Cathay General Bancorp’s fourth quarter results for 2025 were met with a negative market reaction, despite revenue and non-GAAP earnings per share coming in ahead of Wall Street expectations. Management pointed to higher net interest income, lower credit loss provisions, and improvements in noninterest income as key drivers for the quarter. CEO Chang Liu emphasized the reduction in nonaccrual loans and a notable increase in core deposit growth. However, investors appeared concerned about margin pressures and evolving credit quality, particularly with an increase in special mention loans and ongoing competitive dynamics in both deposit and lending markets.

Is now the time to buy CATY? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Cathay General Bancorp’s Q4 Earnings Call

• Kelly Motta (KBW) asked about assumptions for deposit betas in net interest margin projections. CFO Heng Chen specified a 60% beta for interest-bearing deposits, with CEO Chang Liu discussing the need to balance pricing and deposit retention amid market competition.
• Kelly Motta (KBW) inquired about credit migration trends, particularly the increase in special mention loans. CEO Chang Liu detailed the specific situations leading to downgrades and expressed confidence in their resolution over the next year.
• Andrew Terrell (Stephens) questioned whether loan yield improvements included unusual interest recoveries. CFO Heng Chen confirmed that five basis points of NIM benefit came from recoveries, similar to the previous quarter.
• Andrew Terrell (Stephens) asked about the level of competition for incremental loan growth. CEO Chang Liu explained that residential mortgage yields held firm, while commercial and industrial lending saw the most aggressive rate competition and yield compression.
• Andrew Terrell (Stephens) requested details on expected low income housing amortization in 2026. CFO Heng Chen estimated it at $11 million per quarter.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will be watching (1) the pace at which Cathay General Bancorp can defend and grow its deposit base amid intense competition, (2) the resolution of special mention credits and trends in broader credit quality, and (3) the ability to maintain loan yields despite pressure in commercial and industrial lending. We will also monitor expense growth and the impact of any new share buyback authorizations on capital allocation.

Cathay General Bancorp currently trades at $49.97, down from $52.30 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

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