Los Angeles, California, USA, August 16, 2025
News Summary
Cathay General Bancorp reaffirmed its quarterly cash dividend of $0.34 per share and repurchased $35.6 million of stock under a newly authorized $150 million buyback program. Q2 results showed net income rose to $77.5 million, supported by higher net interest income and a 3.27% net interest margin. The bank reported solid capital ratios but a notable rise in non-performing assets to $199.5 million and a decline in the allowance-to-NPL ratio, prompting management to emphasize conservative payout policy and strategic lending shifts toward lower-risk segments while maintaining shareholder returns.
Cathay General Bancorp Balances Share Returns with Caution as Construction Loan Exposure Falls
Key developments first
Cathay General Bancorp declared a cash dividend and moved forward with share buybacks while flagging rising non-performing assets tied in part to construction and commercial real estate. The board approved a quarterly cash dividend of $0.34 per share, payable September 8, 2025 to holders of record on August 28, 2025, continuing a five-year streak of the same quarterly payout.
At the same time, Cathay executed $35.6 million of stock repurchases in Q2 2025 under a $150 million authorization set in June 2025. The buybacks represented about 4.4% of equity and were funded in part by an 11.5% year-over-year rise in quarterly net income. Management framed the moves as part of a shareholder-friendly plan that keeps capital buffers intact.
Financial performance and margins
Net income for Q2 2025 came in at $77.5 million, up from $66.8 million a year earlier. Basic earnings per share rose to $1.11 (diluted $1.10), from
The bank’s efficiency ratio remained strong at 45.34%, a level management says is better than the regional average and is supported by disciplined cost control and pricing power.
Capital strength and allocation
Cathay reported robust capital ratios as of June 2025: a Tier 1 risk-based capital ratio of 13.35%, a CET1 ratio of 13.6%, and a leverage ratio of 11.09%. These figures are above common regulatory buffers and, according to the company, provide room for both dividends and buybacks while preserving loss-absorbing capacity.
Rising problem loans and construction exposure
Non-performing assets increased materially in the quarter to $199.5 million, a 55% year-over-year rise. The uptick was driven partly by a 12.7% increase in non-accrual loans and several large commercial defaults plus a downgraded loan relationship. Even so, non-performing assets to total assets stayed at 0.84%, a level the company says remains below the regional bank average.
The allowance for loan losses to non-performing loans ratio dropped to 96.12% from 112.06% in the prior quarter, signaling smaller default cushions. The company pointed to that decline as especially relevant for the construction and commercial real estate sectors. In the same period, construction loans fell by 9.5%, reflecting deliberate reductions in exposure to volatile construction lending.
Strategic shift in lending
Management described a targeted shift of lending toward lower-risk areas: lower-risk commercial real estate, residential mortgages, affordable housing, and renewable energy projects. The bank said this reallocation aims to diversify risk, reduce reliance on construction financing, and position future growth around more stable income streams.
Market view and outlook
Analysts have identified potential upside in the stock, with a consensus projection of about 26.42% upside for 2025. The firm cited the bank’s ability to reduce credit loss provisions while maintaining asset quality as a driver of that view. Company filings and commentary emphasized monitoring economic trends and loan performance closely.
Context and footprint
Cathay operates over 60 branches nationwide, with the largest concentrations in California: 24 branches in Southern California and 17 in Northern California. The company also runs a network including 9 branches in New York State and locations in Washington, Illinois, Texas, Maryland, Massachusetts, Nevada, and New Jersey, plus an overseas branch in Hong Kong and representative offices in Beijing, Shanghai and Taipei.
The company filed its Form 10-Q on August 8, 2025. The filing highlights the allowance for loan losses as the most significant estimate subject to change, noting that economic shifts could affect loan performance and credit loss provisions.
What this means for construction lenders and borrowers
The combination of rising non-performing assets and deliberate cuts to construction loans suggests tighter credit for riskier construction projects. Borrowers in volatile construction segments may face stricter underwriting, higher pricing, or more conservative advance rates as lenders reallocate capital to less risky assets. At the same time, banks that shift into affordable housing and renewable projects may open new funding channels for those development types.
Contact and reference details: press contact listed as Heng W. Chen at (626) 279-3652. Company information and filings are available through corporate and bank websites: www.cathaygeneralbancorp.com and www.cathaybank.com.
Bottom line
Cathay General Bancorp’s Q2 2025 results show a mix of strength and caution. The bank delivered higher quarterly earnings, maintained strong margins and capital ratios, and returned capital through dividends and buybacks. At the same time, rising non-performing assets and a reduced allowance buffer highlight pressure points, especially in construction and some commercial real estate relationships. The bank is shifting lending toward lower-risk sectors as it balances shareholder returns with credit risk management.
Frequently Asked Questions
What dividend did the company declare and when is it payable?
The board declared a cash dividend of $0.34 per common share, payable on September 8, 2025 to shareholders of record on August 28, 2025.
How much did the bank repurchase in Q2 2025?
The bank repurchased $35.6 million of shares in Q2 2025 under a $150 million repurchase program authorized in June 2025.
Are non-performing assets a major concern?
Non-performing assets rose to $199.5 million, a 55% year-over-year increase. Management reports the NPA ratio to total assets at 0.84%, below the regional average, but the drop in allowance coverage to 96.12% from 112.06% is a notable decline in default buffers.
How is the bank changing its lending strategy?
The bank is reducing exposure to volatile construction loans and shifting toward lower-risk CRE, residential mortgages, affordable housing, and renewable energy projects.
Where can I find the official filings and more details?
The company filed its Form 10-Q for the quarter on August 8, 2025. More information is on the corporate and bank websites: www.cathaygeneralbancorp.com and www.cathaybank.com.
Key Features at a Glance
| Feature | Value |
|---|---|
| Quarterly dividend | $0.34 per share |
| Dividend annualized yield (Aug 2025) | 2.88% |
| Q2 2025 net income | $77.5 million |
| Q2 2025 net interest margin | 3.27% |
| Efficiency ratio | 45.34% |
| Buybacks (Q2 2025) | $35.6 million (4.4% of equity) |
| Authorized repurchase program | $150 million |
| Tier 1 capital (June 2025) | 13.35% |
| CET1 ratio (June 2025) | 13.6% |
| Leverage ratio (June 2025) | 11.09% |
| Non-performing assets (Q2 2025) | $199.5 million (up 55% YoY) |
| Allowance/NPL ratio | 96.12% (Q2 2025) |
| Construction loan change (Q2 2025) | -9.5% |
| Branch footprint | Over 60 branches; strong California presence |
| Form 10-Q filed | August 8, 2025 |
| Analyst upside (consensus) | ~26.42% for 2025 |
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Additional Resources
- Business Wire: Cathay General Bancorp Declares $0.34 Per Share Dividend
- Wikipedia: Cathay General Bancorp
- TradingView: Cathay General Bancorp SEC 10-Q Report
- Google Search: Cathay General Bancorp news
- AiInvest: Cathay General Bancorp — Balancing dividend resilience, credit risks
- Google Scholar: Cathay General Bancorp
- Investing.com: Cathay General Bancorp declares $0.34 per share dividend
- Encyclopedia Britannica: Cathay General Bancorp
- The Globe and Mail: Cathay General Bancorp to announce Q2 2025 financial results
- Google News: Cathay General Bancorp
