CATHAY GENERAL BANCORP Earnings Per Share Disclosure
12. Stockholders’ Equity and Earnings per Share
As a bank holding company, the Bancorp’s ability to pay dividends will depend upon the dividends it receives from the Bank and on the income it may generate from any other activities in which it may engage, either directly or through other subsidiaries.
Under California banking law, the Bank may not, without regulatory approval, pay a cash dividend that exceeds the lesser of the Bank’s retained earnings or its net income for the last three fiscal years, less any cash distributions made during that period. Under this regulation, the amount of retained earnings available for cash dividends to the Company immediately after December 31, 2024, is restricted to approximately $433.6 million. 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, 2024, and 2023 were as follows:
| 2024 | 2023 | |||||||||||||||||||||||
| Pre-tax | Tax expense/ (benefit) | Net-of-tax | Pre-tax | Tax expense/ (benefit) | Net-of-tax | |||||||||||||||||||
| Beginning balance, loss, net of tax | (In thousands) | |||||||||||||||||||||||
| Securities AFS | $ | (86,190 | ) | $ | (104,832 | ) | ||||||||||||||||||
| Cash flow hedge derivatives | 774 | 2,537 | ||||||||||||||||||||||
| Total | $ | (85,416 | ) | $ | (102,295 | ) | ||||||||||||||||||
| Net unrealized gains/(losses) arising during the period | ||||||||||||||||||||||||
| Securities AFS | $ | 1,123 | $ | 332 | $ | 791 | $ | 24,315 | $ | 7,786 | $ | 16,529 | ||||||||||||
| Cash flow hedge derivatives | (1,099 | ) | (325 | ) | (774 | ) | (2,503 | ) | (740 | ) | (1,763 | ) | ||||||||||||
| Total | 24 | 7 | 17 | 21,812 | 7,046 | 14,766 | ||||||||||||||||||
| Reclassification adjustment for net gains/(losses) in net income | ||||||||||||||||||||||||
| Securities AFS | (295 | ) | (87 | ) | (208 | ) | 3,000 | 887 | 2,113 | |||||||||||||||
| Cash flow hedge derivatives | — | — | — | — | — | — | ||||||||||||||||||
| Total | (295 | ) | (87 | ) | (208 | ) | 3,000 | 887 | 2,113 | |||||||||||||||
| Total other comprehensive income/(loss) | ||||||||||||||||||||||||
| Securities AFS | $ | 828 | $ | 245 | 583 | 27,315 | 8,673 | 18,642 | ||||||||||||||||
| Cash flow hedge derivatives | (1,099 | ) | (325 | ) | (774 | ) | (2,503 | ) | (740 | ) | (1,763 | ) | ||||||||||||
| Total | $ | (271 | ) | $ | (80 | ) | $ | (191 | ) | $ | 24,812 | $ | 7,933 | $ | 16,879 | |||||||||
| Ending balance, gain/(loss), net of tax | ||||||||||||||||||||||||
| Securities AFS | $ | (85,607 | ) | $ | (86,190 | ) | ||||||||||||||||||
| Cash flow hedge derivatives | — | 774 | ||||||||||||||||||||||
| Total | $ | (85,607 | ) | $ | (85,416 | ) | ||||||||||||||||||
The Board of Directors of the Bancorp is authorized to issue preferred stock in one or more series and to fix the voting powers, designations, preferences or other rights of the shares of each such class or series and the qualifications, limitations, and restrictions thereon. Any preferred stock issued by the Bancorp may rank prior to the Bancorp common stock as to dividend rights, liquidation preferences, or both, may have full or limited voting rights, and may be convertible into shares of the Bancorp common stock. There are shares of preferred stock currently issued and outstanding.
The following is the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years as indicated:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||
| Per | Per | Per | ||||||||||||||||||||||||||||||||||
| Income | Shares | Share | Income | Shares | Share | Income | Shares | Share | ||||||||||||||||||||||||||||
| (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | ||||||||||||||||||||||||||||
| (In thousands, except shares and per share data) | ||||||||||||||||||||||||||||||||||||
| Net income | $ | 285,979 | $ | 354,124 | $ | 360,642 | ||||||||||||||||||||||||||||||
| Basic EPS, income | $ | 285,979 | 72,068,850 | $ | 3.97 | $ | 354,124 | 72,573,025 | $ | 4.88 | $ | 360,642 | 74,337,265 | $ | 4.85 | |||||||||||||||||||||
| Effect of dilutive stock options and RSU | 258,167 | 289,603 | 327,470 | |||||||||||||||||||||||||||||||||
| Diluted EPS, income | $ | 285,979 | 72,327,017 | $ | 3.95 | $ | 354,124 | 72,862,628 | $ | 4.86 | $ | 360,642 | 74,664,735 | $ | 4.83 | |||||||||||||||||||||
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.