Key Highlights

  • Cathay General Bancorp (NASDAQ:CATY) reported diluted earnings of USD 1.43 per share on Wednesday, October 21, 2026, against the consensus estimate of USD 1.45, up from USD 1.37 in the second quarter.
  • Net charge-offs rose to USD 25.3 million, or 0.48% of average loans annualised, from USD 1.8 million, concentrated in one construction loan and two movie theatre real estate loans.
  • Net interest income rose 5.5% to USD 211.9 million and the net interest margin widened to 3.52% from 3.48%, while gross loans grew USD 574.5 million, about 11.4% annualised.
  • Noninterest income doubled to USD 42.8 million on higher equity securities gains, offset partly by a USD 8.0 million charitable contribution and a USD 5.4 million contract termination fee.

Loan Growth Meets Three Problem Credits

Cathay General Bancorp (NASDAQ:CATY), the Los Angeles-based holding company for Cathay Bank, reported third-quarter results at 4:30 p.m. ET on Wednesday, October 21, 2026. Diluted earnings were USD 1.43 per share, against the consensus estimate of USD 1.45, USD 1.37 in the second quarter and USD 1.13 a year earlier. Net income was USD 95.2 million. Net interest income before provision rose USD 11.0 million to USD 211.9 million. Gross loans rose 2.79% in the quarter to USD 21.20 billion and deposits rose 3.67% to USD 21.83 billion. The provision for credit losses jumped to USD 28.6 million from USD 11.2 million. Net charge-offs of USD 25.3 million came mainly from three borrower-specific credits, including two movie theatre loans acquired from Far East National Bank.

How One-Off Items Netted Out in Earnings

For Cathay General Bancorp (NASDAQ:CATY), several unusual items moved in opposite directions. Equity securities gains rose USD 24.4 million and a trust preferred securities redemption added USD 3.1 million, while repositioning losses on investment securities rose USD 4.5 million. Expenses carried a USD 8.0 million charitable contribution to the Cathay Bank Foundation and a USD 5.4 million contract termination fee. Underneath, the core spread improved: the margin widened 4 basis points to 3.52%, against 3.31% a year earlier, while the cost of interest-bearing deposits fell to 2.91% from 3.28% a year ago. The release links the higher provision to strong loan growth and updated loss assumptions after recent charge-offs. The efficiency ratio, expenses divided by revenue, improved to 40.60% from 41.53%.

Risks and What to Watch

The first risk for Cathay General Bancorp (NASDAQ:CATY) is that the three charge-offs signal wider stress in commercial real estate, particularly construction and specialised properties such as cinemas. The allowance held at 1.06% of loans, unchanged from June, and covers 242.97% of nonperforming loans, while nonaccrual loans fell 21.8% to USD 87.3 million. The second is funding cost, as interest-bearing deposit costs rose 5 basis points from June after the Federal Reserve raised rates to 3.75% to 4.00% on Wednesday, September 16, 2026. The third is earnings quality, since securities gains may not recur. Investors should watch fourth-quarter charge-offs, the pace of loan growth and the share count, which fell to 66,083,728 from 66,825,367 in June.

Where Things Stand

The answer is that Cathay General Bancorp (NASDAQ:CATY) took USD 25.3 million of charge-offs on three specific loans, two of them acquired with Far East National Bank, while its core margin kept widening. Earnings still rose year on year to USD 1.43 per share, just short of consensus. Chief executive Chang M. Liu stressed "prudent balance sheet management" in the release. The next catalysts are fourth-quarter credit costs, the 3.52% margin trend and the USD 0.38 quarterly dividend. Dividends are not guaranteed, and this is not investment advice.