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, 2025, is restricted to approximately $376.9 million. The amount of retained earnings available for cash dividends is restricted to approximately $433.6 million for December 31,2024.

 

Activity in accumulated other comprehensive income, net of tax, and reclassification out of accumulated other comprehensive income for the years ended December 31, 2025, and 2024 were as follows:

 

		2025												2024
		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										$	(85,607	)										$	(86,190	)
Cash flow hedge derivatives											—												774
Total										$	(85,607	)										$	(85,416	)
Net unrealized gains/(losses) arising during the period
Securities AFS		$	44,303			$	13,096			$	31,207			$	1,123			$	332			$	791
Cash flow hedge derivatives			—				—				—				(1,099	)			(325	)			(774	)
Total			44,303				13,096				31,207				24				7				17
Reclassification adjustment for net losses in net income
Securities AFS			—				—				—				(295	)			(87	)			(208	)
Cash flow hedge derivatives			—				—				—				—				—				—
Total			—				—				—				(295	)			(87	)			(208	)
Total other comprehensive income/(loss)
Securities AFS		$	44,303			$	13,096				31,207			$	828			$	245				583
Cash flow hedge derivatives			—				—				—				(1,099	)			(325	)			(774	)
Total		$	44,303			$	13,096			$	31,207			$	(271	)		$	(80	)		$	(191	)
Ending balance, loss, net of tax
Securities AFS										$	(54,400	)										$	(85,607	)
Cash flow hedge derivatives											—												—
Total										$	(54,400	)										$	(85,607	)

 

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 no 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,
		2025												2024												2023
										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		$	315,124											$	285,979											$	354,124
Basic EPS, income		$	315,124				69,184,832			$	4.55			$	285,979				72,068,850			$	3.97			$	354,124				72,573,025			$	4.88
Effect of dilutive stock options and RSU							266,428												258,167												289,603
Diluted EPS, income		$	315,124				69,451,260			$	4.54			$	285,979				72,327,017			$	3.95			$	354,124				72,862,628			$	4.86