What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-28 compared with 2024-02-29 · 304 added, 325 removed, 2184 unchanged (22% of the section changed)

12 unchanged sentences

Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2024.

The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm” below.

KPMG LLP, the independent registered public accounting firm that audited the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K, has also issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm” below.

Changes in Internal Control over Financial Reporting

101 unchanged sentences

2016 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Performance Shares – EPS), used to award performance-based restricted stock units.

Previously filed with the Securities and Exchange Commission on December 21, 2016, as an exhibit to the Bancorp’s Current Report on Form 8-K and incorporated herein by reference.

2016 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Performance Shares – TSR), used to award performance-based restricted stock units.

Previously filed with the Securities and Exchange Commission on December 21, 2016, as an exhibit to the Bancorp’s Current Report on Form 8-K and incorporated herein by reference.

2016 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Performance Shares – ROA), used to award performance-based restricted stock units.

Previously filed with the Securities and Exchange Commission on December 21, 2016, as an exhibit to the Bancorp’s Current Report on Form 8-K and incorporated herein by reference.

Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Clawback Rider), used in connection with award of performance-based restricted stock units.

2016 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Clawback Rider), used to award performance-based restricted stock units.

Previously filed with the Securities and Exchange Commission on December 21, 2016, as an exhibit to the Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.

2024 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Performance Shares – EPS).

Previously filed with the Securities and Exchange Commission on August 8, 2024, as an exhibit to the Bancorp’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and incorporated herein by reference.

2024 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Performance Shares – TSR).

2024 Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Performance Shares – ROA).

Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Time-Based Shares).

Previously filed with the Securities and Exchange Commission on March 30, 2017, as an exhibit to the Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.

Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Clawback Rider), used in connection with award of time-based restricted stock units.

Previously filed with the Securities and Exchange Commission on March 30, 2017, as an exhibit to the Bancorp’s Current Report on Form 8-K and incorporated herein by reference.

Form of Cathay General Bancorp 2005 Incentive Plan (As Amended and Restated) Restricted Stock Unit Agreement (Immediate Vesting/Deferred Distribution).

Previously filed with the Securities and Exchange Commission on May 10, 2018, as an exhibit to the Bancorp’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, and incorporated herein by reference.

Amended and Restated Change of Control Employment Agreement for Dunson K.

15 unchanged sentences

Previously filed with the Securities and Exchange Commission on November 9, 2020 as an exhibit to the Bancorp’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and incorporated herein by reference.

Cathay General Bancorp Insider Trading Policy.

Subsidiaries of the Bancorp.

4 unchanged sentences

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incentive-Based Compensation Clawback Policy.

Inline XBRL Instance Document

‎ Cathay General Bancorp Incentive-Based Compensation Clawback Policy.

‎ Previously filed with the Securities and Exchange Commission on February 29, 2024 as an exhibit to the Bancorp’s ‎Annual Report on Form 10-K for the year ended December 31, 2023 and incorporated herein by reference.

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*

Inline XBRL Taxonomy Extension Schema Document*

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Inline XBRL Taxonomy Extension Presentation Linkbase Document*

Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

Cover Page Interactive Data File - the cover page SBRL tags are embedded within the Inline XBRL document*

Management contract or compensatory plan or arrangement.

Filed herewith.

Furnished herewith pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended.

Filed herewith pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended.

Form 10-K Summary.

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February 28, 2025

/s/ Ann Yee Kono

February 28, 2025

/s/ Elizabeth Woo

February 28, 2025

Elizabeth Woo

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

30 unchanged sentences

Allowance for loan losses for loans evaluated on a collective basis modeled using an econometric methodology.

As discussed in Note 5 to the consolidated financial statements, the Company’s total allowance for loan losses as of December 31, 2023 was $154.6 million, a substantial portion of which relates to the allowance for loan losses on loans evaluated on a collective basis over residential mortgages, commercial and industrial loans, construction loans, commercial real estate for multifamily loans, commercial real estate for owner-occupied loans, and other commercial real estate loans (hereafter “six portfolios”) using a methodology that includes econometric regression models, risk ratings, and certain qualitative loss factors (together the collective ALL).

As discussed in Note 4 to the consolidated financial statements, the Company’s total allowance for loan losses as of December 31, 2024 was $161.8 million, a substantial portion of which relates to the allowance for loan losses on loans evaluated on a collective basis over residential mortgages, commercial and industrial loans, construction loans, commercial real estate for multifamily loans, commercial real estate for owner-occupied loans, and other commercial real estate loans (hereafter “six portfolios”).

As discussed in Note 1, the collective ALL includes the measure of expected credit losses on a collective basis by pooling those loans that share similar risk characteristics into these six portfolios.

The collective ALL methodology uses historical credit loss experience as a basis for estimation of expected credit losses at the collective pool basis over the contractual term of the loans, adjusted for expected prepayments when appropriate.

The Company calculates the collective ALL by estimating the probability of default during the reasonable and supportable forecast period using separate econometric regression models developed to correlate macroeconomic variables to historical credit performance for each of the six portfolios.

The Company calculates the collective ALL by estimating the probability of default during the reasonable and supportable forecast period using separate econometric regression models developed to correlate macroeconomic variables to loan risk rating performance for each of the six portfolios.

Loss given default rates are computed based on the net charge-offs recognized and then applied to the expected exposure at default of defaulted loans.

1 unchanged sentence

The collective ALL incorporates reasonable and supportable forecasts of various macroeconomic variables over a two-year reasonable and supportable forecast period, reverting linearly to long-term loss rates over the one-year reversion period.

Management relies on multiple forecasts, which are weighted in determining a single loss estimate.

Adjustments to historical loss information are made for differences in current loan-specific risk characteristics as well as for changes in environmental conditions.

8 unchanged sentences

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the collective ALL, including controls related to the:

development of the collective ALL methodology

continued use and appropriateness of changes in the econometric models

continued use and appropriateness of the collective ALL methodology

continued use and appropriateness of the econometric models

identification and determination of the significant assumptions used in the econometric models

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As of December 31,

(In thousands, except share and per share data)

(In thousands, except share data)

Cash and due from banks

4 unchanged sentences

1,547,128 1,604,570

Loans held for sale

19,375,955 19,548,140

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Other real estate owned, net

23,071 19,441

Affordable housing investments and alternative energy partnerships, net

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993,962 987,953

Accumulated other comprehensive income loss, net

Accumulated other comprehensive loss, net

( 85,607 ) ( 85,416 )

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Year Ended December 31,

(In thousands, except share

and per share data)

(In thousands, except share and per share data)

Interest and Dividend Income

19 unchanged sentences

Short-term borrowings

2,243 3,870 862

Total interest expense

2 unchanged sentences

674,055 741,746 733,697

Provision/(reversal) for credit losses

Provision for credit losses

37,500 25,978 14,543

2 unchanged sentences

Non-Interest Income

Net gains/(losses) from equity securities

Net (losses)/gains from equity securities

( 7,516 ) 18,248 392

Securities (losses)/gains, net

Net gains/(losses) from securities available for sale

1,107 ( 3,000 ) —

25 unchanged sentences

Other real estate owned expense

2,699 761 127

Amortization of investments in low income housing and

3 unchanged sentences

1,098 1,310 1,892

Cost associated with debt redemption

Acquisition, integration and reorganization costs

671 4,127 1,425

Other operating expense

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

(In thousands, except number of shares)

(In thousands, except shares and per share data)

Comprehensive

Stockholders'

Income/(Loss)

Balance at December 31, 2021

75,750,862 $ 909 $ 972,474 $ ( 3,065 ) $ 1,985,168 $ ( 509,235 ) $ 2,446,251

Cumulative effect of change in accounting principle related to ASC 326 (1)

— — — — ( 3,139 ) — ( 3,139 )

Dividend Reinvestment Plan

12 unchanged sentences

— — — — ( 100,955 ) — ( 100,955 )

Other comprehensive income/(loss)

Other comprehensive loss

— — — ( 99,230 ) — — ( 99,230 )

16 unchanged sentences

— — — — ( 98,638 ) — ( 98,638 )

Other comprehensive income/(loss)

Other comprehensive income

— — — 16,879 — — 16,879

5 unchanged sentences

Restricted stock units vested

183,324 2 — — — — 2

Shares withheld related to net share settlement of RSUs

5 unchanged sentences

Stock -based compensation

— — 6,984 — — — 6,984

Cash dividends of $ 1.36 per share

( 97,967 ) ( 97,967 )

Other comprehensive income/(loss)

Other comprehensive loss

( 191 ) ( 191 )

2 unchanged sentences

70,863,324 $ 916 $ 993,962 $ ( 85,607 ) $ 2,688,353 $ ( 751,920 ) $ 2,845,704

(1) Represents the impact of the adoption of Accounting Standards Update ASU 2016-13, Financial Instruments — Credit Losses (Topic 326) on January 1, 2021.

See accompanying notes to Consolidated Financial Statements.

6 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Provision/(reversal) for credit losses

Provision for credit losses

37,500 25,978 14,543

Provision for losses on other real estate owned

Deferred tax (benefit)/ provision

Deferred tax benefit

( 20,756 ) ( 4,782 ) ( 2,088 )

6 unchanged sentences

Net gains on sale and transfers of other real estate owned

— ( 6 ) ( 57 )

Net gains on sale of loans

— ( 1 ) ( 357 )

Proceeds from sales of loans

Originations of loans held for sale

— — ( 4,994 )

Net losses/(gains) on sale of loans

Loss on sales or disposal of fixed assets

5 unchanged sentences

( 25,369 ) ( 11,373 ) 2,465

Unrealized (gain)/loss on equity securities

Unrealized loss/(gain) on equity securities

7,516 ( 18,248 ) ( 291 )

16 unchanged sentences

Benefits received from bank owned life insurance policies

— 4,013 2,752

Purchase of Federal Home Loan Bank stock

2 unchanged sentences

13,031 28,885 9,776

Proceeds from sale of loans originally classified as held-for-investment

Net increase in loans

7 unchanged sentences

— — ( 73,882 )

Net cash used for investing activities

Net cash provided/(used) for investing activities

184,030 ( 1,477,080 ) ( 1,849,400 )

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( 3,726 ) ( 4,490 ) ( 2,905 )

Net cash provided by financing activities

Net cash (used)/provided by financing activities

( 302,466 ) 758,737 94,741

(Decrease)/increase in cash, cash equivalents, and restricted cash

Increase/(decrease) in cash, cash equivalents, and restricted cash

210,719 ( 333,601 ) ( 1,287,302 )

15 unchanged sentences

Loans transferred from held-for-investment to held-for-sale

$ 173,697 $ — $ 32

See accompanying notes to Consolidated Financial Statements.

21 unchanged sentences

Securities Available for Sale.

Effective January 1, 2021, upon the adoption of ASU 2016 - 13, debt securities Available For Sale (“AFS”) are measured at fair value and subject to impairment testing.

Debt securities Available For Sale (“AFS”) are measured at fair value and subject to impairment testing.

When an AFS debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, ( 1 ) recognize an allowance for credit loss by a charge to earnings for the credit-related component (if any) of the decline in fair value, and ( 2 ) recognize in other comprehensive income (loss) any non-credit related components of the fair value change.

3 unchanged sentences

Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

A debt security is placed on nonaccrual status at the time any principal or interest payments become delinquent by 90 days or greater.

42 unchanged sentences

Allowance for Credit Losses ( “ ACL ” ) on Loans Held for Investment.

The Company adopted ASU 2016 - 13, Financial Instruments – Credit Losses (Topic 326 ) on January 1, 2021 which introduced a new current expected credit loss (“CECL”) approach for financial instruments measured at amortized cost and other commitments to extend credit.

The Company uses the current expected credit loss (“CECL”) approach for financial instruments measured at amortized cost and other commitments to extend credit.

CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset.

The forward-looking concept of CECL requires loss estimates to consider historical experience, GDP, unemployment rates, CRE and home price indexes, and reasonable and supportable economic forecasts of future events and circumstances.

The forward-looking concept of CECL requires loss estimates to consider historical experience, adjusted for current conditions and reasonable and supportable forecasts, which may include forecasts of items such as GDP, unemployment rates, CRE and home price indexes, and reasonable and supportable economic forecasts of future events and circumstances.

The ACL is the combination of the allowance for loan losses and the reserve for unfunded loan commitments.

2 unchanged sentences

The "Provision for credit losses" on the Consolidated Statements of Operations and Comprehensive Income is a combination of the provision for loan losses and the provision for unfunded loan commitments.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Under the Company’s CECL approach, management estimates the ACL using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable economic forecasts that vary by loan portfolio.

18 unchanged sentences

and other CRE loans.

We estimate the probability of default during the reasonable and supportable forecast period using separate econometric regression models developed to correlate macroeconomic variables, (GDP, unemployment, CRE prices and residential mortgage prices) to historical credit performance for each of the six loan portfolios from the fourth quarter of 2007 to the fourth quarter of 2022.

We estimate the probability of default during the reasonable and supportable forecast period using separate econometric regression models developed to correlate macroeconomic variables, (GDP, unemployment, CRE prices and residential mortgage prices) to loan risk rating performance for each of the six loan portfolios from the fourth quarter of 2007 to the fourth quarter of 2022.

Loss given default rates are computed based on the net charge-offs recognized divided by the exposure at default of defaulted loans starting with the fourth quarter of 2007 through the fourth quarter of 2022.

1 unchanged sentence

The amounts so calculated comprise the quantitative portion of the allowance for credit losses.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The Company’s CECL methodology utilizes an eight -quarter reasonable and supportable (“R&S”) forecast period, and a four -quarter reversion period.

Management relies on multiple forecasts, blending them into a single loss estimate.

Management relies on multiple forecasts, which are weighted in determining a single loss estimate.

Generally speaking, the blended scenario approach would include the Baseline, the Alternative Scenario 1 – Upside – 10th Percentile and the Alternative Scenario 3 – Downside – 90th Percentile forecasts.

2 unchanged sentences

The contractual term excludes expected extensions, renewals, and modifications unless the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The simplified approach portfolios include Small Business Administration (“SBA”) loans, Home Equity Lines of Credit (“HELOCs”) and cash-secured loans, which are not modelled econometrically due to the low loss history for these three pools of loans.

24 unchanged sentences

on nonaccrual status, modifications to borrowers experiencing financial difficulty, or payment delinquency of 90 days or more.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company has adopted ASU 2022 - 02, “Financial Instruments – Troubled Debt Restructurings and Vintage Disclosures” effective January 1, 2023.

29 unchanged sentences

As of December 31, 2024 , eleven of the limited partnerships in which the Company has an equity interest were determined to be variable interest entities for which the Company is the primary beneficiary.

The Company therefore consolidated the financial statements of these ten limited partnerships into the Consolidated Financial Statements.

The Company therefore consolidated the financial statements of these eleven limited partnerships into the Consolidated Financial Statements.

The tax credits from these partnerships are recognized in the consolidated financial statements to the extent they are utilized on the Company’s income tax returns.

14 unchanged sentences

Construction in process is carried at cost and includes land acquisition cost, architectural fees, general contractor fees, capitalized interest and other costs related directly to the construction of a property.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Goodwill and Other Intangible Assets.

3 unchanged sentences

Other intangible assets.

Other intangible assets are mainly comprised of core deposit intangible, which represents the purchase price over the fair value of the deposits acquired from other financial institutions, is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.

Other intangible assets are mainly comprised of core deposit intangible ("CDI"), which represents the purchase price over the fair value of the deposits acquired from other financial institutions.

CDI is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.

If a pattern of consumption cannot be reliably determined, straight-line amortization is used.

6 unchanged sentences

Stock-Based Compensation.

The Company grants time-based RSUs, which include service conditions for vesting.

Compensation cost for these time-based awards is based on the quoted market price of the Company’s common stock at the grant date.

Compensation costs for time-based RSUs that will be settled in cash instead of shares are adjusted to fair value based on changes in the Company’s stock price up to the settlement date.

In addition, the Company grants performance-based RSUs, which contain additional performance goals and market conditions that are required to be met in order for the awards to vest.

Compensation expense for these performance-based RSUs is based on the grant-date fair value considers both performance and market conditions.

Subsequently, the Company evaluates the probable outcome of the performance conditions quarterly and makes cumulative adjustments for current and prior periods in compensation expense in the period of change.

Market conditions subsequent to the grant date have no impact on the amount of compensation expense the Company will recognize over the life of the award.

Compensation cost is amortized on a straight-line basis over the requisite service period for the entire award, which is generally the maximum vesting period of the award.

Excess tax benefits and deficiencies on share-based payment awards are recognized within Income tax expense on the Consolidated Statement of Income.

As stock-based compensation expense is estimated based on awards ultimately expected to vest, it is reduced by the expense related to awards expected to be forfeited.

Forfeitures are estimated at the time of grant and are updated quarterly.

If the estimated forfeitures are revised, a cumulative effect of changes in estimated forfeitures for the current and prior periods is recognized in compensation expense in the period of change.

Refer to Note 19 — Equity Incentive Plans on the Consolidated Financial Statements in this Form 10 -K for additional information.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Stock option compensation expense is calculated based on the fair value of the award at the grant date for those options expected to vest and is recognized as an expense over the vesting period of the grant using the straight-line method.

16 unchanged sentences

Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Income Taxes.

19 unchanged sentences

Segment Reporting.

Through our branch network and lending units, we provide a broad range of financial services to individuals and companies.

These services include demand, time and savings deposits;

and commercial and industrial, real estate and consumer lending.

While our chief decision makers monitor the revenue streams of our various products and services, operations are managed, and financial performance is evaluated on a company-wide basis.

Accordingly, we consider all of our operations to be aggregated in one reportable operating segment.

Accounting Pronouncements Adopted in 2023

In March 2022, the FASB issued ASU 2022 - 01, “Derivatives and Hedging (Topic 815 ):

Fair Value Hedging - Portfolio Layer Method.” Under prior guidance, entities can apply the last-of-layer hedging method to hedge the exposure of a closed portfolio of prepayable financial assets to fair value changes due to changes in interest rates for a portion of the portfolio that is not expected to be affected by prepayments, defaults, and other events affecting the timing and amount of cash flows.

ASU 2022 - 01 expands the last-of-layer method, which permits only one hedge layer, to allow multiple hedged layers of a single closed portfolio.

To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.

ASU 2022 - 01 also (i) expands the scope of the portfolio layer method to include non-prepayable financial assets, (ii) specifies eligible hedging instruments in a single-layer hedge, (iii) provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method and (iv) specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.

The adoption of ASU 2022 - 01 did not have a significant impact on our financial statements.

The Company operates as a single operating segment.

Our Chief Executive Officer is our chief operating decision maker (“CODM”).

The CODM uses net income to evaluate financial performance and allocate resources based on net income that also is reported on the income statement as consolidated net income and compares to budgeted amounts.

The accounting policies of the operating segment are the same as those of our consolidated entity and described in the summary of significant accounting policies.

The measure of segment assets is reported on the balance sheet as total assets.

The Company’s operations primarily consist of commercial banking services, servicing primarily the individuals, professionals, and small to medium-sized businesses in the local markets in which its branches are located.

Its operations include the acceptance of checking, savings, and time deposits, and the making of commercial, real estate, and consumer loans.

The Bank also offers trade financing, letters of credit, wire transfer, foreign currency spot and forward contracts, internet banking, investment services, and other customary banking services to its customers within the United States.

As such the Company does not report any disaggregated financial information.

The Company generates substantially all its revenues from banking services and does not have material operations outside the United States.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

In March 2022, ASU 2022 - 02, “Financial Instruments - Credit Losses (Topic 326 ):

Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022 - 02 eliminates the accounting guidance for troubled debt restructurings in Accounting Standards Codification (“ASC”) Subtopic 310 - 40, Receivables - Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Additionally, ASU 2022 - 02 requires entities to disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC Subtopic 326 - 20, Financial Instruments - Credit Losses - Measured at Amortized Cost.

As part of the adoption, the Company has elected to apply the pending content prospectively and the practical expedient to exclude the accrued interest receivable balance from the disclosed amortized cost basis of loan modifications to debtors experiencing financial difficulty, consistent with our ACL approach discussed further below in Note 5.

Other Accounting Standards Pending Adoption

Recent Accounting Pronouncements Adopted in 2024

In November 2023, ASU No.

2023 - 07, “Segment Reporting (Topic 280 ), Improvements to Reportable Segment Disclosures”, was issued.

This ASU expands the disclosure requirements for reportable segments of public entities by adding the following disclosure requirements.

The amendments require, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, on an annual and interim basis, disclose amount and description of composition of other segment items.

This amount reconciles segment revenues, less the significant segment expenses, to the reported measure of segment profit or loss; expands the current interim disclosure requirements to require all existing annual disclosures about a reportable segment’s profit or loss and assets also be made on an interim basis; clarifies that if a CODM uses more than one measure of segment profit or loss, then the entity may disclose one or more measures, but at least one measure should be that which is most consistent with GAAP measurement principles; and requires annual disclosure of the title and position of the CODM as well as explanation of how the CODM uses the reported measures in assessing segment performance and allocating resources.

The amendments in this update are effective for fiscal years beginning after December 15, 2023.

The Company has determined that the adoption of ASU 2023 - 07 did not have a significant impact on the Company’s Consolidated Financial Statements.

In March 2023, ASU 2023 - 02, “Investments-Equity Method and Joint Ventures (Topic 323 ):

2 unchanged sentences

ASU 2023 - 02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023.

The Company is still evaluating the impact on it’s consolidated financial statements.

The Company elected not to apply the proportional method of amortization allowed as an election under ASU 2023 - 02.

In June 2022, ASU 2022 - 03, “Fair Value Measurement (Topic 820 ):

1 unchanged sentence

ASU 2022 - 03 also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain new disclosures for equity securities subject to contractual sale restrictions.

ASU 2022 - 03 will be effective for us on January 1, 2024.

The adoption of ASU 2022 - 03 is not expected to have a significant impact on our financial statements.

Business Combinations

The Company’s subsidiary bank, Cathay Bank completed the purchase of HSBC Bank USA, National Association’s West Coast mass retail market consumer banking business and retail business banking business on February 7, 2022.

As a result of the acquisition, Cathay Bank added 10 retail branches in California and additional loans with principal balance of $ 646.1 million and deposits with a balance of $ 575.2 million.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the February 7, 2022 acquisition date.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting.

We have included the financial results of the business combinations in the Consolidated Statements of Operations and Comprehensive Income beginning on the acquisition date.

The fair value of the assets and the liabilities acquired as of February 7, 2022 are shown below:

Balance Sheet

(In thousands)

Cash and cash equivalents

Right-of-use assets - operating leases

Core deposit intangible

Liabilities assumed:

Lease liabilities

Total liabilities assumed

Net assets acquired

Total cash paid at closing

The adoption of ASU 2022 - 03 did not have a significant impact on our financial statements.

Other Accounting Standards Pending Adoption

In November 2024, ASU No.

2024 - 03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses”, was issued.

This ASU requires disaggregated disclosure of income statement expenses for public business entities.

ASU 2024 - 03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption.

The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization.

Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

ASU 2024 - 03 is effective for us, on a prospective basis, for annual periods beginning in 2027, and interim periods within fiscal years beginning in 2028, though early adoption and retrospective application is permitted.

ASU 2024 - 03 is not expected to have a significant impact on our financial statements.

On March 6, 2024, the U.S.

Securities and Exchange Commission ("SEC") adopted final rules under SEC Release No.

33 - 11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors”.

This rule will require that climate-related information be included in a Company’s annual reports and registration statements.

The disclosure requirements will apply to the Company's fiscal year beginning January 1, 2025; however, the SEC has determined to stay the application of this rule pending the completion of judicial review in legal challenges related to the rule.

The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.

In December 2023, ASU No.

2023 - 09, “Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures” was issued.

This ASU amends the disclosure requirements for income taxes, including the requirement for further disaggregation of the income tax rate reconciliation and income taxes paid disclosures.

The amendments in this guidance are effective for annual periods beginning after December 15, 2024.

These amendments should be applied prospectively, with the option to apply retrospectively.

The Company is currently evaluating the impact of this guidance on the Company’s Consolidated Financial Statements.

Cash, Cash Equivalents and Restricted Cash

The Company manages its cash and cash equivalents based upon the Company’s operating, investment, and financing activities.

Cash and cash equivalents, for the purpose of reporting cash flows, consist of cash and due from banks and short-term investments and interest-bearing deposits.

Cash and cash equivalents, for the purpose of reporting cash flows, consist of cash and due from banks, short-term investments, and interest-bearing deposits.

Cash and due from banks include cash on hand, cash items in transit, cash due from the Federal Reserve Bank of San Francisco (“FRBSF”) and other financial institutions.

Short-term investments and interest-bearing deposits include cash placed with other banks with original maturity of three months or less.

The Company had average excess balance with FRBSF of $ 1.09 billion and $ 1.24 billion as of December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, the Company had $ 53.8 million and $ 88.9 million, respectively, as cash margin that serves as collateral on deposit in a cash margin account for interest rate swaps of which $ 8.6 million and $ 8.2 million is restricted.

The Company had average excess balance with FRBSF of $ 1.05 billion and $ 1.09 billion for the years ended December 31, 2024 , and 2023 , respectively.

As of December 31, 2024 , and 2023 , the Company had $ 43.4 million and $ 53.8 million, respectively, as cash margin that serves as collateral on deposit in a cash margin account for interest rate swaps.

Of the balances held in the cash margin account $ 8.6 million are restricted as of December 31, 2024 , and 2023 .

As of December 31, 2024 , and December 31, 2023 , the Company held $ 0.3 million and $ 6.4 million, respectively, in a restricted escrow account with a major bank for its alternative energy investments.

3 unchanged sentences

Investment Securities.

The following tables reflect the amortized cost, gross unrealized gains, gross unrealized losses, and fair values of debt securities available-for-sale as of December 31, 2023 and December 31, 2022:

The following tables set forth the amortized cost, gross unrealized gains, gross unrealized losses, and fair values of debt securities available-for-sale ("AFS") as of December 31, 2024 , and December 31, 2023 :

As of December 31, 2024

(In thousands)

Securities Available-for-Sale

Securities AFS

treasury securities

11 unchanged sentences

(In thousands)

Securities Available-for-Sale

Securities AFS

treasury securities

2 unchanged sentences

48,282 117 230 48,169

government sponsored entities

30,000 — — 30,000

Mortgage-backed securities

5 unchanged sentences

$ 1,726,080 $ 515 $ 122,025 $ 1,604,570

The amortized cost and fair value of securities available-for-sale as of December 31, 2023, by contractual maturities, are set forth in the table below.

The amortized cost and fair value of AFS securities as of December 31, 2024 , by contractual maturities, are set forth in the table below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties.

Securities Available-for-Sale

Securities AFS

As of December 31, 2024

10 unchanged sentences

$ 1,668,661 $ 1,547,128

Proceeds from the sale of investment securities were $ 33.7 million during the year ended December 31, 2024 .

There were no sales of investment securities during the years ended December 31, 2023, and 2022.

We received proceeds of $ 21.1 million from sales of investment securities for the year ended December 31, 2021.

Gross realized gain on sale of investment securities was $ 853 thousand for the year ended December 31, 2021.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Gross realized gain on sale of investment securities was of $ 1.1 million for the year ended December 31, 2024 .

Allowance for Credit Losses

The securities that were in an unrealized loss position as of December 31, 2023, were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors.

The AFS securities that were in an unrealized loss position as of December 31, 2024 , were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors.

For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1 Summary of Significant Accounting Policies - Allowance for Credit Losses on Available for Sale Securities to the Consolidated Financial Statements.

1 unchanged sentence

The issuers have not, to the Company’s knowledge, established any cause for default on these securities.

The Company expects to recover the amortized cost basis of its securities and has no present intent to sell and will not be required to sell available-for-sale securities that have declined below their cost before their anticipated recovery.

The Company expects to recover the amortized cost basis of its securities and has no present intent to sell and will not be required to sell securities AFS that have declined below their cost before their anticipated recovery.

Accordingly, no allowance for credit losses was recorded as of December 31, 2024 , and 2023 , against these securities, and there was no provision for credit losses recognized for the years ended December 31, 2024 , 2023 and 2022 .

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The tables below show the related fair value and the gross unrealized losses of the Company’s investment portfolio, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2024 , and December 31, 2023 :

6 unchanged sentences

(In thousands)

Securities Available-for-Sale

treasury securities

$ 49,831 $ 20 $ — $ — $ 49,831 $ 20

Securities AFS

government agency entities

10 unchanged sentences

12 months or longer

Gross Unrealized Fair

Gross Unrealized

(In thousands)

Securities Available-for-Sale

Securities AFS

treasury securities

9 unchanged sentences

$ 132,580 $ 680 $ 964,495 $ 121,345 $ 1,097,075 $ 122,025

As of December 31, 2023 the Company had 192 AFS debt securities in a gross unrealized loss position with no credit impairment, consisting of 154 mortgage-backed securities, 24 corporate debt securities, one U.S.

treasury securities, five collateralized mortgage obligations and eight U.S.

government agencies.

In comparison, as of December 31, 2022, the Company had 159 mortgage-backed securities, 22 corporate debt securities, six U.S.

treasury securities, five collateralized mortgage obligations and three U.S.

government agencies.

Securities available-for-sale having a carrying value of $ 134.2 million and $ 145.7 million as of December 31, 2023, and December 31, 2022, respectively, were pledged to secure public deposits, and other borrowings.

As of December 31, 2024 , the Company had a total of 182 AFS securities in a gross unrealized loss position with no credit impairment, consisting primarily of 154 mortgage-backed securities, 16 corporate debt securities, nine U.S.

government agencies securities and three collateralized mortgage obligations.

In comparison, as of December 31, 2023 , the Company had a total of 192 AFS securities in a gross unrealized loss position with no credit impairment, consisting primarily of 154 mortgage-backed securities, 24 corporate debt securities, eight U.S.

government agencies securities, five collateralized mortgage obligations and one U.S.

treasury security.

AFS securities having a carrying value of $ 17.8 million and $ 134.2 million as of December 31, 2024 , and December 31, 2023 , respectively, were pledged to secure public deposits, and other borrowings.

Equity securities were $ 34.4 million and $ 40.4 million as of December 31, 2024 , and 2023 , respectively.

The Company recognized a net unrealized gain of $ 18.2 million, $ 291 thousand and $ 1.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company recognized a net unrealized loss on equity securities of $ 7.5 million for the year ended December 31, 2024 .

The company recognized net unrealized gains on equity securities of $ 18.2 million and $ 0.3 million for the years ended December 31, 2023 and 2022 , respectively.

The Company received proceeds of $ 553 thousand and realized a loss of $ 101 thousand on the sale of equity securities for the year ended December 31, 2022.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Most of the Company’s business activities are with clients located in the high-density Asian-populated areas of Southern and Northern California;

10 unchanged sentences

The Company generally expects loans to be paid off from the operating profits of the borrowers, from refinancing by another lender, or through sale by the borrowers of the secured collateral.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following table presents the composition of the Company’s loans as of December 31, 2024 , and 2023 , were as follows:

16 unchanged sentences

( 10,541 ) ( 10,720 )

Total loans, net

Total loans held for investment, net

$ 19,203,649 $ 19,382,858

Loans held for sale

The Company pledged real estate loans of $ 14.55 billion as of December 31, 2024 , and $ 14.15 billion as of December 31, 2023 , to the Federal Home Loan Bank of San Francisco under its blanket lien pledging program.

The Company pledged commercial loans of $ 388 thousand as of December 31, 2023, and $ 583 thousand as of December 31, 2022, to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

The Company pledged commercial loans of $ 474.8 million as of December 31, 2024 , and $ 388 thousand as of December 31, 2023 , to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

Loans serviced for others as of December 31, 2024 , totaled $ 172.2 million and were comprised of $ 63.3 million of residential mortgages, $ 44.5 million of commercial real estate loans, $ 22.6 million of construction loans, and $ 41.8 million of commercial loans.

As of December 31, 2023 , loans serviced for others, totaled $ 203.0 million and were comprised of $ 70.7 million of residential mortgages, $ 76.1 million of commercial real estate loans, $ 11.8 million of construction loans and $ 44.4 million of commercial loans.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company has entered into transactions with its directors, executive officers, or principal holders of its equity securities, or the associates of such persons (“related parties”).

10 unchanged sentences

$ 85,248 $ 45,707

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Non-accrual Loans

As of December 31, 2024 , recorded investment in non-accrual loans totaled $ 169.2 million compared to $ 66.7 million as of December 31, 2023 .

The average balance of non-accrual loans was $ 130.1 million and $ 71.8 million as of December 31, 2024 , and 2023 , respectively.

Interest recognized on non-accrual loans totaled $ 321 thousand, $ 435 thousand and $ 1.1 million for the years ended December 31, 2023, 2022 and 2021.

Interest recognized on non-accrual loans totaled $ 197 thousand, $ 321 thousand and $ 435 thousand for the years ended December 31, 2024 , 2023 and 2022 .

For non-accrual loans, the amounts previously charged-off represent 11.7 % of the contractual balances for non-accrual loans as of December 31, 2024 , and 15.8 % as of December 31, 2023 .

As of December 31, 2024, $ 115.2 million of the $ 169.2 million of non-accrual loans were secured by real estate compared to $ 52.3 million of the $ 66.7 million of non-accrual loans that were secured by real estate as of December 31, 2023.

As of December 31, 2024 and 2023, collateral-dependent non-accrual loans were secured by real estate and personal property.

The Bank generally seeks to obtain current appraisals, sales contracts, or other available market price information intended to provide updated factors in evaluating potential loss.

The allowance for the collateral-dependent loans is calculated based on the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals, sales contracts, or other available market price information, less cost to sell.

The allowance for collateral-dependent loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing.

We continue to monitor the collateral coverage of these loans, based on recent appraisals, on a quarterly basis and adjust the allowance accordingly.

The following tables present the average balance and interest income recognized on non-accrual loans for the periods indicated:

8 unchanged sentences

$ 130,126 $ 197

Average Recorded Investment Interest Income Recognized

For the year ended December 31, 2023

Average Recorded Investment

Interest Income Recognized

(In thousands)

Commercial loans

2 unchanged sentences

Residential mortgage and equity lines

Installment and other loans

$ 71,830 $ 321

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table presents non-accrual loans and the related allowance as of December 31, 2024 , and 2023 :

5 unchanged sentences

$ 56,022 $ 53,499 $ —

Construction loans

7,736 7,736 —

Commercial real estate loans

2 unchanged sentences

19,340 18,831 —

Installment and other loans

$ 175,678 $ 155,266 $ —

1 unchanged sentence

Commercial loans

$ 18,769 $ 6,267 $ 1,208

Commercial real estate loans

Residential mortgage and equity lines

7,786 7,435 29

$ 26,749 $ 13,895 $ 1,238

Total non-accrual loans

$ 202,427 $ 169,161 $ 1,238

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

As of December 31, 2023

4 unchanged sentences

$ 26,310 $ 14,404 $ —

Construction loans

7,736 7,736 —

Commercial real estate loans

1 unchanged sentence

Residential mortgage and equity lines

Installment and other loans

12,957 12,511 —

$ 88,728 $ 66,681 $ —

With allocated allowance:

Commercial loans

$ 14,643 $ 12,823 $ 3,734

Commercial real estate loans

1,896 1,891 207

$ 16,539 $ 14,714 $ 3,941

Residential mortgage and equity lines

Total non-accrual loans

8 unchanged sentences

Interest recognized

321 435 1,074

Net interest foregone

$ 15,078 $ 5,949 $ 4,185

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following tables present the aging of the loan portfolio by type as of December 31, 2024 , and December 31, 2023 :

29 unchanged sentences

$ 124,698 $ 38,941 $ 7,157 $ 66,681 $ 237,477 $ 19,310,663 $ 19,548,140

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The Company has adopted ASU 2022 - 02, “Financial Instruments – Troubled Debt Restructurings and Vintage Disclosures” effective January 1, 2023.

Under the new guidance on loan modifications made to borrowers experiencing financial difficulty, when a loan held for investment is modified and is considered to be a continuation of the original loan, the Company uses the post-modification contractual rate to derive the effective interest rate when using a discounted cash flow method to determine the allowance for credit loss.

The amendments in this new guidance eliminate the previous TDR recognition and measurement guidance and, instead, require that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan.

Under this guidance on loan modifications made to borrowers experiencing financial difficulty, when a loan held for investment is modified and is considered to be a continuation of the original loan, the Company uses the post-modification contractual rate to derive the effective interest rate when using a discounted cash flow method to determine the allowance for credit loss.

The amendments in this guidance require that an entity evaluate whether the modification represents a new loan or a continuation of an existing loans.

Under the prior TDR guidance, a TDR is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower.

6 unchanged sentences

Under the prior guidance when the value of a concession was measured using the discounted cash flow method, the allowance for credit loss was determined by discounting the expected future cash flows at the original interest rate of the loan.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Upon adoption of ASU 2022 - 02, the Company establishes a specific reserve for individually evaluated loans that do not share similar risk characteristics with the loans included in the quantitative baseline.

The Company establishes a specific reserve for individually evaluated loans that do not share similar risk characteristics with the loans included in the collective reserve.

These individually evaluated loans are removed from the pooling approach for the quantitative baseline, and include non-accrual loans, loan modifications made to borrowers experiencing financial difficulty, and other loans as deemed appropriate by management.

6 unchanged sentences

of Contracts Pre-Modification Outstanding Recorded Investment Post-Modification Outstanding Recorded Investment Specific Reserve Charge-offs

(Dollars in thousands)

(In thousands)

Commercial loans

5 unchanged sentences

15 $ 11,980 $ 11,946 $ 427 $ —

The following table presents TDRs that were modified during 2021, their specific reserve as of December 31, 2021, and charge-offs during 2021:

Loans Modified as TDRs During the Year Ended December 31, 2021

Pre-Modification Outstanding

Post-Modification Outstanding

(Dollars in thousands)

Modifications of the loan terms in the twelve months ended December 31, 2024 , and December 31, 2023 , were in the form of payment deferrals, term extensions, and interest rate reductions, or a combination thereof.

The following table presents the amortized cost of loans modified to borrowers experiencing financial difficulty disaggregated by class of financing receivable and type of concession granted and the financial effects of the modifications for the twelve months ended December 31, 2024 , and 2023 , by loan class and modification type:

Twelve Months Ended December 31, 2024

Financial Effects of Loan Modifications

Term Extension

Rate Reduction

Payment Delay

Combo-Rate Reduction/Term Extension/Payment Delay

Modification as a % of Loan Class

Weighted-Average Change in Rate

Weighted-Average Term Extension (in Years)

Weighted-Average Payment Deferral (in Years)

(In thousands)

Commercial loans

$ 4,720 $ — $ 130 $ 4,092 $ 8,942 0.29 % 0.20 2.3 0.1

Residential mortgage and equity lines

Residential mortgage loans

— — 221 — 221 0.00 % 0.00 0.0 2.0

$ 4,720 $ — $ 351 $ 4,092 $ 9,163

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Modifications of the loan terms in the three and twelve months ended December 31, 2023, were in the form of payment deferrals, term extensions, and interest rate reductions, or a combination thereof.

Twelve Months Ended December 31, 2023

Financial Effects of Loan Modifications

Term Extension

Rate Reduction

Payment Delay

1 unchanged sentence

Modification as a % of Loan Class

Weighted-Average Rate Reduction

Weighted-Average Term Extension

Weighted-Average Payment Deferral

Weighted-Average Change in Rate

Weighted-Average Term Extension (in Years)

Weighted-Average Payment Deferral (in Years)

(In thousands)

Commercial loans

5 unchanged sentences

The Company tracks the performance of modified loans.

A modified loan may become delinquent and may result in a payment default subsequent to modification.

There were no loans that received a modification for the twelve months ended December 31, 2023 that subsequently defaulted.

The following table presents the performance of loans that were modified during the twelve months ended December 31, 2023.

There were no loans that received a modification for the twelve months ended December 31, 2024 , and 2023 , that subsequently defaulted.

A modified loan may become delinquent and may result in a payment default (generally 90 days past due) subsequent to modification.

There were no loans that received modifications which subsequently defaulted for the twelve months ended December 31, 2024 , and 2023 .

The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of loans that were modified during the twelve months ended December 31, 2024 , and 2023 .

Twelve Months Ended December 31, 2024

30–89 Days Past Due 90+ Days Past Due Total

(In thousands)

Commercial loans

$ 2,650 $ — $ — $ 2,650

Residential mortgage loans

$ 2,872 $ — $ — $ 2,872

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

A summary of TDRs by type of concession and by type of loans as of December 31, 2022, is set forth in the table below:

December 31, 2022

Accruing TDRs

Payment Deferral Rate Reduction Rate Reduction and Payment Deferral Total

30–89 Days Past Due

90+ Days Past Due

(In thousands)

1 unchanged sentence

$ 8,942 $ — $ — $ 8,942

Commercial real estate loans

2,791 — 5,855 8,646

Residential mortgage loans

$ 9,163 $ — $ — $ 9,163

Total accruing TDRs

$ 7,560 $ 445 $ 7,140 $ 15,145

December 31, 2022

Non-accrual TDRs

Payment Deferral Rate Reduction Rate Reduction and Payment Deferral Total

Twelve Months Ended December 31, 2023

30–89 Days Past Due 90+ Days Past Due Total

(In thousands)

1 unchanged sentence

$ 2,650 $ — $ — $ 2,650

Commercial real estate loans

1,098 — — 1,098

Residential mortgage loans

$ 2,872 $ — $ — $ 2,872

Total non-accrual TDRs

$ 6,348 $ — $ — $ 6,348

Modifications of the loan terms in the twelve months ended December 31, 2022, were in the form of extensions of maturity dates, which ranged generally from three to twelve months from the modification date.

We expect that the TDRs on accruing status as of December 31, 2022, which were all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company considers a loan to be in payment default once it is 60 to 90 days contractually past due under the modified terms.

The Company did not have any loans that were modified as a TDR during the previous twelve months and which had subsequently defaulted as of December 31, 2022.

Under the Company’s internal underwriting policy, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification in order to determine whether a borrower is experiencing financial difficulty.

17 unchanged sentences

The vintage year is the year of origination, renewal or major modification.

Revolving loans that are converted to term loans presented in the table below are excluded from the term loans by vintage year column.

Loans Amortized Cost Basis by Origination Year

110 unchanged sentences

and Equity Lines

Allowance for loan losses (In thousands)

(In thousands)

Allowance for loan losses

2022 Ending Balance

18 unchanged sentences

$ 4,840 $ 3,890 $ — $ — $ — $ 8,730

Provision for expected credit losses

Provision/(reversal) for expected credit losses

2,048 ( 1,725 ) — — — 323

5 unchanged sentences

$ 7,780 $ 1,896 $ — $ — $ — $ 9,676

Residential mortgage loans in process of formal foreclosure proceedings were $ 242 thousand as of December 31, 2023, and $ 456 thousand as of December 31, 2022.

Residential mortgage loans in process of formal foreclosure proceedings were $ 6.7 million as of December 31, 2024 , and $ 242 thousand as of December 31, 2023 .

Investments in Affordable Housing and Alternative Energy Partnerships

7 unchanged sentences

The balance of the Company’s investments in these entities was $ 289.6 million and $ 315.7 million as of December 31, 2024 , and 2023 , respectively.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company’s investments in these partnerships, net, are presented in the table below:

15 unchanged sentences

Unfunded commitments for affordable housing limited partnerships and alternative energy tax credit partnerships were recorded under other liabilities.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

As of December 31, 2024 , the Company’s unfunded commitments related to investments in qualified affordable housing and alternative energy partnerships, net, are estimated to be paid as follows:

9 unchanged sentences

In 2024 and 2023 , non-interest expense included $ 6.1 million and $ 7.7 million in impairment charges for investments in low-income housing partnerships.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table summarizes the Company’s usage of affordable housing and other tax credits including energy tax credits.

24 unchanged sentences

The amount of depreciation included in operating expense was $ 6.1 million, $ 7.1 million and $ 8.0 million for the years ended December 31, 2024 , 2023 and 2022 , respectively.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Goodwill and Other Intangible Assets

2 unchanged sentences

The Company completed its annual goodwill impairment testing and additionally reviewed the macroeconomic conditions on its business performance and market capitalization and concluded that goodwill was not impaired as of December 31, 2024 , and 2023 .

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Core Deposit Intangibles.

As a result of the acquisition of HSBC’s West Coast mass retail market consumer banking business and retail business banking business, the Company added core deposit intangibles of $ 3.1 million in 2022.

The following table presents the gross carrying amount and accumulated amortization of core deposits intangible assets as of December 31, 2024 , and 2023 :

7 unchanged sentences

$ 2,946 $ 4,044

There were $ 1.2 million and $ 918 thousand in impairment write-downs on core deposit intangibles for the year ended December 31, 2023 and 2022, respectively, included in amortization of core deposit intangibles on the Consolidated Statements of Operations and Comprehensive Income.

No impairment write-downs were recorded on core deposit intangibles for the years ended December 31, 2021.

There were $ 0.1 million, $ 0.3 million and $ 0.9 million in impairment write-down on core deposit intangibles during the year of December 31, 2024 , 2023 and 2022 , respectively, included in amortization of core deposit intangibles on the Consolidated Statements of Operations and Comprehensive Income.

The Company amortizes the core deposit intangibles based on the projected useful lives of the related deposits.

The amortization expense related to the core deposit intangible assets was $ 1.3 million, $ 1.9 million and $ 687 thousand for the years ended December 31, 2023, 2022 and 2021, respectively.

The amortization expense related to the core deposit intangible assets was $ 1.1 million, $ 1.3 million and $ 1.9 million for the years ended December 31, 2024 , 2023 and 2022 , respectively.

(In thousands)

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table displays deposit balances as of December 31, 2024 , and December 31, 2023 :

31 unchanged sentences

$ 636,265 $ 467,962 $ 105,296

The aggregate amount of domestic time deposits in denominations that meet or exceed the current FDIC insurance limit of $250 thousand was $ 5.30 billion and $ 4.10 billion as of December 31, 2023, and 2022, respectively.

Foreign offices’ time deposits of $ 174.2 million and $ 128.6 million as of December 31, 2023, and 2022, respectively, were in denominations of greater than $250 thousand.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The aggregate amount of domestic time deposits in denominations that meet or exceed the current FDIC insurance limit of $250 thousand was $ 5.60 billion and $ 5.30 billion as of December 31, 2024 , and 2023 , respectively.

Foreign offices’ time deposits of $ 153.1 million and $ 174.2 million as of December 31, 2024 , and 2023 , respectively, were in denominations of greater than $250 thousand.

Borrowed Funds

1 unchanged sentence

Securities sold under agreements to repurchase, if any, are accounted for as collateralized financing transactions and recorded at the amounts at which the securities were sold.

As of December 31, 2023, there were no over-night borrowings from the FHLB in 2023 and $ 150.0 million in over-night borrowings from the FHLB at a rate of 4.65 % in 2022.

As of December 31, 2024 , and 2023 , there were no over-night borrowings from the FHLB.

As of December 31, 2024 , all advances from the FHLB were $ 60.0 million at a weighted average rate of 5.08 % and $ 540.0 million at a weighted average rate of 5.64 % as of December 31, 2023 .

As of December 31, 2023, final maturity for the FHLB advances were $ 525.0 million that will mature in January 2024 and $ 15.0 million that will mature in September 2024.

As of December 31, 2024 , final maturity for the FHLB advances were $ 60.0 million that will mature in February 2025.

Our unused borrowing capacity from the Federal Home Loan Bank as of December 31, 2024 , was $ 7.47 billion and unpledged securities at December 31, 2024 , was $ 1.53 billion.

19 unchanged sentences

Under the terms of the Junior Subordinated Notes, the Company may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if it has deferred payment of interest on any Junior Subordinated Notes.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

As of December 31, 2024 , and 2023 , Junior Subordinated Notes totaled $ 119.1 million, with a weighted average interest rate of 7.75 % and 7.54 %, respectively.

3 unchanged sentences

Capital Resources

Total equity was $ 2.74 billion as of December 31, 2023, an increase of $ 262.5 million, or 10.6 %, from $ 2.47 billion at December 31, 2022, primarily due to net income of $ 354.1 million, other comprehensive income of $ 16.9 million, stock based compensation of $ 7.0 million, proceeds from dividend reinvestment of $ 3.5 million, stock issued to directors of $ 0.9 million, offset by common stock cash dividends of $ 98.6 million, purchases of treasury stock of $ 16.7 million, and shares withheld related to net share settlement of RSU’s of $ 4.5 million.

Total equity was $ 2.85 billion as of December 31, 2024 , an increase of $ 109.1 million, or 4.0 %, from $ 2.74 billion at December 31, 2023 , primarily due to net income of $ 286.0 million, stock based compensation of $ 6.0 million, proceeds from dividend reinvestment of $ 2.9 million, and stock issued to directors of $ 0.9 million, offset by common stock cash dividends of $ 98.0 million, purchases of treasury stock of $ 84.7 million, shares withheld related to net share settlement of RSU’s of $ 3.7 million, and other comprehensive loss of $ 0.2 million.

The Company paid cash dividends of $ 1.36 per common share in 2024 , $ 1.36 per common share in 2023 , and $ 1.36 per common share in 2022 .

On May 26th, 2022, the Board of Directors approved a stock repurchase program to buy back up to $ 125.0 million of the Company’s common stock.

Under this program, the Company repurchased 2,522,538 shares for $ 108.4 million at an average cost of $ 42.98 for the year.

During 2022, the Company repurchased 3,227,465 shares in total for approximately $ 141.3 million at an average cost of $ 43.79 .

On February 21, 2023, the Company completed its May 2022 stock buyback program by repurchasing 375,090 shares at an average cost of $ 44.20 in the first quarter of 2023, for a total of $ 16.6 million.

On May 28th, 2024, the Company announced a new stock repurchase program to buy back up to $ 125.0 million of the Company's common stock.

The previous $ 125.0 million share repurchase program announced on May 26, 2022, was completed on February 21, 2023, with the repurchase of 2,897,628 shares at an average cost of $ 43.14 .

Through December 31, 2024 , the Company repurchased 2,028,581 shares of common stock for a total of $ 83.9 million, at an average cost of $ 41.37 per share under the May 2024 buyback program.

The five special purpose trusts established for the purpose of issuing the Capital Securities are considered variable interest entities.

7 unchanged sentences

As of December 31, 2024

(Dollars in thousands)

(In thousands)

Cathay Capital Trust I

17 unchanged sentences

As of December 31, 2023

(Dollars in thousands)

(In thousands)

Cathay Capital Trust I

51 unchanged sentences

$ ( 9,569 ) $ ( 9,687 )

Depreciation and amortization

Unrealized gain on interest rate swaps

1 unchanged sentence

Unrealized gain on equity securities

( 2,460 ) ( 4,863 )

Dividends on Federal Home Loan Bank common stock

6 unchanged sentences

Amounts for the current year are based upon estimates and assumptions and could vary from amounts shown on the tax returns as filed.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

As of December 31, 2023, the Company’s gross net operating loss (“NOL”) carryovers, all of which are subject to limitation under Section 382 of the Internal Revenue Code, totaled approximately $ 2.3 million for which a deferred tax asset of $ 0.5 million has been recorded reflecting the expected benefit of these federal NOL carryovers.

At December 31, 2024 , the Company has California NOL carryovers of $ 33.5 million for which a California deferred tax asset of $ 3.2 million has been recorded reflecting the expected benefit of these California NOL carryovers.

The annual IRC Section 382 limitation is $10.2 million per year until 2021 and decreases to $8.8 million in 2022 and $7.3 million per year thereafter.

If not utilized, a portion of the Company’s federal and state NOL’s will begin to expire in 2030.

At December 31, 2023, the Company’s federal tax credit carryovers and AMT tax credit carryovers total $ 7.5 million and $ 1.0 million, respectively.

The annual IRC Section 382 limitation is $7.3 million per year.

If not utilized, a portion of the Company’s state NOL’s will begin to expire in 2030.

At December 31, 2024 , the Company’s federal tax credit carryovers total $ 28.7 million .

If not utilized, the federal tax credit carryovers will begin to expire in 2028.

4 unchanged sentences

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize all benefits related to these deductible temporary differences.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The Company had current income tax receivables of $ 37.0 million as of December 31, 2024 , and $ 33.7 million as of December 31, 2023 .

The Company had $ 15.9 million of tax credits generated in 2023 that will be credited back to 2022.

The Company had $ 20.2 million of tax credits generated in 2024 that will be carried forward to 2025.

Current income tax receivable is included in other assets in the accompanying Consolidated Balance Sheets.

5 unchanged sentences

Year Ended December 31,

(Dollars in thousands)

(In thousands)

Tax provision at Federal statutory rate

9 unchanged sentences

$ 31,563 9.9 % $ 49,458 12.3 % $ 111,894 23.7 %

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Stockholders ’ Equity and Earnings per Share

3 unchanged sentences

The amount of retained earnings available for cash dividends is restricted to approximately $ 420.4 million for December 31, 2023 .

Activity in accumulated other comprehensive income, net of tax, and reclassification out of accumulated other comprehensive income for the years ended December 31, 2023, and 2022 was as follows:

Activity in accumulated other comprehensive income, net of tax, and reclassification out of accumulated other comprehensive income for the years ended December 31, 2024 , and 2023 were as follows:

Tax expense/ (benefit)

2 unchanged sentences

(In thousands)

Securities available-for-sale

Securities AFS

$ ( 86,190 ) $ ( 104,832 )

1 unchanged sentence

$ ( 85,416 ) $ ( 102,295 )

$ ( 102,295 ) $ ( 3,065 )

Net unrealized gains/(losses) arising during the period

Securities available-for-sale

Securities AFS

$ 1,123 $ 332 $ 791 $ 24,315 $ 7,786 $ 16,529

3 unchanged sentences

Reclassification adjustment for net gains/(losses) in net income

Securities available-for-sale

Securities AFS

( 295 ) ( 87 ) ( 208 ) 3,000 887 2,113

1 unchanged sentence

( 295 ) ( 87 ) ( 208 ) 3,000 887 2,113

3,000 887 2,113 ( 2,612 ) ( 772 ) ( 1,840 )

Total other comprehensive income/(loss)

Securities available-for-sale

Securities AFS

$ 828 $ 245 583 27,315 8,673 18,642

3 unchanged sentences

Ending balance, gain/(loss), net of tax

Securities available-for-sale

Securities AFS

$ ( 85,607 ) $ ( 86,190 )

35 unchanged sentences

Unless noted otherwise, the Company does not require collateral or other security to support financial instruments with credit risk.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Financial instruments for which contract amounts represent the amount of credit risk include the following:

18 unchanged sentences

The credit risk involved in issuing letters of credit and bill of lading guarantees is essentially the same as that involved in making loans to clients.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The Company enters into operating leases in the normal course of business primarily for branch offices, office spaces and certain equipment.

5 unchanged sentences

The Company does not possess any leases that have variable lease payments or residual value guarantees as of December 31, 2024 , and 2023 .

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table represents the operating lease amounts reported on the Consolidated Balance Sheets and other supplemental information as of December 31, 2024 , and December 31, 2023 :

1 unchanged sentence

December 31, 2023

(Dollars in millions)

(In millions)

Operating Leases:

19 unchanged sentences

As part of the Company’s asset and liability management, however, the Company enters into financial derivatives to seek to mitigate exposure to interest rate risks related to its interest-earning assets and interest-bearing liabilities.

The Company believes that these transactions, when properly structured and managed, may provide a hedge against inherent interest rate risk in assets or liabilities and against risk in specific transactions of the Company.

In such instances, the Company may protect its position through the purchase or sale of interest rate futures contracts for a specific cash or interest rate risk position.

The Company believes that these transactions, when properly structured and managed, may provide a hedge against inherent interest rate risk in our assets or liabilities and against risk in specific transactions.

In such instances, the Company may protect its position through the purchase or sale of interest rate future contracts for a specific cash or interest rate risk position.

Other hedging transactions may be implemented using interest rate swaps, interest rate caps, floors, financial futures, forward rate agreements, and options on futures or bonds.

19 unchanged sentences

As of December 31, 2024 , and 2023 , the Company had outstanding interest rate derivative contracts with certain clients and third -party financial institutions with a notional amount of $ 680.5 million and $ 650.9 million, respectively, with a fair value of $ 32.7 million and $ 38.6 million, respectively, for both clients and third -party financial institutions.

As of December 31, 2022, the notional amount of $ 205.6 million of interest rate swaps cleared through the CCP.

In May 2014, the Bancorp entered into interest rate swap contracts with the notional amount of $ 119.1 million for a period of ten years.

The objective of these interest rate swap contracts, which were designated as hedging instruments in cash flow hedges, was to hedge the quarterly interest payments on the Bancorp’s $ 119.1 million of Junior Subordinated Debentures that had been issued to five trusts, throughout the ten -year period beginning in June 2014 and ending in June 2024, from the risk of variability of these payments resulting from changes in the three -month LIBOR interest rate.

The Company early terminated these cash flow derivative swaps in 2022 and realized a gain of $ 4.0 million for the year ended December 31, 2022 and is recognizing the amount as a reduction of long-term debt interest expense over the remaining life of the swaps on a straight-line basis.

As of December 31, 2022, the ineffective portion of these interest rates swaps was not significant.

The periodic net settlement of the interest rate swaps included in interest expense was a net gain of $ 772 thousand as of December 31, 2022.

As of December 31, 2024 , and 2023 , for borrower swap transactions, there were no notional amount of interest rate swaps cleared through the CCP.

In May 2014, Bancorp entered into interest rate swap contracts in the notional amount of $ 119.1 million for a period of ten years.

The objective of these interest rate swap contracts, which were designated as hedging instruments in cash flow hedges, was to hedge the quarterly interest payments on Bancorp’s $ 119.1 million of Junior Subordinated Debentures that had been issued to five trusts, throughout the ten -year period beginning in June 2014 and ending in June 2024, from the risk of variability of these payments resulting from changes in the three -month LIBOR interest rate.

The Company early terminated these cash flow derivative swaps in 2022 and realized a gain of $ 4.0 million for the year ended December 31, 2022, and is recognizing the amount as a reduction of long-term debt interest expense over the remaining life of the swaps on a straight-line basis ending in June 2024.

As of December 31, 2024 , and 2023 , the Bank’s outstanding fair value interest rate swap contracts matched to individual fixed-rate commercial real estate loans had a notional amount of $ 81.3 million and $ 88.5 million with a fair value of $ 3.3 million and $ 4.2 million, respectively, and for various terms from three to ten years.

2 unchanged sentences

As of December 31, 2024 , and 2023 , the ineffective portion of these interest rate swaps was not significant.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company has designated as a partial-term hedging election $ 1.07 billion and $ 669.7 million notional with a fair value of $ 3.8 million and $ 32.0 million as last-of-layer hedge on pools of loans with a notational value of $ 1.78 billion and $ 1.21 billion as of December 31, 2023 and 2022, respectively.

The Company has designated as a partial-term hedging election $ 793.8 million and $ 1.07 billion notional with a fair value of $ 321 thousand and $ 3.8 million as last-of-layer hedge on pools of loans with a notational value of $ 1.32 billion and $ 1.78 billion as of December 31, 2024 , and 2023 , respectively.

The loans are not expected to be affected by prepayment, defaults, or other factors affecting the timing and amount of cash flows under the last-of-layer method.

The Company has entered into these pay-fixed and receive 1 -Month Term SOFR interest rate swap to convert the last-of-layer $ 1.07 billion portion of a $ 1.78 billion fixed rate loan tranche in order to reduce the Company’s exposure to higher interest rates for the last-of-layer tranche.

As of December 31, 2023 and 2022, the last-of-layer loan tranche had a fair value basis adjustment of $ 2.0 million and $ 31.0 million, respectively.

The Company has entered into these pay-fixed and receive 1 -Month Term SOFR interest rate swaps to convert the last-of-layer $ 793.8 million portion of a $ 1.32 billion fixed rate loan pools in order to reduce the Company’s exposure to higher interest rates for the last-of-layer tranches.

As of December 31, 2024 , and 2023 , the last-of-layer loan tranche had a net fair value basis adjustment of $ 1.2 million and $ 2.0 million, respectively.

The interest rate swap converts this last-of-layer tranche into a floating rate instrument.

4 unchanged sentences

Credit exposure may be reduced by the amount of collateral pledged by the counterparty.

Bancorp’s interest rate swaps have been assigned by the counterparties to a derivatives clearing organization and daily margin is indirectly maintained with the derivatives clearing organization.

The notional amount and net unrealized loss of the Company’s fair value derivative financial instruments as of December 31, 2023, and December 31, 2022, were as follows:

Bancorp’s interest rate swaps have been assigned by the counterparties to a derivative clearing organization and daily margin is indirectly maintained with the derivative clearing organization.

The notional amount and net unrealized loss of the Company’s fair value hedge derivative financial instruments as of December 31, 2024 , and December 31, 2023 , were as follows:

December 31, 2024

11 unchanged sentences

$ 3,644 $ 7,935

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

December 31, 2024

4 unchanged sentences

( 2 ) the amount of periodic net settlement of interest rate swaps was included in interest income.

Included in the total notional amount of $ 1.16 billion and $ 874.0 million of the fair value interest rate contracts entered into with financial counterparties as of December 31, 2023 and 2022, was a notional amount of $ 846.9 million and $ 449.3 million of interest rate swaps that cleared through the CCP, respectively.

Applying variation margin payments as settlement to CCP cleared derivative transactions resulted in a reduction in derivative asset fair values of $ 257 thousand and $ 25.8 million as of December 31, 2023 and 2022, respectively.

Included in the total notional amount of $ 875.1 million and $ 1.16 billion of the fair value hedge contracts entered into with financial counterparties as of December 31, 2024 , and 2023 , was a notional amount of $ 572.8 million and $ 846.9 million of interest rate swaps that cleared through the CCP, respectively.

Applying variation margin payments as settlement to CCP cleared derivative transactions resulted in a reduction in derivative asset fair values of $ 158 thousand and $ 257 thousand as of December 31, 2024 , and 2023 , respectively.

The Company enters into foreign exchange forward contracts with various counterparties to mitigate the risk of fluctuations in foreign currency exchange rates for foreign exchange certificates of deposit or foreign exchange contracts entered into with our clients.

2 unchanged sentences

Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities .

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The notional amount and fair value of the Company’s derivative financial instruments not designated as hedging instruments as of December 31, 2024 , and December 31, 2023 , were as follows:

5 unchanged sentences

Notional amounts:

Option contracts

Forward, and swap contracts with positive fair value

6 unchanged sentences

$ ( 33,531 ) $ ( 38,807 )

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Fair Value Measurements and Fair Value of Financial Instruments

9 unchanged sentences

market inputs that are not directly observable but are derived from or corroborated by observable market data.

Level 3 – Unobservable inputs based on the Company’s own judgments about the assumptions that a market participant would use.

Level 3 – Unobservable inputs based on the Company’s own judgment about the assumptions that a market participant would use.

The classification of assets and liabilities within the hierarchy is based on whether inputs to the valuation methodology used are observable or unobservable, and the significance of those inputs in the fair value measurement.

The Company’s assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurements as follows:

The Company’s assets and liabilities are classified in their entirety based on the lowest level of input that is significant to their fair value measurements.

Financial assets and liabilities measured at fair value on a recurring basis

5 unchanged sentences

This category generally includes U.S.

Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, corporate bonds and trust preferred securities.

The Company measures the fair value of warrants based on unobservable inputs based on assumption and management judgment, a Level 3 measurement.

Government agency securities, U.S.

Government sponsored entities, state and municipal securities, mortgage-backed securities (“MBS”), collateralized mortgage obligations and corporate bonds.

The Company measures the fair value of warrants based on unobservable inputs based on assumptions and management judgment, a Level 3 measurement.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Currency Option Contracts and Foreign Exchange Contracts .

2 unchanged sentences

The Company measures the fair value of interest rate swaps using third party models with observable market data, a Level 2 measurement.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following tables present the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2023, and at December 31, 2022:

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2024 , and at December 31, 2023 :

As of December 31, 2024

1 unchanged sentence

(In thousands)

Securities available-for-sale

Securities AFS

Treasury securities

2 unchanged sentences

— 9,149 — 9,149

government sponsored entities

Mortgage-backed securities

26 unchanged sentences

(In thousands)

Securities available-for-sale

Securities AFS

Treasury securities

2 unchanged sentences

— 48,169 — 48,169

government sponsored entities

— 30,000 — 30,000

Mortgage-backed securities

25 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Assets measured at estimated fair value on a non-recurring basis.

Financial assets and liabilities measured at estimated fair value on a non-recurring basis.

Certain assets or liabilities are required to be measured at estimated fair value on a nonrecurring basis subsequent to initial recognition.

1 unchanged sentence

In determining the estimated fair values during the period, the Company determined that substantially all the changes in estimated fair value were due to declines in market conditions versus instrument specific credit risk.

For the year ended December 31, 2023, and December 31, 2022, there were no material adjustments to fair value for the Company’s assets and liabilities measured at fair value on a nonrecurring basis in accordance with GAAP.

For financial assets measured at fair value on a nonrecurring basis that were still reflected in the Consolidated Balance Sheets as of December 31, 2023, and 2022, the following tables provide the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets at December 31, 2023, and at December 31, 2022, and the total losses for the periods indicated:

For the periods ended December 31, 2024 , and December 31, 2023 , there were no material adjustments to fair value for the Company’s assets and liabilities measured at fair value on a nonrecurring basis in accordance with GAAP.

During the second quarter of 2024, the Company entered into a restructuring support agreement and received equity securities in a private company, a Level 3 measurement.

The fair value of the Company’s Level 3 equity securities were measured using the private company’s projected earnings plus cash on hand.

The primary inputs and assumptions used in the fair value measurement was derived from the issuer’s projected earnings and collateral, which included cash on hand, the financial standing of the issuer, the business and financial plan of the issuer, among other factors.

Significant increases or decreases in any of the inputs or assumptions could result in a significant increase or decrease in the fair value measurement.

For financial assets measured at fair value on a nonrecurring basis that were still reflected in the Consolidated Balance Sheets as of December 31, 2024 , and 2023 , the following tables set forth the level of valuation assumptions used to determine each adjustment, the carrying value of the related individual assets at December 31, 2024 , and December 31, 2023 , and the total losses for the periods indicated:

As of December 31, 2024

9 unchanged sentences

— — 15,320 15,320 4,049 4,069

Residential mortgage and equity lines

— — 243 243 59 —

Total non-accrual loans

2 unchanged sentences

— — 24,126 24,126 — —

Other equity securities

— — 1,539 1,539 — —

Investments in venture capital

13 unchanged sentences

— — 6,882 6,882 4,069 2,091

Residential mortgage and equity lines

— — 8,978 8,978 — —

Installment and other loans

Total non-accrual loans

6 unchanged sentences

( 1 ) Other real estate owned balance of $ 19.4 million in the Consolidated Balance Sheets is net of estimated disposal costs.

The significant unobservable (Level 3 ) inputs used in the fair value measurement of collateral for collateral-dependent individually evaluated loans was primarily based on the appraised value of collateral adjusted by estimated sales cost and commissions.

The significant unobservable (Level 3 ) inputs used in the fair value measurement of collateral for collateral-dependent individually evaluated loans are primarily based on the appraised value of collateral adjusted by estimated sales cost and commissions.

The Company generally obtains new appraisal reports every twelve months as appropriate.

3 unchanged sentences

The Company does not record loans at fair value on a recurring basis.

Nonrecurring fair value adjustments to collateral dependent non-accrual loans are recorded based on the current appraised value of the collateral, a Level 2 measurement, or management’s judgment and estimation of value using discounted future cash flows or old appraisals which are then adjusted based on recent market trends, a Level 3 measurement.

Nonrecurring fair value adjustments to collateral dependent individually evaluated loans are recorded based on the current appraised value of the collateral, a Level 2 measurement, or management’s judgment and estimation of value using discounted future cash flows or old appraisals which are then adjusted based on recent market trends, a Level 3 measurement.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Loans held for sale are recorded at the lower of cost or fair value upon transfer.

Loans held for sale may be measured at fair value on a nonrecurring basis when fair value is less than cost.

Fair value is generally determined based on available market data for similar loans and therefore, are classified as Level 2 measurement.

The significant unobservable inputs (Level 3 ) used in the fair value measurement of other real estate owned (“OREO”) are primarily based on the appraised value of OREO adjusted by estimated sales cost and commissions.

The Company applies estimated sales cost and commissions ranging from 3 % to 6 % of the collateral value of individually evaluated loans, quoted price, or loan sale price of loans held for sale, and appraised value of OREO.

The significant unobservable inputs in the Black-Scholes option pricing model for the fair value of warrants are the expected life of warrant ranging from one to six years, risk-free interest rate from 4.25 % to 5.11 %, and stock volatility of the Company from 20.14 % to 27.69 % as of December 31, 2022.

There were no warrants outstanding as of December 31, 2023.

Fair value is estimated in accordance with ASC Topic 825.

2 unchanged sentences

Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.

These estimates are subjective in nature and involved uncertainties and matters of significant judgment and therefore cannot be determined with precision.

These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.

Changes in assumptions could significantly affect the estimates.

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:

The following tables sets forth the carrying amounts and notional amounts and estimated fair value of financial instruments as of December 31, 2024 , and December 31, 2023 :

December 31, 2024

6 unchanged sentences

882,353 882,353 654,813 654,813

Securities available-for-sale

Securities AFS

1,547,128 1,547,128 1,604,570 1,604,570

29 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The following tables present the level in the fair value hierarchy for the estimated fair values of certain financial instruments as of December 31, 2023, and December 31, 2022.

The following tables set forth the level in the fair value hierarchy for the estimated fair values of financial instruments as of December 31, 2024 , and December 31, 2023 , excluding financial instruments recorded at fair value on a recurring basis already presented in other tables in this note:

As of December 31, 2024

38 unchanged sentences

72,304 — 72,304 —

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Revenue from Contracts with Clients

12 unchanged sentences

52,263 43,912 42,179

Noninterest income, not in-scope (2)

Non-interest income, not in-scope (2)

3,401 24,380 14,635

2 unchanged sentences

( 1 ) Other service fees comprise of fees related to letters of credit, wire fees, fees on foreign exchange transactions and other immaterial individual revenue streams.

( 2 ) These amounts primarily represent revenue from contracts with customers that are out of the scope of ASC 606.

( 2 ) These amounts primarily represent revenue from contracts with clients that are out of the scope of ASC Topic 606 and primarily represent revenue from interest rate swap fees, unrealized gains and losses on equity securities and other miscellaneous income.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

The major revenue streams by fee type that are within the scope of ASC 606 presented in the above tables are described in additional detail below:

7 unchanged sentences

The Company recognizes revenue for the services performed at quarter end based on actual transaction details received from the broker dealer the Company engages.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Practical Expedients and Exemptions

43 unchanged sentences

Compensation costs of both time-based and performance-based awards are recognized on a straight-line basis from the grant date until the vesting date of each grant.

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table presents RSU activity for 2024 , 2023 , and 2022 :

42 unchanged sentences

Other liabilities

13,166 13,758

Total liabilities

14 unchanged sentences

$ 2,978,006 $ 2,869,469

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Statements of Operations

6 unchanged sentences

8,129 6,480 5,560

Non-interest Income

Non-interest (loss)/income

( 9,371 ) 17,757 1,018

3 unchanged sentences

194,777 141,256 224,324

Income tax expense/(benefit)

Income tax (benefit)/expense

( 5,695 ) 1,707 ( 2,885 )

4 unchanged sentences

$ 285,979 $ 354,124 $ 360,642

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

Statements of Cash Flows

6 unchanged sentences

( 85,507 ) ( 214,575 ) ( 133,433 )

Gain on equity securities

Loss/(gain) on equity securities

9,271 ( 17,977 ) ( 733 )

10 unchanged sentences

Venture capital and other investments

168 ( 5 ) 357

Net cash (used)/provided by investment activities

168 ( 5 ) 357

Net cash provided/(used) by investment activities

Cash flows from Financing Activities

15 unchanged sentences

$ 50,174 $ 24,262 $ 14,902

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Dividend Reinvestment Plan

80 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures