positioning the bank as 'well capitalized' under Basel III rules. Plus, they are actively returning capital to shareholders. In Q3 2025, the company repurchased 1.07 million shares for a total of $50.1 million under its existing program. This disciplined capital allocation amplifies EPS growth, provided core performance holds up.

To be fair, the bank must navigate some near-term risks, like rising credit loss provisions, but the focus on operational efficiency and digital advancements is a clear path forward. They have a clear roadmap for their values and direction, which you can review here: Mission Statement, Vision, & Core Values of Cathay General Bancorp (CATY).

Here is a snapshot of the forward-looking financial metrics: