Cathay General Bancorp Q3 2026: Record Net Interest Income, But Credit Costs Bite
As seen on the 24/7 Wall St. homepage on October 21, 2026.
Credit costs are the story behind the penny miss: the provision for credit losses jumped to $28.6 million, driven by charge-offs on three borrower-specific credits. Underlying, net interest income hit a record, so the franchise is earning its way through the losses.
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Cathay General Bancorp posted third-quarter 2026 earnings of $1.43 per diluted share, missing expectations, while revenue cleared estimates and net income climbed 22.6% from the year-ago period, so the headline shortfall masks a stronger underlying business.
The driver of that strength was net interest income hitting a record $211.9 million, with the net interest margin widening, gross loans growing and total deposits increasing in the quarter.
The earnings miss traces entirely to credit costs. The provision for credit losses surged to $28.6 million, driven by net charge-offs concentrated in three specific borrower relationships, including movie theater commercial real estate loans acquired from Far East National Bank. Investors need to weigh whether that spike is contained.
Nonperforming assets declined 18.0% during the quarter, suggesting the charge-offs were idiosyncratic. The efficiency ratio also improved, meaning the bank is generating each dollar of revenue at a lower operating cost.
The quarter also included notable one-time items that moved through the GAAP results, including an $8.0 million charitable contribution to the Cathay Bank Foundation, net gains from equity securities, a net loss on an investment securities repositioning, a benefit from redeeming Trust Preferred Securities and a contract termination fee. Stripping those out is essential to reading the true run rate of the franchise.
The bank paid a cash dividend of $0.38 per common share in the quarter and provided no formal forward outlook. Keep an eye on the stock into Q4 for whether the borrower-specific charge-offs remain contained and whether record net interest income can hold as deposit costs inch higher.
Mentioned: CATY