CATY

Cathay General is a textbook regional community bank story: FY2025 diluted EPS grew 14.9% to $4.54 on net income of $315M, with management aggressively shrinking the share count (-4.7% YoY) via $180M of buybacks (more than 2x FY2024). At $61.62 the stock trades at 13.6x trailing earnings — undemanding for a bank compounding book value with a 10.8% ROE and a $24.2B balance sheet that grew 5.1%. Operating cash flow of $369M (+12%) comfortably covers the $93.8M dividend and the buyback program, and long-term debt is a trivial $119M against $2.93B of equity. (Note: the reported 'revenue' line of $53.8M and the resulting 76.7x P/S and 585.8% net margin are clearly the XBRL non-interest fee tag, not net interest income — they should be ignored as headline metrics for a bank.)

The 10-K narrative tempers the enthusiasm. Management explicitly flags that ~99.8% of time deposits mature within one year and 'will reprice lower' as the Fed cuts work through, while also warning of 'some outflow…due to the keen competition in the Bank's marketplace' — a classic NIM-squeeze setup where asset yields and deposit costs are both in motion. More importantly, the MD&A discloses that the 2025 allowance build was driven by 'an increase in Special Mention-rated loans and an increase in individually evaluated loan reserves,' and that the macro overlay puts 'more weight…on the downside scenario than the upside.' That is the bank telling you, in CECL language, that credit is migrating the wrong way — consistent with broader CRE stress, which is a meaningful exposure given CATY's commercial real estate concentration mentioned across the six modeled portfolios.