10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-K

R ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-18630

Cathay General Bancorp

(Exact name of Registrant as specified in its charter)

Delaware	95-4274680
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
777 North Broadway, Los Angeles, California (Address of principal executive offices)	90012 (Zip Code)

Registrant’s telephone number, including area code:   (213) 625-4700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.01 par value	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:   None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes R     No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes ¨     No R

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes R     No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes R No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer R	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨No R

The aggregate market value of the voting stock held by non-affiliates of the Registrant, computed by reference to the price at which the common equity was last sold as of the last business day of the Registrant’s most recently completed second fiscal quarter (June 30, 2012) was $1,186,791,731.  This value is estimated solely for the purposes of this cover page.  The market value of shares held by Registrant’s directors, executive officers, and Employee Stock Ownership Plan have been excluded because they may be considered to be affiliates of the Registrant.

As of February 15, 2013, there were 78,785,472 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

•  Portions of Registrant’s definitive proxy statement relating to Registrant’s 2013 Annual Meeting of Stockholders which will be filed within 120 days of the fiscal year ended December 31, 2012, are incorporated by reference into Part III.

CATHAY GENERAL BANCORP

2012 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I		3
Item 1.	Business.	3
Item 1A.	Risk Factors.	21
Item 1B.	Unresolved Staff Comments.	34
Item 2.	Properties.	34
Item 3.	Legal Proceedings.	34
Item 4.	Mine Safety Disclosures.	35
Executive Officers of the Registrant.		35
PART II		35
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	35
Item 6.	Selected Financial Data.	37
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	39
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	78
Item 8.	Financial Statements and Supplementary Data.	82
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	82
Item 9A.	Controls and Procedures.	82
Item 9B.	Other Information.	85
PART III		85
Item 10.	Directors, Executive Officers and Corporate Governance.	85
Item 11.	Executive Compensation.	85
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	85
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	86
Item 14.	Principal Accounting Fees and Services.	86
PART IV		86
Item 15.	Exhibits, Financial Statement Schedules.	86
SIGNATURES		92

Forward-Looking Statements

In this Annual Report on Form 10-K, the term “Bancorp” refers to Cathay General Bancorp and the term “Bank” refers to Cathay Bank. The terms “Company,” “we,” “us,” and “our” refer to Bancorp and the Bank collectively. The statements in this report include forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995 regarding management’s beliefs, projections, and assumptions concerning future results and events. We intend such forward-looking statements to be covered by the safe harbor provision for forward-looking statements in these provisions. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including statements about anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, growth plans, acquisition and divestiture opportunities, business prospects, strategic alternatives, business strategies, financial expectations, regulatory and competitive outlook, investment and expenditure plans, financing needs and availability, and other similar forecasts and statements of expectation and statements of assumptions underlying any of the foregoing. Words such as “aims,” “anticipates,” “believes,” “can,” “could,” “estimates,” “expects,” “hopes,” “intends,” “may,” “plans,” “projects,” “seeks,” “shall,” “should,” “will,” “predicts,” “potential,” “continue,” “possible,” “optimistic,” and variations of these words and similar expressions are intended to identify these forward-looking statements. Forward-looking statements by us are based on estimates, beliefs, projections, and assumptions of management and are not guarantees of future performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from:

· U.S. and international business and economic conditions;

· credit risks of lending activities and deterioration in asset or credit quality;

· current and potential future supervisory action by bank supervisory authorities;

· increased costs of compliance and other risks associated with changes in regulation and the current regulatory environment, including the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and the potential for substantial changes in the legal, regulatory, and enforcement framework and oversight applicable to financial institutions in reaction to recent adverse financial market events, including changes pursuant to the Dodd-Frank Act;

· potential goodwill impairment;

· liquidity risk;

· fluctuations in interest rates;

· inflation and deflation;

· risks associated with acquisitions and the expansion of our business into new markets;

· real estate market conditions and the value of real estate collateral;

· environmental liabilities;

· our ability to compete with larger competitors;

· the possibility of higher capital requirements, including implementation of the Basel III capital standards of the Basel Committee;

· our ability to retain key personnel;

· successful management of reputational risk;

· natural disasters and geopolitical events;

1

· general economic or business conditions in California, Asia, and other regions where the Bank has operations;

· restrictions on compensation paid to our executives as a result of our participation in the TARP Capital Purchase Program;

· failures, interruptions, or security breaches of our information systems;

· our ability to adapt our systems to technological changes, including successfully implementing our core system conversion;

· adverse results in legal proceedings;

· changes in accounting standards or tax laws and regulations;

· market disruption and volatility;

· restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure;

· successfully raising additional capital, if needed, and the resulting dilution of interests of holders of our common stock; and

· the soundness of other financial institutions.

These and other factors are further described in this Annual Report on Form 10-K (at Item 1A in particular),  the Company’s other reports filed with the Securities and Exchange Commission (the “SEC”) and other filings the Company makes with the SEC from time to time. Actual results in any future period may also vary from the past results discussed in this report. Given these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which speak to the date of this report. We have no intention and undertake no obligation to update any forward-looking statement or to publicly announce any revision of any forward-looking statement to reflect future developments or events, except as required by law.

2

PART I

Item 1.         Business.

Business of Bancorp

Overview

Cathay General Bancorp is a corporation that was organized in 1990 under the laws of the State of Delaware. We are the holding company of Cathay Bank, a California state-chartered commercial bank (“Cathay Bank” or the “Bank”), six limited partnerships investing in affordable housing investments in which the Bank is the sole limited partner, and GBC Venture Capital, Inc. We also own 100% of the common stock of five statutory business trusts created for the purpose of issuing capital securities.   In the future, we may become an operating company or acquire savings institutions, other banks, or companies engaged in bank-related activities and may engage in or acquire such other businesses, or activities as may be permitted by applicable law. Our principal place of business is currently located at 777 North Broadway, Los Angeles, California 90012, and our telephone number at that location is (213) 625-4700. In addition, certain of our administrative offices are located in El Monte, California, and our address there is 9650 Flair Drive, El Monte, California 91731. Our common stock is traded on the NASDAQ Global Select Market and our trading symbol is “CATY”.

We are regulated as a bank holding company by the Board of Governors of the Federal Reserve System (“Federal Reserve”). Cathay Bank is regulated as a California commercial bank by the California Department of Financial Institutions (“DFI”) and the Federal Deposit Insurance Corporation (“FDIC”).

Subsidiaries of Bancorp

In addition to its wholly-owned bank subsidiary, the Bancorp has the following subsidiaries:

Cathay Capital Trust I, Cathay Statutory Trust I, Cathay Capital Trust II, Cathay Capital Trust III and Cathay Capital Trust IV.  The Bancorp established Cathay Capital Trust I in June 2003, Cathay Statutory Trust I in September 2003, Cathay Capital Trust II in December 2003, Cathay Capital Trust III in March 2007, and Cathay Capital Trust IV in May 2007 (collectively, the “Trusts”) as wholly-owned subsidiaries.  The Trusts are statutory business trusts. The Trusts issued capital securities representing undivided preferred beneficial interests in the assets of the Trusts. The Trusts exist for the purpose of issuing the capital securities and investing the proceeds thereof, together with proceeds from the purchase of the common securities of the Trusts by the Bancorp, in Junior Subordinated Notes issued by the Bancorp. The Bancorp guarantees, on a limited basis, payments of distributions on the capital securities of the Trusts and payments on redemption of the capital securities of the Trusts. The Bancorp is the owner of all the beneficial interests represented by the common securities of the Trusts. The purpose of issuing the capital securities was to provide the Company with a cost-effective means of obtaining Tier 1 Capital for regulatory purposes.  Because the Bancorp is not the primary beneficiary of the Trusts, the financial statements of the Trusts are not included in our Consolidated Financial Statements.

GBC Venture Capital, Inc.  The business purpose of GBC Venture Capital, Inc. is to hold equity interests (such as options or warrants) received as part of business relationships and to make equity investments in companies and limited partnerships subject to applicable regulatory restrictions.

Competition

Our primary business is to act as the holding company for the Bank.  Accordingly, we face the same competitive pressures as those expected by the Bank.   For a discussion of those risks, see “Business of the Bank — Competition” below under this Item 1.

3

Employees

Due to the limited nature of the Bancorp’s activities as a bank holding company, the Bancorp currently does not employ any persons other than Bancorp’s management, which includes the Chief Executive Officer and President, the Chief Operating Officer, the Chief Financial Officer, Executive Vice Presidents, the Secretary, Assistant Secretary, and the General Counsel. See also “Business of the Bank — Employees” below under this Item 1.

Business of the Bank

General

Cathay Bank was incorporated under the laws of the State of California on August 22, 1961, was licensed by the DFI (previously known as the California State Banking Department) and commenced operations as a California state-chartered bank on April 19, 1962. Cathay Bank is an insured bank under the Federal Deposit Insurance Act by the FDIC, but it is not a member of the Federal Reserve.

The Bank’s head office is located in the Chinatown area of Los Angeles, at 777 North Broadway, Los Angeles, California 90012. In addition, as of December 31, 2012, the Bank had branch offices in Southern California (20 branches), Northern California (11 branches), New York (eight branches), Massachusetts (one branch), Texas (two branches), Washington (three branches), Illinois (three branch locations and one drive-through location), New Jersey (one branch), and Hong Kong (one branch) and a representative office in Shanghai and in Taipei. Deposit accounts at the Hong Kong branch are not insured by the FDIC. Each branch has loan approval rights subject to the branch manager’s authorized lending limits. Current activities of the Shanghai and Taipei representative offices are limited to coordinating the transportation of documents to the Bank’s head office and performing liaison services.

Our primary market area is defined by the Community Reinvestment Act delineation, which includes the contiguous areas surrounding each of the Bank’s branch offices. It is the Bank’s policy to reach out and actively offer services to low and moderate income groups in the delineated branch service areas. Many of the Bank’s employees speak both English and one or more Chinese dialects or Vietnamese, and are thus able to serve the Bank’s Chinese, Vietnamese, and English speaking customers.

As a commercial bank, the Bank accepts checking, savings, and time deposits, and makes commercial, real estate, personal, home improvement, automobile, and other installment and term loans. From time to time, the Bank invests available funds in other interest-earning assets, such as U.S. Treasury securities, U.S. government agency securities, state and municipal securities, mortgage-backed securities, asset-backed securities, corporate bonds, and other security investments. The Bank also provides letters of credit, wire transfers, forward currency spot and forward contracts, traveler’s checks, safe deposit, night deposit, Social Security payment deposit, collection, bank-by-mail, drive-up and walk-up windows, automatic teller machines (“ATM”), Internet banking services, and other customary bank services.

The Bank primarily services individuals, professionals, and small to medium-sized businesses in the local markets in which its branches are located and provides commercial mortgage loans, commercial loans,  Small Business Administration (“SBA”) loans, residential mortgage loans, real estate construction loans, equity lines of credit, and installment loans to individuals for automobile, household, and other consumer expenditures.

Through Cathay Wealth Management, the Bank provides its customers the ability to trade securities online and to purchase mutual funds, annuities, equities, bonds, and short-term money market instruments.  All securities and insurance products provided by Cathay Wealth Management are offered by, and all Financial Consultants are registered with, Cetera Financial Services, a registered securities broker/dealer and licensed insurance agency and member of the Financial Industry Regulatory Authority and Security Investor Protection Corporation.  Cetera Financial Services and Cathay Bank are independent entities.  These products are not insured by the FDIC.

4

Securities

The Bank’s securities portfolio is managed in accordance with a written Investment Policy which addresses strategies, types, and levels of allowable investments, and which is reviewed and approved by our Board of Directors on an annual basis.

Our investment portfolio is managed to meet our liquidity needs through proceeds from scheduled maturities and is also utilized for pledging requirements for deposits of state and local subdivisions, securities sold under repurchase agreements, and Federal Home Loan Bank (“FHLB”) advances.  The portfolio is comprised of U.S. government agency securities, mortgage-backed securities, collateralized mortgage obligations, obligations of states and political subdivisions, corporate debt instruments, asset-backed securities, mutual funds, and equity securities.

Information concerning the carrying value, maturity distribution, and yield analysis of the Company’s securities portfolio as well as a summary of the amortized cost and estimated fair value of the Bank’s securities by contractual maturity is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Note 4 to the Consolidated Financial Statements.

Loans

The Bank’s Board of Directors and senior management establish, review, and modify the Bank’s lending policies.  These policies include (as applicable) an evaluation of a potential borrower’s financial condition, ability to repay the loan, character, existence of secondary repayment source (such as guaranties), quality and availability of collateral, capital, leverage capacity of the borrower, regulatory guidelines, market conditions for the borrower’s business or project, and prevailing economic trends and conditions.  Loan originations are obtained through a variety of sources, including existing customers, walk-in customers, referrals from brokers or existing customers, and advertising.   While loan applications are accepted at all branches, the Bank’s centralized document department supervises the application process including documentation of loans, review of appraisals, and credit reports.

Commercial Mortgage Loans. Commercial mortgage loans are typically secured by first deeds of trust on commercial properties. Our commercial mortgage portfolio includes primarily commercial retail properties, shopping centers, and owner-occupied industrial facilities, and, secondarily, office buildings, multiple-unit apartments, hotels, and multi-tenanted industrial properties.

The Bank also makes medium-term commercial mortgage loans which are generally secured by commercial or industrial buildings where the borrower uses the property for business purposes or derives income from tenants.

Commercial Loans.  The Bank provides financial services to diverse commercial and professional businesses in its market areas. Commercial loans consist primarily of short-term loans (normally with a maturity of up to one year) to support general business purposes, or to provide working capital to businesses in the form of lines of credit to finance trade. The Bank continues to focus primarily on commercial lending to small-to-medium size businesses within the Bank’s geographic market areas.  The Bank participates or syndicates loans, typically more than $20 million in principal amount, with other financial institutions to limit its credit exposure.  Commercial loan pricing is generally at a rate tied to the prime rate, as quoted in The Wall Street Journal, or the Bank’s reference rate.

SBA Loans.  The Bank originates U.S. Small Business Administration (“SBA”) loans under the national “preferred lender” status. Preferred lender status is granted to a lender which has made a certain number of SBA loans and which, in the opinion of the SBA, has staff qualified and experienced in small business loans. As a preferred lender, the Bank’s SBA Lending Group has the authority to issue, on behalf of the SBA, the SBA guaranty on loans under the 7(a) program which may result in shortening the time it takes to process a loan.  In addition, under this program, the SBA delegates loan underwriting, closing, and most servicing and liquidation authority and responsibility to selected lenders.

5

The Bank utilizes both the 504 program, which is focused toward long-term financing of buildings and other long-term fixed assets, and the 7(a) program, which is the SBA’s primary loan program and which can be used for financing of a variety of general business purposes such as acquisition of land and buildings, equipment, inventory and working capital needs of eligible businesses generally over a 5- to 25-year term. The collateral position in the SBA loans is enhanced by the SBA guaranty in the case of 7(a) loans, and by lower loan-to-value ratios under the 504 program. The Bank has sold, and may in the future sell, the guaranteed portion of certain of its SBA 7(a) loans in the secondary market. SBA loan pricing is generally at a rate tied to the prime rate, as quoted in The Wall Street Journal.

Residential Mortgage Loans. The Bank originates single-family-residential mortgage loans. The single-family-residential mortgage loans are comprised of conforming, non­conforming, and jumbo residential mortgage loans, and are secured by first or subordinate liens on single (one-to-four) family residential properties. The Bank’s products include a fixed-rate residential mortgage loan and an adjustable-rate residential mortgage loan.  Mortgage loans are underwritten in accordance with the Bank’s and regulatory guidelines, on the basis of the borrower’s financial capabilities, independent appraisal of value of the property, historical loan quality, and other relevant factors. As of December 31, 2012, approximately 63% of the Bank’s residential mortgages were for properties located in California.  It is the current practice of the Bank to sell all conforming fixed rate residential first mortgages that meet Government Sponsored Agency guidelines to the Federal Home Loan Mortgage Corporation on a cash basis as they are originated. The Bank retains all other mortgage loans it originates in its portfolio. As such, the Bank doesn’t expect to be impacted by the expected regulations pertaining to risk retention, since the Bank doesn’t securitize any of the loans it sells or retains.

Real Estate Construction Loans. The Bank’s real estate construction loan activity focuses on providing short-term loans to individuals and developers, primarily for the construction of multi-unit projects. Residential real estate construction loans are typically secured by first deeds of trust and guarantees of the borrower. The economic viability of the projects, borrower’s credit worthiness, and borrower’s and contractor’s experience are primary considerations in the loan underwriting decision. The Bank utilizes approved independent licensed appraisers and monitors projects during the construction phase through construction inspections and a disbursement program tied to the percentage of completion of each project. The Bank also occasionally makes unimproved property loans to borrowers who intend to construct a single-family residence on their lots generally within twelve months. In addition, the Bank makes commercial real estate construction loans to high net worth clients with adequate liquidity for construction of office and warehouse properties. Such loans are typically secured by first deeds of trust and are guaranteed by the borrower.

   Home Equity Lines of Credit.  The Bank offers variable-rate home equity lines of credit that are secured by the borrower’s home.  The pricing on the variable-rate home equity line of credit is generally at a rate tied to the prime rate, as quoted in The Wall Street Journal, or the Bank’s reference rate.  Borrowers may use this line of credit for home improvement financing, debt consolidation and other personal uses.

Installment Loans. Installment loans tend to be fixed rate and longer-term (one-to-six year maturities). These loans are funded primarily for the purpose of financing the purchase of automobiles and other personal uses of the borrower.

   Distribution and Maturity of Loans.  Information concerning types, distribution, and maturity of loans is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Note 5 to the Consolidated Financial Statements.

6

Asset Quality

The Bank’s lending and credit policies require management to review regularly the Bank’s loan portfolio so that the Bank can monitor the quality of its assets.  If during the ordinary course of business, management becomes aware that a borrower may not be able to meet the contractual payment obligations under a loan, then that loan is supervised more closely with consideration given to placing the loan on non-accrual status, the need for an additional allowance for loan losses, and (if appropriate) partial or full charge-off.

Under the Bank’s current policy, a loan will generally be placed on a non-accrual status if interest or principal is past due 90 days or more, or in cases where management deems the full collection of principal and interest unlikely. When a loan is placed on non-accrual status, previously accrued but unpaid interest is reversed and charged against current income, and subsequent payments received are generally first applied towards the outstanding principal balance of the loan. Depending on the circumstances, management may elect to continue the accrual of interest on certain past due loans if partial payment is received or the loan is well-collateralized, and in the process of collection. The loan is generally returned to accrual status when the borrower has brought the past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled. A non-accrual loan may also be returned to accrual status if all principal and interest contractually due are reasonably assured of repayment within a reasonable period and there has been a sustained period of payment performance, generally six months.

Information concerning non-performing loans, restructured loans, allowance for credit losses, loans charged-off, loan recoveries, and other real estate owned is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Note 5 and Note 6 to the Consolidated Financial Statements.

Deposits

The Bank offers a variety of deposit products in order to meet its customers’ needs.  As of December 31, 2012, the Bank offered passbook accounts, checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, college certificates of deposit, and public funds deposits.   These products are priced in order to promote growth of deposits.

  The Bank’s deposits are generally obtained from residents within its geographic market area.  The Bank utilizes traditional marketing methods to attract new customers and deposits, by offering a wide variety of products and services and utilizing various forms of advertising media.  From time to time, the Bank may offer special deposit promotions.  Information concerning types of deposit accounts, average deposits and rates, and maturity of time deposits of $100,000 or more is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Note 9 to the Consolidated Financial Statements.

Borrowings

Borrowings from time to time include securities sold under agreements to repurchase, the purchase of federal funds, funds obtained as advances from the FHLB, borrowing from other financial institutions, subordinated debt, and Junior Subordinated Notes.  Information concerning the types, amounts, and maturity of borrowings is included in Note 10 and Note 11 to the Consolidated Financial Statements.

7

Return on Equity and Assets

   Information concerning the return on average assets, return on average stockholders’ equity, the average equity to assets ratio and the dividend payout ratio is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Interest Rates and Differentials

   Information concerning the interest-earning asset mix, average interest-earning assets, average interest-bearing liabilities, and the yields on interest-earning assets and interest-bearing liabilities is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Analysis of Changes in Net Interest Income

   An analysis of changes in net interest income due to changes in rate and volume is included in Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Commitments and Letters of Credit

   Information concerning the Bank’s outstanding loan commitments and letters of credit is included in Note 14 to the Consolidated Financial Statements.

Expansion

   We have engaged in expansion through acquisitions and may consider acquisitions in the future in order to compete for new deposits and loans, and to be able to serve our customers more effectively

Subsidiaries of Cathay Bank

   Cathay Real Estate Investment Trust (“CB REIT”) is a real estate investment trust subsidiary of the Bank that was formed in January 2003 to provide the Bank with flexibility in raising capital.  During 2003, the Bank contributed $1.13 billion in loans and securities to CB REIT in exchange for 100% of the common stock of CB REIT.  CB REIT sold $4.4 million in 2003 and $4.2 million in 2004 of its 7.0% Series A Non-Cumulative preferred stock to accredited investors.  During 2005, CB REIT repurchased $131,000 of its preferred stock.  At December 31, 2012, total assets of CB REIT were consolidated with the Company and totaled approximately $1.47 billion.

   Cathay Community Development Corporation (“CCDC”) is a wholly-owned subsidiary of the Bank and was incorporated in September 2006.  The primary mission of CCDC is to help in the development of low-income neighborhoods in the Bank's California and New York service areas by providing or facilitating the availability of capital to businesses and real estate developers working to renovate these neighborhoods.  In October 2006, CCDC formed a wholly-owned subsidiary, Cathay New Asia Community Development Corporation (“CNACDC”), for the purpose of assuming New Asia Bank’s pre-existing New Markets Tax Credit activities in the greater Chicago area by providing or facilitating the availability of capital to businesses and real estate developers working to renovate these neighborhoods.   CNACDC has been certified as a community development entity and is seeking to participate in the U.S. Treasury Department's New Markets Tax Credit program.

   Cathay Holdings LLC (“CHLLC”) was incorporated in December 2007, Cathay Holdings 2 LLC (“CHLLC2”) was incorporated in January 2008, and Cathay Holdings 3 LLC (“CHLLC3”) was incorporated in December 2008.  They are wholly-owned subsidiaries of the Bank.  The purpose of these subsidiaries is to hold other real estate owned in the state of Texas that was transferred from the Bank.  Since February 2011, CHLLC, CHLLC2, and CHLLC3 have not owned any real estate.

8

   Competition

   We face substantial competition for deposits, loans and other banking services, as well as acquisitions, throughout our market area from the major banks and financial institutions that dominate the commercial banking industry. This may cause our cost of funds to exceed that of our competitors. These banks and financial institutions have greater resources than we do, including the ability to finance advertising campaigns and allocate their investment assets to regions of higher yield and demand and make acquisitions. By virtue of their larger capital bases, they have substantially greater lending limits than we do and perform certain functions, including trust services, which are not presently offered by us. We also compete for loans and deposits, as well as other banking services, with savings and loan associations, brokerage houses, insurance companies, mortgage companies, credit unions, credit card companies and other financial and non-financial institutions and entities. The recent consolidation of certain competing financial institutions and the conversion of certain investment banks to bank holding companies have increased the level of competition among financial services companies and may adversely affect our ability to market our products and services. Significant increases in the costs of monitoring and ensuring compliance with new banking regulations and the necessary costs of upgrading information technology and data processing capabilities can have a disproportionate impact on our ability to compete with larger institutions.

To compete with other financial institutions in its primary service areas, the Bank relies principally upon local promotional activities, personal contacts by its officers, directors, employees, and stockholders, extended hours on weekdays, Saturday banking in certain locations, Internet banking, an Internet website (www.cathaybank.com), and certain other specialized services.  The content of our website is not incorporated into and is not part of this Annual Report on Form 10-K.

If a proposed loan exceeds the Bank’s internal lending limits, the Bank has, in the past, and may in the future, arrange the loan on a participation or syndication basis with correspondent banks. The Bank also assists customers requiring other services not offered by the Bank to obtain these services from its correspondent banks.

   In California, one larger Chinese-American bank competes for loans and deposits with the Bank and at least two super-regional banks compete with the Bank for deposits.   In addition, there are many other Chinese-American banks in both Southern and Northern California. Banks from the Pacific Rim countries, such as Taiwan, Hong Kong, and China also continue to open branches in the Los Angeles area, thus increasing competition in the Bank’s primary markets.  See discussion below in Part I — Item 1A — “Risk Factors.”

Employees

   As of December 31, 2012, the Bank and its subsidiaries employed approximately 1,092 persons, including 480 banking officers.  None of the employees are represented by a union.  We believe that our employer-employee relations are good.

Available Information

   We invite you to visit our website at www.cathaygeneralbancorp.com, to access free of charge the Bancorp's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, all of which are made available as soon as reasonably practicable after we electronically file such material with or furnish it to the Securities and Exchange Commission (the “SEC”). In addition, you can write to us to obtain a free copy of any of those reports at Cathay General Bancorp, 9650 Flair Drive, El Monte, California 91731, Attn: Investor Relations. These reports are also available through the SEC’s Public Reference Room, located at 100 F Street NE, Washington, DC 20549 and online at the SEC’s website, located at www.sec.gov. Investors can obtain information about the operation of the SEC’s Public Reference Room by calling 800-SEC-0300.

9

Regulation and Supervision

 General

 The Bancorp and the Bank are subject to significant regulation and restrictions by federal and state laws and regulatory agencies.  This regulation is intended primarily for the protection of depositors and the deposit insurance fund, and secondarily for the stability of the U.S. banking system.  It is not intended for the benefit of stockholders of financial institutions.  The following discussion of statutes and regulations is a summary and does not purport to be complete nor does it address all applicable statutes and regulations.  This discussion is also qualified in its entirety by reference to the full text and to the implementation and enforcement of the statutes and regulations referred to in this discussion.

 Additional initiatives may be proposed or introduced before Congress, the California Legislature, and other governmental bodies in the future.  Such proposals, if enacted, may further alter the structure, regulation, and competitive relationship among financial institutions and may subject us to increased supervision and disclosure and reporting requirements.  In addition, the various bank regulatory agencies often adopt new rules and regulations and policies to implement and enforce existing legislation.  It cannot be predicted whether, or in what form, any such legislation or regulatory changes in policy may be enacted or the extent to which the business of the Bank would be affected thereby.  In addition, the outcome of examinations, any litigation, or any investigations initiated by state or federal authorities may result in necessary changes in our operations and increased compliance costs.

 The Dodd-Frank Wall Street Reform and Consumer Protection Act

 The Dodd-Frank Wall Street Reform and Consumer Protection Act financial reform legislation (the “Dodd-Frank Act”) significantly revised and expanded the rulemaking, supervisory and enforcement authority of the federal bank regulatory agencies.  The numerous rules and regulations that have been promulgated and are yet to be promulgated and finalized under the Dodd-Frank Act are likely to significantly impact our operations and compliance costs.  The Dodd-Frank Act followed the Emergency Economic Stabilization Act of 2008 (“EESA”) and the American Recovery and Reinvestment Act of 2009 (“ARRA”) in response to the economic downturn and financial industry instability.

 The Dodd-Frank Act impacts many aspects of the financial industry and, in many cases, will impact larger and smaller financial institutions and community banks differently over time.  Many of the following key provisions of the Dodd-Frank Act affecting the financial industry are now either effective or are in the proposed rule or implementation stage:

● the creation of a Financial Services Oversight Counsel to identify emerging systemic risks and improve interagency cooperation;

● expanded the authority of the Federal Deposit Insurance Corporation (“FDIC”) to conduct the orderly liquidation of certain systemically significant non-bank financial companies in addition to depository institutions;

● the establishment of strengthened capital and liquidity requirements for banks and bank holding companies, including minimum leverage and risk-based capital requirements no less than the strictest requirements in effect for depository institutions as of the date of enactment;

● the requirement by statute that bank holding companies serve as a source of financial strength for their depository institution subsidiaries;

● limitations, or significant burdens and compliance and other costs, on activities traditionally conducted by banking organizations, such as originating and securitizing mortgage loans and other financial assets, arranging and participating in swap and derivative transactions and proprietary trading and investing in private equity and other funds (the “Volcker Rule”);

10

● the termination of investments by the U.S. Treasury under the Troubled Asset Relief Program (“TARP”);

● the elimination and phase out of trust preferred securities from Tier 1 capital with certain exceptions;

● a permanent increase of FDIC deposit insurance to $250,000 and an extension of federal deposit coverage through 2012 for the full net amount held by depositors in business checking and othernon-interesting bearing transaction accounts;

● changes in the calculation of FDIC deposit insurance assessments, such that the assessment base will no longer be the institution’s deposit base, but instead, will be its average consolidated total assets less its average tangible equity;

● the elimination of remaining barriers to de novo interstate branching by banks;

● expanded restrictions on transactions with affiliates and insiders under Section 23A and 23B of the Federal Reserve Act and lending limits for derivative transactions, repurchase agreements, and securities lending and borrowing transactions;

● provisions that affect corporate governance and executive compensation at most United States publicly traded companies, including (i) stockholder advisory votes on executive compensation, (ii) executive compensation “clawback” requirements for companies listed on national securities exchanges in the event of materially inaccurate statements of earnings, revenues, gains or other criteria, (iii) enhanced independence requirements for compensation committee members, and (iv) giving the SEC authority to adopt proxy access rules which would permit stockholders of publicly traded companies to nominate candidates for election as director and have those nominees included in a company’s proxy statement; and

● the establishment of the Consumer Finance Protection Bureau (“CFPB”) with responsibility for promulgating regulations designed to protect consumers’ financial interests and prohibit unfair, deceptive, and abusive acts and practices by financial institutions, and with authority to directly examine those financial institutions with $10 billion or more in assets for compliance with consumer laws and  regulations.

 In general, more stringent capital, liquidity and leverage requirements are expected to impact our business as the Dodd-Frank Act is fully implemented.  The federal agencies have issued proposed rules which will apply directly to larger institutions with more than $10 billion in assets, such as regulations of the Board of Governors of the Federal Reserve for financial institutions deemed systemically significant, Federal Reserve and FDIC rules requiring stress tests and Federal Reserve rules to implement the Volcker Rule.  However, requirements and policies imposed on larger institutions may, in some cases, become “best practice” standards for smaller institutions.  Therefore, as a result of the changes required by the Dodd-Frank Act, the profitability of our business activities may be impacted and we may be required to make changes to certain of our business practices.  These changes may also require us to devote significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements.

 We participated in TARP, which was designed to bolster eligible healthy institutions by injecting capital into these institutions, so that we could continue to lend and support our current and prospective clients.  Under the terms of our participation, we received $258 million in exchange for the issuance of preferred stock (the “Series B Preferred Stock”) and a warrant to purchase common stock and thereby became subject to various requirements, including certain restrictions on paying dividends on our common stock and repurchasing our equity securities, unless the U.S. Treasury has consented.

11

In order to participate in TARP, financial institutions were required to adopt certain standards for executive compensation and corporate governance.  ARRA also included a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health, and education needs.  ARRA imposes certain   stringent executive compensation and corporate expenditure limits on all TARP recipients until the U.S. Treasury is repaid.  We have complied with the compensation provisions of TARP and ARRA and have certified as to such compliance in the exhibits attached to this report pursuant to Section 111(b) of EESA.  We contemplate that we may be able to partially or fully redeem the Series B Preferred Stock in 2013 depending on our earnings and receipt of approval by our regulators to receive dividends from the Bank that would be used to repurchase our Series B Preferred Stock.

Bank Holding Company and Bank Regulation

The Bancorp is a bank holding company within the meaning of the Bank Holding Company Act and is registered as such with the Federal Reserve.  The Bancorp is also a bank holding company within the meaning of Section 3700 of the California Financial Code and is subject to examination by, and may be required to file reports with, the California Department of Financial Institutions (“DFI”).  As a California commercial bank the deposits of which are insured by the FDIC, the Bank is subject to regulation, supervision, and regular examination by the DFI and by the FDIC, as the Bank’s primary federal regulator, and must additionally comply with certain applicable regulations of the Federal Reserve.

Bank holding companies and their bank and non-bank subsidiaries are subject to significant regulation and restrictions by federal and state laws and regulatory agencies.  These laws, regulations and restrictions, which may affect the cost of doing business, limit permissible activities and expansion or impact the competitive balance between banks and other financial services providers, are intended primarily for the protection of depositors and the FDIC’s Deposit Insurance Fund, and secondarily for the stability of the U.S. banking system. They are not intended for the benefit of stockholders of financial institutions. The following discussion of key statutes and regulations to which the Bancorp and the Bank are subject is a summary and does not purport to be complete nor does it address all applicable statutes and regulations. This discussion is qualified in its entirety by reference to the full statutes and regulations.

The wide range of requirements and restrictions contained in both federal and state banking laws include:

● Requirements that bank holding companies and banks file periodic reports.

● Requirements that bank holding companies and banks meet or exceed minimum capital requirements.  See Part 1 — Item 1 — “Business — Capital Requirements.”

● Requirements that bank holding companies serve as a source of financial and managerial strength for their banking subsidiaries. In addition, the regulatory agencies have “prompt corrective action” authority to limit activities and require a limited guaranty of a required bank capital restoration plan by a bank holding company if the capital of a bank subsidiary falls below capital levels required by the regulators.

● Limitations on dividends payable to stockholders.  The Bancorp’s ability to pay dividends on both its common and preferred stock are subject to legal and regulatory restrictions.  A substantial portion of the Bancorp’s funds to pay dividends or to pay principal and interest on our debt obligations is derived from dividends paid by the Bank.

● Limitations on dividends payable by bank subsidiaries.  These dividends are subject to various legal and regulatory restrictions.  The federal banking agencies have indicated that paying dividends that deplete a depositary institution’s capital base to an inadequate level would be an unsafe and unsound banking practice.  Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

● Safety and soundness requirements. Banks must be operated in a safe and sound manner and meet standards applicable to internal controls, information systems, internal audit, loan documentation, credit underwriting, interest rate exposure, asset growth, and compensation, as well as other operational and management standards. These safety and soundness requirements give bank regulatory agencies significant latitude in exercising their supervisory authority and their authority to initiate informal or formal enforcement action.

12

● Requirements for notice, application and approval, or non-objection of acquisitions and activities conducted directly or in subsidiaries of the Bancorp or the Bank.

● Compliance with the Community Reinvestment Act (“CRA”).  The CRA requires that banks help meet the credit needs in their communities, including the availability of credit to low and moderate income individuals. If the Bank fails to adequately serve its communities, penalties may be imposed, including denials of applications for branches, for adding subsidiaries and affiliates, or for the merger with or purchase of other financial institutions. In its last reported examination by the FDIC in March, 2011, the Bank received a CRA rating of “Satisfactory.”

● Compliance with the Bank Secrecy Act, the USA Patriot Act, and other anti-money laundering laws. These laws and regulations require financial institutions to assist U.S. government agencies in detecting and preventing money laundering and other illegal acts by maintaining policies, procedures and controls designed to detect and report money laundering, terrorist financing, and other suspicious activity.

● Limitations on the amount of loans to one borrower and its affiliates and to executive officers and directors.

● Limitations on transactions with affiliates.

● Restrictions on the nature and amount of any investments in, and ability to underwrite, certain securities.

● Requirements for opening of intra- and interstate branches.

● Truth in lending and other consumer protection and disclosure laws to ensure equal access to credit and to protect consumers in credit transactions.

● Provisions of the Gramm-Leach-Bliley Act of 1999 (“GLB Act”) and other federal and state laws dealing with privacy for nonpublic personal information of customers.

Additional Restrictions on Bancorp and Bank Activities

Subject to prior notice or Federal Reserve approval, bank holding companies may generally engage in, or acquire shares of companies engaged in, activities determined by the Federal Reserve to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.  Bank holding companies which elect and retain “financial holding company” status pursuant to the GLB Act may engage in these nonbanking activities and broader securities, insurance, merchant banking and other activities that are determined to be “financial in nature” or are incidental or complementary to activities that are financial in nature without prior Federal Reserve approval.  Pursuant to the GLB Act and the Dodd-Frank Act, in order to elect and retain financial holding company status, a bank holding company and all depository institution subsidiaries of a bank holding company must be well capitalized and well managed, and, except in limited circumstances, depository subsidiaries must be in satisfactory compliance with the CRA, which requires banks to help meet the credit needs of the communities in which they operate.  Failure to sustain compliance with these requirements or correct any non-compliance within a fixed time period could lead to divestiture of subsidiary banks or require all activities to conform to those permissible for a bank holding company.  The Bancorp has not elected financial holding company status and has not engaged in any activities determined by the Federal Reserve to be financial in nature or incidental or complementary to activities that are financial in nature.

Pursuant to the Federal Deposit Insurance Act (“FDI Act”) and the California Financial Code, California state chartered commercial banks may generally engage in any activity permissible for national banks. Therefore, the Bank may form subsidiaries to engage in the many so-called “closely related to banking” or “nonbanking” activities commonly conducted by national banks in operating subsidiaries or subsidiaries of bank holding companies.  Further, pursuant to the GLB Act, California banks may conduct certain “financial” activities in a subsidiary to the same extent as may a national bank, provided the bank is and remains “well-capitalized,” “well-managed” and in satisfactory compliance with the CRA. The Bank currently has no financial subsidiaries.

13

Enforcement Authority

The Bank operates branches and/or loan production offices in California, New York, Illinois, Massachusetts, Texas, Washington, and New Jersey.  While the DFI remains the Bank’s primary state regulator, the Bank’s operations in these jurisdictions are subject to examination and supervision by local bank regulators, and transactions with customers in those jurisdictions are subject to local laws, including consumer protection laws.  The Bank also operates a branch in Hong Kong and a representative office in Taipei and in Shanghai.  The operations of these foreign offices and branches (and limits on the scope of their activities) are subject to local law and regulatory authorities in those jurisdictions in addition to regulation and supervision by the DFI and the Federal Reserve.

The federal and California regulatory structure gives the bank regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes.  The regulatory agencies have adopted guidelines to assist in identifying and addressing potential safety and soundness concerns before an institution’s capital becomes impaired.  The guidelines establish operational and managerial standards generally relating to: (i) internal controls, information systems, and internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest-rate exposure; (v) asset growth and asset quality; and (vi) compensation, fees, and benefits.  Further, the regulatory agencies have adopted safety and soundness guidelines for asset quality and for evaluating and monitoring earnings to ensure that earnings are sufficient for the maintenance of adequate capital and reserves.  If, as a result of an examination, the DFI or the FDIC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Bank’s operations are unsatisfactory or that the Bank or its management is violating or has violated any law or regulation, the DFI and the FDIC, and separately the FDIC as insurer of the Bank’s deposits, have residual authority to:

● Require affirmative action to correct any conditions resulting from any violation or practice;

● Direct an increase in capital and the maintenance of higher specific minimum capital ratios, which may preclude the Bank from being deemed well capitalized and restrict its ability to accept certain brokered deposits;

● Restrict the Bank’s growth geographically, by products and services, or by mergers and acquisitions;

● Enter into or issue informal or formal enforcement actions, including required Board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices;

● Require prior approval of senior executive officer or director changes; remove officers and directors, and assess civil monetary penalties; and

● Terminate FDIC insurance, revoke the Bank’s charter, take possession of and close and liquidate the Bank, or appoint the FDIC as receiver.

The Federal Reserve has similar enforcement authority over bank holding companies and commonly takes parallel action in conjunction with actions taken by a subsidiary bank’s regulators.

On December 17, 2009, the Bancorp entered into a memorandum of understanding with the Federal Reserve Bank of San Francisco (the “FRB SF”) under which the Bancorp agreed, among other things, to limitations on payment of and receipt of dividends and on senior executive officer and director changes, and to submit a plan to maintain sufficient capital,  a plan to improve management of our liquidity position and funds management practices, and a liquidity policy and contingency funding plan for the Bancorp.

14

Until it was terminated as of November 7, 2012, the Bank was subject to a memorandum of understanding with the DFI and the FDIC that was entered into on March 1, 2010, by which the Bank agreed to undertake certain steps to strengthen its operations. This included, among other things, the submission of satisfactory plans to reduce commercial real estate concentrations, to enhance and to improve the quality of our stress testing of the Bank’s loan portfolio, to address improved profitability and capital ratios and reduce the Bank’s overall risk profile, to improve asset quality, and to reduce dependence on wholesale funding. In addition, we were required to maintain management and a board acceptable to the DFI and FDIC.

Deposit Insurance

The FDIC is an independent federal agency that insures deposits, up to prescribed statutory limits, of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and savings industries.  The FDIC insures our customer deposits through the Deposit Insurance Fund (the “DIF”) up to prescribed limits for each depositor.  Pursuant to the Dodd-Frank Act, the maximum deposit insurance amount was permanently increased to $250,000 and unlimited insurance coverage for non-interest-bearing transaction accounts was provided through December 31, 2012, but the latter coverage was not extended by Congress.  The amount of FDIC assessments paid by each DIF member institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors.  All FDIC-insured institutions are also required to pay assessments to the FDIC to fund interest payments on bonds issued by the Financing Corporation (“FICO"), an agency of the federal government established to recapitalize the predecessor to the DIF.  These assessments will continue until the FICO bonds mature in 2017.

We are generally unable to control the amount of assessments that we are required to pay for FDIC insurance.  If there are additional bank or financial institution failures or if the FDIC otherwise determines, we may be required to pay even higher FDIC assessments than the recently increased levels.  These increases in FDIC insurance assessments may have a material and adverse affect on our earnings and could have a material adverse effect on the value of, or market for, our common stock.

Capital Adequacy Requirements

Bank holding companies and banks are subject to various regulatory capital requirements administered by state and federal banking agencies.  Increased capital requirements have also been proposed as a result of expanded authority set forth in the Dodd-Frank Act.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting, and other factors. At December 31, 2012, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements of the federal banking agencies for “well capitalized” institutions. See Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Resources —Capital Adequacy.”

The current risk-based capital guidelines for bank holding companies and banks adopted by the federal banking agencies are expected to provide a measure of capital that reflects the degree of risk associated with a banking organization’s operations for both transactions reported on the balance sheet as assets, such as loans, and those recorded as off-balance sheet items, such as commitments, letters of credit, and recourse arrangements. The risk-based capital ratio is determined by classifying assets and certain off-balance sheet financial instruments into weighted categories, with higher levels of capital being required for those categories perceived as representing greater risks and dividing its qualifying capital by its total risk-adjusted assets and off-balance sheet items.  Bank holding companies and banks engaged in significant trading activity may also be subject to the market risk capital guidelines and be required to incorporate additional market and interest rate risk components into their risk-based capital standards.

15

Qualifying capital is classified depending on the type of capital:

● “Tier I capital” currently includes common equity and trust preferred securities, subject to certain criteria and quantitative limits.  The capital received from the sale of the Series B Preferred Stock also qualifies as Tier I capital.  Under the Dodd-Frank Act, depository institution holding companies with more than $15 billion in total consolidated assets as of December 31, 2009, will no longer be able to include trust preferred securities as Tier 1 regulatory capital as of the end of a phase-out period in 2016, and will be obligated to replace any outstanding trust preferred securities issued prior to May 19, 2010, with qualifying Tier 1 regulatory capital during the phase-out period.

● “Tier II capital” includes hybrid capital instruments, other qualifying debt instruments, a limited amount of the allowance for loan and lease losses, and a limited amount of unrealized holding gains on equity securities.  Following the phase-out period under the Dodd-Frank Act, trust preferred securities will be treated as Tier II capital.

● “Tier III capital” consists of qualifying unsecured debt. The sum of Tier II and Tier III capital may not exceed the amount of Tier I capital.

Under the current capital guidelines, there are three fundamental capital ratios: a total risk-based capital ratio, a Tier 1 risk-based capital ratio, and a Tier 1 leverage ratio.  To be deemed “well capitalized” a bank must have a total risk-based capital ratio of at least 10.00%, a Tier 1 risk-based capital ratio of at least at 6.00%, and a Tier 1 leverage ratio of at least 5.00%.  There is currently no Tier 1 leverage requirement for a holding company to be deemed well-capitalized.  At December 31, 2012, the respective capital ratios of the Bancorp and the Bank exceeded the minimum percentage requirements to be deemed “well-capitalized.”  As of December 31, 2012, the Bank’s total risk-based capital ratio was 17.08% and its Tier 1 risk-based capital ratio was 15.33%.  As of December 31, 2012, the Bancorp’s total risk-based capital ratio was 19.12% and its Tier 1 risk-based capital ratio was 17.36%.

The Bancorp and the Bank are also required to maintain a leverage capital ratio designed to supplement the risk-based capital guidelines.  Banks and bank holding companies that have received the highest rating of the five categories used by regulators to rate banks and that are not anticipating or experiencing any significant growth must maintain a ratio of Tier 1 capital (net of all intangibles) to adjusted total assets of at least 3.00%.  All other institutions are required to maintain a leverage ratio of at least 100 to 200 basis points above the 3.00% minimum, for a minimum of 4.00% to 5.00%.  As of December 31, 2012, the Bank’s leverage capital ratio was 12.22%, and the Bancorp’s leverage capital ratio was 13.82%, both of which exceeded regulatory minimums.

Pursuant to federal regulations, banks must maintain capital levels commensurate with the level of risk to which they are exposed, including the volume and severity of problem loans.  Federal regulators may, however, set higher capital requirements when a bank’s particular circumstances warrant and have required many banks and bank holding companies subject to enforcement actions to maintain capital ratios in excess of the minimum ratios otherwise required to be deemed well capitalized, in which case institutions may no longer be deemed well capitalized and may therefore be subject to restrictions on taking brokered deposits.

The federal regulatory authorities’ risk-based capital guidelines are based upon the 1988 capital accord (“Basel I”) of the Basel Committee on Banking Supervision (the “Basel Committee”). The Basel Committee is a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines for use by each country’s supervisors in determining the supervisory policies they apply. In 2004, the Basel Committee published a new capital accord (“Basel II”) to replace Basel I. Basel II provides two approaches for setting capital standards for credit risk – an internal ratings-based approach tailored to individual institutions’ circumstances and a standardized approach that bases risk weightings on external credit assessments to a much greater extent than permitted in existing risk-based capital guidelines. Basel II also sets capital requirements for operational risk and refines the existing capital requirements for market risk exposures.

16

In December 2010, the Basel Committee released its final framework for strengthening international capital and liquidity regulation, now officially identified as “Basel III.” If and when implemented by the U.S. banking agencies and fully phased-in, it would require bank holding companies and their bank subsidiaries to maintain substantially more capital than currently required, with a greater emphasis on common equity.  The Dodd-Frank Act also required the Federal Reserve, the Office of the Controller of the Currency, and the FDIC to adopt regulations imposing a continuing “floor” of the Basel I-based capital requirements in cases where the Basel II-based capital requirements and any changes in capital regulations resulting from Basel III otherwise would permit lower requirements. In December 2010, the federal bank regulatory agencies issued a joint notice of proposed rulemaking not yet finalized that would implement this requirement.

On June 7, 2012, the federal bank regulatory agencies issued a series of proposed rules that would revise their risk-based and leverage capital requirements and their method for calculating risk-weighted assets to make them consistent with the agreements that were reached by the Basel Committee in Basel III and certain provisions of the Dodd-Frank Act. The proposed rules, which would be fully phased in by January 1, 2019, would apply to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more, and top-tier savings and loan holding companies (“banking organizations”). Among other things, the proposed rules establish a new Common Equity Tier 1 minimum capital requirement of 4.5% and a higher minimum Tier 1 capital requirement of 6.0% and assign higher risk weightings (150%) to exposures that are more than 90 days past due or are on nonaccrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property. Additionally, the U.S. implementation of Basel III contemplates that, for banking organizations with less than $15 billion in assets, the ability to treat trust preferred securities as Tier 1 capital would be phased out over a ten-year period. The proposed rules also require unrealized gains and losses on certain securities holdings to be included for purposes of calculating regulatory capital requirements. The proposed rules limit a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of a specified amount of common equity Tier 1 capital in addition to the amount necessary to meet its minimum risk-based capital requirements. The proposed rules indicated that the final rule would become effective on January 1, 2013, and the changes set forth in the final rules will be phased in from January 1, 2013, through January 1, 2019. However, the agencies have recently indicated that, due to the volume of public comments received, the final rule would not become effective on January 1, 2013.

While the proposed regulatory capital requirements, when finalized, will likely result in generally higher regulatory capital standards for the Bancorp and the Bank, it is difficult at this time to predict when or how many of the proposed provisions will ultimately be adopted or whether broader exemptions may be provided for community banks. In addition, bank regulators may also continue their past policies of expecting banks to maintain yet additional capital beyond the new minimum requirements. The implementation of more stringent requirements to maintain higher levels of capital or to maintain higher levels of liquid assets could adversely impact the Bancorp’s net income and return on equity, restrict the ability to pay dividends and require the raising of additional capital.

Failure to meet statutorily mandated capital guidelines or more restrictive ratios separately established for a financial institution could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting or renewing brokered deposits, limitations on the rates of interest that the institution may pay on its deposits and other restrictions on its business.  Significant additional restrictions can be imposed on FDIC-insured depository institutions that fail to meet applicable capital requirements under the regulatory agencies’ prompt corrective action authority.

Prompt Corrective Action Provisions

The FDI Act provides a framework for regulation of depository institutions and their affiliates, including parent holding companies, by their federal banking regulators. It requires the relevant federal banking regulator to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards, including requiring the prompt submission of an acceptable capital restoration plan. Supervisory actions by the appropriate federal banking regulator under the prompt corrective action rules generally depend upon an institution’s classification within five capital categories as defined in the regulations. The relevant capital measures are the capital ratio, the Tier 1 capital ratio, and the leverage ratio. However, the federal banking agencies have also adopted non-capital safety and soundness standards to assist examiners in identifying and addressing potential safety and soundness concerns before capital becomes impaired. These include operational and managerial standards relating to: (i) internal controls, information systems, and internal audit systems, (ii) loan documentation, (iii) credit underwriting, (iv) asset quality and growth, (v) earnings, (vi) risk management, and (vii) compensation and benefits.

17

A depository institution’s capital tier under the prompt corrective action regulations will depend upon how its capital levels compare with various relevant capital measures and the other factors established by the regulations. A bank will be: (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.00% or greater, a Tier 1 risk-based capital ratio of 6.00% or greater, and a leverage ratio of 5.00% or greater and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.00% or greater, a Tier 1 risk-based capital ratio of 4.00% or greater, and a leverage ratio of 4.00% or greater and is not “well capitalized;” (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.00%, a Tier 1 risk-based capital ratio of less than 4.00%, or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.00%, a Tier 1 risk-based capital ratio of less than 3.00%, or a leverage ratio of less than 3.00%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.00% of average quarterly tangible assets. An institution may be downgraded to, or deemed to be in, a capital category that is lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition or if it receives an unsatisfactory examination rating with respect to certain matters.

The FDI Act generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” institutions are subject to growth limitations and are required to submit a capital restoration plan. The regulatory agencies may not accept such a plan without determining that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. In addition, for a capital restoration plan to be acceptable, the depository institution’s parent holding company must guarantee that the institution will comply with the plan. The bank holding company must also provide appropriate assurances of performance with potential liability of up to 5% of the depository institution’s total assets at the time it became undercapitalized.

Dividends

Holders of the Bancorp’s common stock and preferred stock are entitled to receive dividends as and when declared by the board of directors out of funds legally available therefore under the laws of the State of Delaware.  Delaware corporations such as the Bancorp may make distributions to their stockholders out of their surplus, or in case there is no surplus, out of their net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.  However, dividends may not be paid out of a corporation’s net profits if, after the payment of the dividend, the corporation’s capital would be less than the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.

Our capital management and dividend policy as part of our Three-Year Capital and Strategic Plan includes a policy to refrain from paying dividends in excess of $.01 per share per quarter, except when covered by operating earnings.  The amount of future dividends will depend on our earnings, financial condition, capital requirements and other factors, and will be determined by our board of directors in accordance with the capital management and dividend policy.

It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.  It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to their banking subsidiaries.  Additionally, in consideration of the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policies and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

18

Further, it is the Federal Reserve's policy that bank holding companies participating in the TARP and other government capital programs must comply on an ongoing basis with the pertinent capital and other requirements established by the U.S. Treasury (including those explicitly set forth in EESA) and related Federal Reserve  supervisory policy. Moreover, a recipient of taxpayer funds through such capital programs should consider and communicate reasonably in advance to Federal Reserve supervisory staff how the bank holding company's proposed dividends, capital redemptions, and capital repurchases are consistent with the requirements applicable to its receipt of capital under the program and related Federal Reserve supervisory policy, as well as its ability to redeem securities issued to the government prior to any contractual increase in the dividend rate without affecting safety and soundness.

The terms of our Series B Preferred Stock and Junior Subordinated Notes also limit our ability to pay dividends on our common stock.  If we are not current in our payment of dividends on our Series B Preferred Stock or in our payment of interest on our Junior Subordinated Notes, we may not pay dividends on our common stock.

We have agreed under the memorandum of understanding with the FRB SF that Bancorp will not, without the FRB SF’s prior written approval, declare or pay any dividends, make any payments on trust preferred securities, or make any other capital distributions.  In February, 2013, Bancorp received Federal Reserve approval to make payments on our Series B Preferred Stock and Junior Subordinated Notes. There can be no assurance that our regulators will approve such payments or dividends in the future.

The Bank is a legal entity that is separate and distinct from its holding company.  The Bancorp receives income through dividends paid by the Bank.  The powers of the board of directors of the Bank to declare a cash dividend to the Bancorp are subject to California law, which restricts the amount available for cash dividends to the lesser of a bank’s retained earnings or net income for its last three fiscal years (less any distributions to stockholders made during such period).  Where the above test is not met, cash dividends may still be paid, with the prior approval of the DFI in an amount not exceeding the greatest of (i) retained earnings of the Bank; (ii) the net income of the Bank for its last fiscal year; or (iii) the net income of the bank for its current fiscal year.  Future cash dividends by the Bank will also depend upon management’s assessment of future capital requirements, contractual restrictions, and other factors.

Under the memorandum of understanding entered into with the FRB SF, the Bancorp also agreed that it would not, without the FRB SF’s prior written approval, receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank. The Bank did not pay a dividend to the Bancorp in 2010 or 2011, but paid dividends of $154.7 million to Bancorp following regulatory approval in 2012, and will pay additional dividends with regulatory approval in 2013 to maintain Bancorp’s cash balance equal to at least two years of Bancorp’s operating expenses and to be in a position, subject to regulatory approval, to repurchase in installments during 2013 the Series B Preferred Stock issued to the U.S. Treasury under the TARP Capital Purchase Program.

Operations and Consumer Compliance Laws

The Bank must comply with numerous federal anti-money laundering and consumer protection statutes and implementing regulations, including the USA Patriot Act, the Bank Secrecy Act, the Foreign Account Tax Compliance Act (effective 2013), the CRA, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, and various federal and state privacy protection laws.  The Bank and the Company are also subject to federal and state laws prohibiting unfair or fraudulent business practices, untrue or misleading advertising and unfair competition.

These laws and regulations also mandate certain disclosure and reporting requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, collecting loans, and providing other services.  Failure to comply with these laws and regulations can subject the Bank to lawsuits and penalties, including but not limited to enforcement actions, injunctions, fines or criminal penalties, punitive damages to consumers, and the loss of certain contractual rights.

19

The Dodd-Frank Act provided for the creation of the CFPB as an independent entity within the Federal Reserveand as a new regulatory agency for United States banks.  The CFPB has broad rulemaking, supervisory, and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans and credit cards.  The CFPB’s functions include investigating consumer complaints, conducting market research, rulemaking, supervising and examining bank consumer transactions, and enforcing rules related to consumer financial products and services.  The CFPB examines banks (such as the Bank) with over $10 billion in assets.  Banks with less than $10 billion in assets are examined for compliance with the consumer laws and regulations by their primary federal banking agency.

Under the Dodd-Frank Act, regulators were required to mandate specific underwriting criteria to support a reasonable, good faith determination by lenders of a consumer's ability to repay a mortgage. The CFPB by amendment to Regulation Z, which implements the Truth in Lending Act and takes effect January 10, 2014, has defined what would be considered a “qualified mortgage.”  Another Dodd-Frank provision requires banks and other mortgage lenders to retain a minimum 5% economic interest in mortgage loans sold through securitizations unless the loans meet a definition of a “qualified residential mortgage” yet to be promulgated.  Banks will have to reevaluate their underwriting standards and the extent and type of their mortgage lending as a result of these regulations implementing the Dodd-Frank Act.

Federal Home Loan Bank System

The Bank is a member of the Federal Home Loan Bank (“FHLB”) of San Francisco.  Among other benefits, each FHLB serves as a reserve or central bank for its members within its assigned region.  Each FHLB is financed primarily from the sale of consolidated obligations of the FHLB system.  Each FHLB makes available loans or advances to its members in compliance with the policies and procedures established by the board of directors of the individual FHLB.  Each member of the FHLB of San Francisco is required to own stock in an amount equal to the greater of (i) a membership stock requirement with an initial cap of $25 million (100% of “membership asset value” as defined), or (ii) an activity based stock requirement (based on a percentage of outstanding advances).  There can be no assurance that the FHLB will pay dividends at the same rate it has paid in the past, or that it will pay any dividends in the future.

Impact of Monetary Policies

The earnings and growth of the Bank are largely dependent on its ability to maintain a favorable differential or spread between the yield on its interest-earning assets and the rates paid on its deposits and other interest-bearing liabilities.  As a result, the Bank’s performance is influenced by general economic conditions, both domestic and foreign, the monetary and fiscal policies of the federal government, and the policies of the regulatory agencies.  The Federal Reserve implements national monetary policies (such as seeking to curb inflation and combat recession) by its open-market operations in U.S. government securities, by adjusting the required level of reserves for financial institutions subject to its reserve requirements and by varying the discount rate applicable to borrowings by banks from the Federal Reserve Banks.  The actions of the Federal Reserve in these areas influence the growth of bank loans, investments, and deposits, and also affect interest rates charged on loans and deposits.  The nature and impact of any future changes in monetary policies cannot be predicted.

Securities and Corporate Governance

The Bancorp is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both as administered by the SEC. As a company listed on the NASDAQ Capital Market, the Company is subject to NASDAQ listing standards for listed companies.  The Bancorp is also subject to the Sarbanes-Oxley Act of 2002, provisions of the Dodd-Frank Act, and other federal and state laws and regulations which address, among other issues, required executive certification of financial presentations, corporate governance requirements for board audit committees and their members, and disclosure of controls and procedures and internal control over financial reporting, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. NASDAQ has also adopted corporate governance rules, which are intended to allow stockholders and investors to more easily and efficiently monitor the performance of companies and their directors.

20

Audit Requirements

The Bank is required to have an annual independent audit, alone or as a part of its bank holding company’s audit, and to prepare all financial statements in accordance with U.S. generally accepted accounting principles.  The Bank and the Bancorp are also each required to have an audit committee comprised entirely of independent directors.  As required by NASDAQ, the Bancorp has certified that its audit committee has adopted formal written charters and meets the requisite number of directors, independence, and qualification standards.  As such, among other requirements, the Bancorp must maintain an audit committee that includes members with banking or related financial management expertise, has access to its own outside counsel, and does not include members who are large customers of the Bank. In addition, because the Bank has more than $3 billion in total assets, it is subject to the FDIC requirements for audit committees of large institutions.

Under the Sarbanes-Oxley Act, management and the Bancorp’s independent registered public accounting firm are required to assess the effectiveness of the Bancorp’s internal control over financial reporting as of December 31, 2012.  These assessments are included in Part II — Item 9A — “Controls and Procedures.”

Regulation of Non-Bank Subsidiaries

Non-bank subsidiaries are subject to additional or separate regulation and supervision by other state, federal and self-regulatory bodies.  Additionally, any foreign-based subsidiaries would also be subject to foreign laws and regulations.

Item 1A.  Risk Factors.

Difficult business and economic conditions can adversely affect our industry and business.

Our financial performance generally, and the ability of borrowers to pay interest on and repay the principal of outstanding loans and the value of the collateral securing those loans, is highly dependent upon the business and economic conditions in the markets in which we operate and in the United States as a whole. Although the U.S. economy has recently showed signs of improvement, certain sectors, such as real estate, remain soft, and unemployment remains high in general and in the markets in which we operate. Local governments and many businesses are still experiencing serious difficulties due to the lack of consumer spending and liquidity in the credit markets. There is also uncertainty over the federal budget and taxation. In addition, concerns about the performance of international economies, including the potential impact of the European debt crises and economic conditions in Asia, particularly the economies of China and Taiwan, can impact the economy here in the United States.  Concerns about the economy have also resulted in decreased lending by financial institutions to their customers and to each other.  These economic pressures on consumers and businesses may continue to adversely affect our business, financial condition, results of operations and stock price. In particular, we may face the following risks in connection with these events:

· We face increased regulation of our industry, including changes by Congress or federal regulatory agencies to the banking and financial institutions regulatory regime and heightened legal standards and regulatory requirements that may be adopted in the future. Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities.

· The process we use to estimate losses inherent in our credit exposure requires difficult, subjective, and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans. The level of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates which may, in turn, impact the reliability of the process.

21

Our banking operations are concentrated primarily in California, and secondarily in New York, Texas, Massachusetts, Washington, Illinois, New Jersey, and Hong Kong. Adverse economic conditions in these regions in particular could impair borrowers’ ability to service their loans, decrease the level and duration of deposits by customers, and erode the value of loan collateral. These conditions include the effects of the general decline in real estate sales and prices in many markets across the United States from their recent highs, the economic recession of recent years, and higher rates of unemployment. These conditions could increase the amount of our non-performing assets and have an adverse effect on our efforts to collect our non-performing loans or otherwise liquidate our non-performing assets (including other real estate owned) on terms favorable to us, if at all, and could also cause a decline in demand for our products and services, or a lack of growth or a decrease in deposits, any of which may cause us to incur losses, adversely affect our capital, and hurt our business. 

We may be required to make additional provisions for loan losses and charge off additional loans in the future, which could adversely affect our results of operations.

At December 31, 2012, our allowance for loan losses totaled $183.3 million and we had total charge-offs of $32.8 million for 2012.  Although economic conditions in  the real estate market in portions of Los Angeles, San Diego, Riverside, and San Bernardino counties and the Central Valley of California where many of our commercial real estate and construction loan customers are based, have improved, the economic recovery in these areas of California is still slow. This slow recovery has resulted in weak pricing and relatively elevated inventories of homes to be sold, which could contribute to financial strain on home builders and suppliers. As of December 31, 2012, we had approximately $4.0 billion in commercial real estate and construction loans. Any  deterioration in the real estate market generally and in the commercial real estate and residential building segments in particular could result in additional loan charge offs and provisions for loan losses in the future, which could have a material adverse effect on our financial condition, net income, and capital.

The allowance for credit losses is an estimate of probable credit losses. Actual credit losses in excess of the estimate could adversely affect our results of operations and capital.

A significant source of risk arises from the possibility that we could sustain losses because borrowers, guarantors, and related parties may fail to perform in accordance with the terms of their loans and leases. The underwriting and credit monitoring policies and procedures that we have adopted to address this risk may not prevent unexpected losses that could have a material adverse effect on our business, financial condition, results of operations, and cash flows. The allowance for credit losses is based on management’s estimate of the probable losses from our credit portfolio. If actual losses exceed the estimate, the excess losses could adversely affect our results of operations and capital. Such excess losses could also lead to larger allowances for credit losses in future periods, which could in turn adversely affect results of operations and capital in those periods. If economic conditions differ substantially from the assumptions used in the estimate or adverse developments arise with respect to our credits, future losses may occur, and increases in the allowance may be necessary. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the adequacy of our allowance. These agencies may require us to establish additional allowances based on their judgment of the information available at the time of their examinations. No assurance can be given that we will not sustain credit losses in excess of present or future levels of the allowance for credit losses.

We are currently subject to a memorandum of understanding with the Federal Reserve Bank of San Francisco, and the Bank was previously  subject to a memorandum of understanding with the California Department of Financial Institutions and the Federal Deposit Insurance Corporation, and we may be subject to further supervisory action by bank supervisory authorities that could have a material adverse effect on our business, financial condition, and the value of our common stock.

22

Under federal and state laws and regulations pertaining to the safety and soundness of financial institutions, the FRB SF has authority over Bancorp and separately the DFI and FDIC  have authority over the Bank to compel or restrict certain actions if the Bancorp's or the Bank’s capital should fall below adequate capital standards as a result of operating losses, or if these regulators otherwise determine that the Bancorp or the Bank have insufficient capital or has engaged in unsafe or unsound practices. These regulators, as well as the CFPB, also have authority over the Bancorp and the Bank over compliance with various statutes and consumer protection and other regulations. Among other matters, the corrective actions may include, but are not limited to, requiring the Bancorp and/or the Bank to enter into informal or formal enforcement orders, including board resolutions, memoranda of understanding, written agreements, supervisory letters, commitment letters, and consent or cease and desist orders to take corrective action and refrain from unsafe and unsound practices; removing officers and directors; assessing civil monetary penalties; and taking possession of and closing and liquidating the Bank.  On December 17, 2009, the Bancorp entered into a memorandum of understanding with the FRB SF (the “MOU”) under which the Bancorp agreed, among other things, to limitations on payment of and receipt of dividends and senior executive officer and director changes, and to submit a plan to maintain sufficient capital, a plan to improve management of our liquidity position and funds management practices, and a liquidity policy and contingency funding plan for the Bancorp.

Until it was terminated as of November 7, 2012, the Bank was subject to a memorandum of understanding with the DFI and the FDIC that was entered into on March 1, 2010, by which the Bank agreed to undertake certain steps to strengthen its operations. This included, among other things, the submission of satisfactory plans to reduce commercial real estate concentrations, to enhance and to improve the quality of our stress testing of the Bank’s loan portfolio, to address improved profitability and capital ratios and reduce the Bank’s overall risk profile, to improve asset quality, and to reduce dependence on wholesale funding. In addition, we were required to maintain management and a board acceptable to the DFI and FDIC.

If we are unable to meet the requirements of, any such memoranda or other corrective actions, we could become subject to additional supervisory action, including a cease and desist order. If our banking supervisors were to take such additional supervisory action, we could, among other things, become subject to significant restrictions on our ability to develop any new business, as well as restrictions on our existing business, and we could be required to raise additional capital, dispose of certain assets and liabilities within a prescribed period of time, or both. The terms of any such supervisory action could have a material negative effect on our business, our financial condition, and the value of our common stock. Additionally, there can be no assurance that we will not be subject to further supervisory action or regulatory proceedings that could have a material negative impact on our business.

Additional requirements imposed by the Dodd-Frank Act could adversely affect us.

Recent government efforts to strengthen the U.S. financial system have resulted in the imposition of additional regulatory requirements, including expansive financial services regulatory reform legislation. The Dodd-Frank Act provided for sweeping regulatory changes including the establishment of strengthened capital and liquidity requirements for banks and bank holding companies, including minimum leverage and risk-based capital requirements no less than the strictest requirements in effect for depository institutions as of the date of enactment; the requirement by statute that bank holding companies serve as a source of financial strength for their depository institution subsidiaries; enhanced regulation of financial markets, including the derivative and securitization markets, and the elimination of certain proprietary trading activities by banks; additional corporate governance and executive compensation requirements; enhanced financial institution safety and soundness regulations, revisions in FDIC insurance assessment fees and a permanent increase in FDIC deposit insurance coverage to $250,000; authorization for financial institutions to pay interest on business checking accounts through 2012; and the establishment of new regulatory bodies, such as the CFPB and the Financial Services Oversight Counsel, to identify emerging systemic risks and improve interagency cooperation. Many of the provisions remain subject to final   rulemaking and/or study. Accordingly, we cannot fully assess its impact on our operations and costs until final regulations are adopted and implemented.

Current and future legal and regulatory requirements, restrictions, and regulations, including those imposed under the Dodd-Frank Act, may adversely impact our profitability and may have a material and adverse effect on our business, financial condition, and results of operations, may require us to invest significant management attention and resources to evaluate and make any changes required by the legislation and related regulations and may make it more difficult for us to attract and retain qualified executive officers and employees.

23

We may become subject to more stringent capital requirements.

The U.S. federal bank regulators have jointly proposed new capital requirements on banks and bank holding companies as required by the Dodd-Frank Act that incorporate the elements of Basel Committee’s Basel III accords and which, may have the effect of raising our capital requirements and imposing new capital requirements beyond those required by current law.  Increased regulatory capital requirements (and the associated compliance costs) whether due to the adoption of new laws and regulations, changes in existing laws and regulations, or more expansive or aggressive interpretations of existing laws and regulations, may impact our ability to pay dividends and may have a material adverse effect on our business, liquidity, financial condition and results of operations.

We are subject to extensive laws and regulations and supervision, and may become subject to future laws and regulations and supervision, if any, that may be enacted, that could limit or restrict our activities, may hamper our ability to increase our assets and earnings, and could adversely affect our profitability.

We operate in a highly regulated industry and are or may become subject to regulation by federal, state, and local governmental authorities and various laws, regulations, regulatory guidelines, and judicial and administrative decisions imposing requirements or restrictions on part or all of our operations, capitalization, payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits, and locations of offices. We also must comply with numerous federal anti-money laundering and consumer protection statutes and regulations.  A considerable amount of management time and resources have been devoted to the oversight of, and the development and implementation of controls and procedures relating to, compliance with these laws and regulations, and we expect that significant time and resources will be devoted to compliance in the future. These laws and regulations mandate certain disclosure and reporting requirements and regulate the manner in which we must deal with our customers when taking deposits, making loans, collecting loans, and providing other services.  We also are, or may become subject to, examination, supervision, and additional comprehensive regulation by various federal, state, and local authorities with regard to compliance with these laws and regulations.

Because our business is highly regulated, the laws, rules, regulations, and supervisory guidance and policies applicable to us are subject to regular modification and change. Perennially, various laws, rules and regulations are proposed, which, if adopted, could impact our operations, increase our capital requirements or substantially restrict our growth and adversely affect our ability to operate profitably by making compliance much more difficult or expensive, restricting our ability to originate or sell loans or further restricting the amount of interest or other charges or fees earned on loans or other products. In addition, further regulation could increase the assessment rate we are required to pay to the FDIC, adversely affecting our earnings.  Furthermore, recent changes to Regulation Z promulgated by the CFPB may make it more difficult for us to underwrite consumer mortgages and to compete with large national mortgage service providers.  It is impossible to predict the competitive impact that any such changes would have on the banking and financial services industry in general or on our business in particular. Such changes may, among other things, increase the cost of doing business, limit permissible activities, or affect the competitive balance between banks and other financial institutions.  The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes in light of the recent performance of and government intervention in the financial services sector. Other changes to statutes, regulations, or regulatory policies, including changes in interpretation or implementation of statutes, regulations, or policies, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, limit the types of financial services and products we may offer, and/or increase the ability of non-banks to offer competing financial services and products, among other things. Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil money penalties, and/or reputation damage, which could have a material adverse effect on our business, financial condition, and results of operations. See Part I — Item 1 — “Business — Regulation and Supervision.”

We may experience goodwill impairment.

Goodwill is initially recorded at fair value and is not amortized, but is reviewed at least annually or more frequently if events or changes in circumstances indicate that the carrying value may not be fully recoverable.  If our estimates of goodwill fair value change, we may determine that impairment charges are necessary. Estimates of fair value are determined based on a complex model using cash flows and company comparisons. If management’s estimates of future cash flows are inaccurate, the fair value determined could be inaccurate and impairment may not be recognized in a timely manner.

24

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans, and other sources could have a material adverse effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn or adverse regulatory action against us. Our ability to acquire deposits or borrow could also be impaired by factors that are not specific to us, such as a severe disruption of the financial markets or negative views and expectations about the prospects for the financial services industry as a whole.  

Our business is subject to interest rate risk and fluctuations in interest rates could reduce our net interest income and adversely affect our business.

A substantial portion of our income is derived from the differential, or “spread,” between the interest earned on loans, investment securities and other interest-earning assets, and the interest paid on deposits, borrowings and other interest-bearing liabilities. The interest rate risk inherent in our lending, investing, and deposit taking activities is a significant market risk to us and our business. Income associated with interest earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by fluctuations in interest rates. The magnitude and duration of changes in interest rates, events over which we have no control, may have an adverse effect on net interest income. Prepayment and early withdrawal levels, which are also impacted by changes in interest rates, can significantly affect our assets and liabilities. Increases in interest rates may adversely affect the ability of our floating rate borrowers to meet their higher payment obligations, which could in turn lead to an increase in non-performing assets and net charge-offs. 

Generally, the interest rates on our interest-earning assets and interest-bearing liabilities do not change at the same rate, to the same extent, or on the same basis. Even assets and liabilities with similar maturities or periods of re-pricing may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities may fluctuate in advance of changes in general market interest rates, while interest rates on other types of assets and liabilities may lag behind changes in general market rates. Certain assets, such as fixed and adjustable rate mortgage loans, have features that limit changes in interest rates on a short-term basis and over the life of the asset. 

We seek to minimize the adverse effects of changes in interest rates by structuring our asset-liability composition to obtain the maximum spread. We use interest rate sensitivity analysis and a simulation model to assist us in estimating the optimal asset-liability composition. However, such management tools have inherent limitations that impair their effectiveness. There can be no assurance that we will be successful in minimizing the adverse effects of changes in interest rates.

We have engaged in expansion through acquisitions and may consider additional acquisitions in the future, which could negatively affect our business and earnings.

We have engaged in expansion through acquisitions and may consider acquisitions in the future. There are risks associated with any such expansion. These risks include, among others, incorrectly assessing the asset quality of a bank acquired in a particular transaction, encountering greater than anticipated costs in integrating acquired businesses, facing resistance from customers or employees, and being unable to profitably deploy assets acquired in the transaction. Additional country- and region-specific risks are associated with transactions outside the United States, including in China. To the extent we issue capital stock in connection with additional transactions, if any, these transactions and related stock issuances may have a dilutive effect on earnings per share and share ownership. 

25

Our earnings, financial condition, and prospects after a merger or acquisition depend in part on our ability to successfully integrate the operations of the acquired company. We may be unable to integrate operations successfully or to achieve expected cost savings. Any cost savings which are realized may be offset by losses in revenues or other charges to earnings. 

In addition, our ability to grow may be limited if we cannot make acquisitions. We compete with other financial institutions with respect to proposed acquisitions. We cannot predict if or when we will be able to identify and attract acquisition candidates or make acquisitions on favorable terms. 

We may in the future engage in FDIC-assisted transactions, which could present additional risks to our business.

In the current economic environment, and subject to any requisite regulatory consent, we may potentially be presented with opportunities to acquire the assets and liabilities of failed banks in FDIC-assisted transactions. These acquisitions involve risks similar to acquiring existing banks even though the FDIC might provide assistance to mitigate certain risks such as sharing in exposure to loan losses and providing indemnification against certain liabilities of the failed institution. However, because these acquisitions are structured in a manner that would not allow us the time normally associated with preparing for and evaluating an acquisition, including preparing for integration of an acquired institution, we may face additional risks if we engage in FDIC-assisted transactions. These risks include the loss of customers, strain on management resources related to collection and management of problem loans and problems related to integration of personnel and operating systems. If we engage in FDIC-assisted transactions, we may not be successful in overcoming these risks or any other problems encountered in connection with these transactions. Our inability to overcome these risks could have an adverse effect on our ability to achieve our business strategy and maintain our market value and profitability. 

Moreover, even if we were inclined to participate in an FDIC-assisted transaction, there are no assurances that the FDIC would allow us to participate or what the terms of such a transaction might be or whether we would be successful in acquiring the bank or assets that we are seeking. We may be required to raise additional capital as a condition to, or as a result of, participation in an FDIC-assisted transaction. Any such transactions and related issuances of stock may have a dilutive effect on earnings per share and share ownership. 

Furthermore, to the extent we are allowed to, and choose to, participate in FDIC-assisted transactions, we may face competition from other financial institutions with respect to the proposed FDIC-assisted transactions.  To the extent that our competitors are selected to participate in FDIC-assisted transactions, our ability to identify and attract acquisition candidates and/or make acquisitions on favorable terms may be adversely affected.

Inflation and deflation may adversely affect our financial performance.

The Consolidated Financial Statements and related financial data presented in this report have been prepared in accordance with accounting principles generally accepted in the United States. These principles require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation or deflation. The primary impact of inflation on our operations is reflected in increased operating costs. Conversely, deflation will tend to erode collateral values and diminish loan quality. Virtually all of our assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the general levels of inflation or deflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the price of goods and services. 

As we expand our business outside of California markets, we will encounter risks that could adversely affect us. 

We primarily operate in California markets with a concentration of Chinese-American individuals and businesses; however, one of our strategies is to expand beyond California into other domestic markets that have concentrations of Chinese-American individuals and businesses. We currently have operations in six other states (New York, Texas, Washington, Massachusetts, Illinois, and New Jersey) and in Hong Kong. In the course of this expansion, we will encounter significant risks and uncertainties that could have a material adverse effect on our operations. These risks and uncertainties include increased expenses and operational difficulties arising from, among other things, our ability to attract sufficient business in new markets, to manage operations in noncontiguous market areas, to comply with all of the various local laws and regulations, and to anticipate events or differences in markets in which we have no current experience. 

26

To the extent that we expand through acquisitions, such acquisitions may also adversely harm our business if we fail to adequately address the financial and operational risks associated with such acquisitions. For example, risks can include difficulties in assimilating the operations, technology, and personnel of the acquired company; diversion of management’s attention from other business concerns; inability to maintain uniform standards, controls, procedures, and policies; potentially dilutive issuances of equity securities; the incurring of additional debt and contingent liabilities; use of cash resources; large write-offs; and amortization expenses related to other intangible assets with finite lives. 

Our loan portfolio is largely secured by real estate, which has adversely affected and may continue to adversely affect our results of operations. 

The downturn in the real estate markets in recent years hurt our business because many of our loans are secured by real estate. The real estate collateral securing our borrowers’ obligations is principally located in California, and to a lesser extent, in New York, Texas, Massachusetts, Washington, Illinois, and New Jersey. The value of such collateral depends upon conditions in the relevant real estate markets. These include general or local economic conditions and neighborhood characteristics, unemployment rates, real estate tax rates, the cost of operating the properties, governmental regulations and fiscal policies, acts of nature including earthquakes, floods, and hurricanes (which may result in uninsured losses), and other factors beyond our control. The continuing low volume of real estate sales and unpredictability of prices in many markets across the United States could reduce the value of our collateral, in which case we may have to foreclose on the properties.  If we are not able to realize a satisfactory amount upon foreclosure sales, we may have to own the properties, subjecting us to exposure to the risks and expenses associated with ownership. Continued declines in real estate sales and prices coupled with any weakness in the economy and continued high unemployment will result in higher than expected loan delinquencies or problem assets, a decline in demand for our products and services, or a lack of growth or a decrease in deposits, which may cause us to incur losses, adversely affect our capital, and hurt our business. 

The risks inherent in construction lending may continue to affect adversely our results of operations. Such risks include, among other things, the possibility that contractors may fail to complete, or complete on a timely basis, construction of the relevant properties; substantial cost overruns in excess of original estimates and financing; market deterioration during construction; and lack of permanent take-out financing. Loans secured by such properties also involve additional risk because they have no operating history. In these loans, loan funds are advanced upon the security of the project under construction (which is of uncertain value prior to completion of construction) and the estimated operating cash flow to be generated by the completed project. There is no assurance that such properties will be sold or leased so as to generate the cash flow anticipated by the borrower. The current general decline in real estate sales and prices across the United States, the decline in demand for residential real estate, economic weakness, high rates of unemployment, and reduced availability of mortgage credit, are all factors that can adversely affect the borrowers’ ability to repay their obligations to us and the value of our security interest in collateral, and thereby adversely affect our results of operations and financial results. 

Our use of appraisals in deciding whether to make a loan on or secured by real property does not ensure the value of the real property collateral.

In considering whether to make a loan secured by real property, we require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made. If the appraisal does not reflect the amount that may be obtained upon any sale or foreclosure of the property, we may not realize an amount equal to the indebtedness secured by the property.

27

Liabilities from environmental regulations could materially and adversely affect our business and financial condition.

In the course of the Bank’s business, the Bank may foreclose and take title to real estate, and could be subject to environmental liabilities with respect to these properties.  The Bank may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or may be required to investigate or clear up hazardous or toxic substances, or chemical releases at a property.  The costs associated with investigation or remediation activities could be substantial.  In addition, as the owner or former owner of any contaminated site, the Bank may be subject to common law claims by third parties based on damages, and costs resulting from environmental contamination emanating from the property.  If the Bank ever becomes subject to significant environmental liabilities, its business, financial condition, liquidity, and results of operations could be materially and adversely affected.  

We face substantial competition from our competitors.

We face substantial competition for deposits, loans, and for other banking services, as well as acquisitions, throughout our market area from the major banks and financial institutions that dominate the commercial banking industry. This may cause our cost of funds to exceed that of our competitors. These banks and financial institutions have greater resources than we do, including the ability to finance advertising campaigns and allocate their investment assets to regions of higher yield and demand and make acquisitions. By virtue of their larger capital bases, they have substantially greater lending limits than we do and perform certain functions, including trust services, which are not presently offered by us. We also compete for loans and deposits, as well as other banking services, with savings and loan associations, brokerage houses, insurance companies, mortgage companies, credit unions, credit card companies and other financial and non-financial institutions and entities. The recent consolidation of certain competing financial institutions and the conversion of certain investment banks to bank holding companies has increased the level of competition among financial services companies and may adversely affect our ability to market our products and services.

We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects.

Competition for qualified employees and personnel in the banking industry is intense and there are a limited number of qualified persons with knowledge of, and experience in, the communities that we serve. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. Our success depends to a significant degree upon our ability to attract and retain qualified management, loan origination, finance, administrative, marketing, and technical personnel and upon the continued contributions of our management and personnel. In particular, our success has been and continues to be highly dependent upon the abilities of key executives and certain other employees, including, but not limited to, our Chief Executive Officer, Dunson K. Cheng, our Chief Financial Officer, Heng W. Chen, and our Chief Operating Officer, Peter Wu.

 Managing reputational risk is important to attracting and maintaining customers, investors, and employees.

Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, and questionable, illegal, or fraudulent activities of our customers. We have policies and procedures in place that seek to protect our reputation and promote ethical conduct, but these policies and procedures may not be fully effective. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors, and employees, costly litigation, a decline in revenues and increased governmental regulation.

Natural disasters and geopolitical events beyond our control could adversely affect us.

Natural disasters such as earthquakes, wildfires, extreme weather conditions, hurricanes, floods, and other acts of nature and geopolitical events involving civil unrest, changes in government regimes, terrorism, or military conflict could adversely affect our business operations and those of our customers and cause substantial damage and loss to real and personal property. These natural disasters and geopolitical events could impair our borrowers’ ability to service their loans, decrease the level and duration of deposits by customers, erode the value of loan collateral, and result in an increase in the amount of our non-performing loans and a higher level of non-performing assets (including real estate owned), net charge-offs, and provision for loan losses, which could adversely affect our earnings. 

28

Adverse conditions in Asia and elsewhere could adversely affect our business.

A substantial number of our customers have economic and cultural ties to Asia and, as a result, we are likely to feel the effects of adverse economic and political conditions in Asia, including the effects of rising inflation or slowing growth in China and other regions. Additionally, we maintain a branch in Hong Kong. U.S. and global economic policies, military tensions, and unfavorable global economic conditions may adversely impact the Asian economies. This could include an actual or perceived default of certain European Union (“EU”) member states on their debt obligations, the continued uncertainty of the EU’s financial support programs, the possibility that other EU member states may experience similar financial troubles, and any resulting slowdown in the economies of the EU member states.  In addition, pandemics and other public health crises or concerns over the possibility of such crises could create economic and financial disruptions in the region. A significant deterioration of economic conditions in Asia could expose us to, among other things, economic and transfer risk, and we could experience an outflow of deposits by those of our customers with connections to Asia. Transfer risk may result when an entity is unable to obtain the foreign exchange needed to meet its obligations or to provide liquidity. This may adversely impact the recoverability of investments with or loans made to such entities. Adverse economic conditions in Asia, and in China or Taiwan in particular, may also negatively impact asset values and the profitability and liquidity of our customers who operate in this region.

Because of our participation in the TARP Capital Purchase Program, we are subject to several restrictions including restrictions on compensation paid to our executives.

Pursuant to the terms of the Purchase Agreement between us and the U.S. Treasury (the “Purchase Agreement”), under which we sold $258 million of our Fixed Rate Cumulative Perpetual Preferred Stock, Series B, with a liquidation preference of $1,000 per share (“Series B Preferred Stock”), we adopted certain standards for executive compensation and corporate governance. These standards generally apply to our Chief Executive Officer, Chief Financial Officer, and the three next most highly compensated executive officers. The standards include (i) ensuring that incentive compensation for senior executive officers does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (ii) requiring clawback of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; (iii) a prohibition on making golden parachute payments to senior executives; and (iv) agreement not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive. In particular, the change to the deductibility limit on executive compensation will likely increase the overall cost of our compensation programs in future periods.

The adoption of the ARRA on February 17, 2009, and interim final regulations thereunder effective June 15, 2009, have imposed certain  executive compensation and corporate expenditure limits on all current and future TARP recipients, including the Company, until the institution has repaid the U.S. Treasury or, in certain instances, until the U.S. Treasury no longer holds our securities, which is now permitted under the ARRA without penalty and without the need to raise new capital, subject to the U.S. Treasury’s consultation with the recipient’s appropriate regulatory agency. The ARRA executive compensation standards are in many respects more stringent than those that continue in effect under TARP and those previously proposed by the U.S. Treasury. The  standards include (but are not limited to) (i) prohibitions on bonuses, retention awards and other incentive compensation, other than restricted stock or restricted stock unit grants for up to one-third of an employee’s total annual compensation, which grants cannot vest for a period of at least two years and can be liquidated during the TARP period only in proportion to the repayment of the TARP investment at 25% increments, (ii) prohibitions on golden parachute payments for departure from a company or change in control of the company, (iii) an expanded clawback of bonuses, retention awards, and incentive compensation if payment is based on materially inaccurate statements of earnings, revenues, gains or other criteria, (iv) prohibitions on compensation plans that encourage manipulation of reported earnings, (v) retroactive review of bonuses, retention awards, and other compensation previously provided by TARP recipients if found by the U.S. Treasury to be inconsistent with the purposes of TARP or otherwise contrary to the public interest, (vi) required establishment of a company-wide policy regarding “excessive or luxury expenditures,” and (vii) inclusion in a participant’s proxy statements for annual shareholder meetings of a nonbinding “Say on Pay” shareholder vote on the compensation of executives. 

29

Our information systems may experience failures, interruptions, or breaches in security, which could have a material adverse effect on our business, financial condition, and results of operations.

We rely heavily on communications and information systems to conduct our business. Any failure, interruption, or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan, and other systems. In the course of providing financial services, we store personally identifiable data concerning customers or employees of customers. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption, or security breaches of our information systems, there can be no assurance that any such failures, interruptions, or security breaches will not occur or, if they do occur, that they will be adequately addressed. Privacy laws and regulations are matters of growing public concern and are continually changing in the states in which we operate.

In recent periods, there has been a rise in electronic fraudulent activity, security breaches, and cyber attacks within the financial services industry, especially in the commercial banking sector.  Some financial institutions have reported breaches of their security of their websites and systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage systems. The secure maintenance and transmission of confidential information, as well as execution of transactions over our systems, are essential to protect us and our customers against fraud and security breaches and to maintain our customers’ confidence. Increases in criminal activity levels and sophistication, advances in computer capabilities, or other developments could result in a compromise or breach of the technology, processes, and controls that we use to prevent fraudulent transactions or to protect data about us, our customers, and underlying transactions, as well as the technology used by our customers to access our systems.  These risks may increase in the future as we continue to increase our offerings of mobile services and other Internet or web-based products.

The occurrence of any failures, interruptions, or security breaches could damage our reputation, result in a loss of customers, cause us to incur additional expenses, disrupt our business, affect our ability to grow our online and mobile banking services, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, and results of operations. 

Our need to continue to adapt our information technology systems to allow us to provide new and expanded service and to successfully implement the core system conversion we are currently undergoing, could present operational issues, require significant capital spending, and disrupt our business.

As we continue to offer Internet banking and other on-line and mobile services to our customers, and continue to expand our existing conventional banking services, we will need to adapt our information technology systems to handle these changes in a way that meets constantly changing industry and regulatory standards. This can be very expensive and may require significant capital expenditures. In addition, our success will depend on, among other things, our ability to provide secure and reliable services, anticipate changes in technology, and efficiently develop and introduce services that are accepted by our customers and cost effective for us to provide.  We are also in the process of undergoing a core system conversion to a new third party provider.  If we are not able to successfully implement the core system conversion in the time frame we currently anticipate and with minimal interruption to our systems and customers, our business could be harmed.

30

Our business and financial results could be impacted materially by adverse results in legal proceedings.

Various aspects of our operations involve the risk of legal liability.  We have been, and expect to continue to be, named or threatened to be named as defendants in legal proceedings arising from our business activities. We establish accruals for legal proceedings when information related to the loss contingencies represented by those proceedings indicates both that a loss is probable and that the amount of the loss can be reasonably estimated, but we do not have accruals for all legal proceedings where we face a risk of loss.  In addition, amounts accrued may not represent the ultimate loss to us from those legal proceedings. Thus, our ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued for loss contingencies arising from legal proceedings. 

Certain provisions of our charter and bylaws could make the acquisition of our company more difficult.

Certain provisions of our restated certificate of incorporation, as amended, and our restated bylaws, as amended, could make the acquisition of our company more difficult. These provisions include authorized but unissued shares of preferred and common stock that may be issued without stockholder approval; three classes of directors serving staggered terms; special requirements for stockholder proposals and nominations for director; and super-majority voting requirements in certain situations including certain types of business combinations. 

Our financial results could be adversely affected by changes in accounting standards or tax laws and regulations.

From time to time, the Financial Accounting Standards Board and the SEC will change the financial accounting and reporting standards that govern the preparation of our financial statements. In addition, from time to time, federal and state taxing authorities will change the tax laws and regulations, and their interpretations. These changes and their effects can be difficult to predict and can materially and adversely impact how we record and report our financial condition and results of operations.  

The price of our common stock may fluctuate significantly, and this may make it difficult for you to sell shares of common stock owned by you at times or at prices you find attractive.

The trading price of our common stock may fluctuate widely as a result of a number of factors, many of which are outside our control. In addition, the stock market is subject to fluctuations in the share prices and trading volumes that affect the market prices of the shares of many companies. These broad market fluctuations could adversely affect the market price of our common stock. Among the factors that could affect our stock price are: 

· actual or anticipated quarterly fluctuations in our operating results and financial condition;

· changes in revenue or earnings estimates or publication of research reports and recommendations by financial analysts;

· failure to meet analysts’ revenue or earnings estimates;

· speculation in the press or investment community;

· strategic actions by us or our competitors, such as acquisitions or restructurings;

· acquisitions of other banks or financial institutions, through FDIC-assisted transactions or otherwise;

· actions by institutional stockholders;

· fluctuations in the stock price and operating results of our competitors;

· general market conditions and, in particular, developments related to market conditions for the financial services industry;

· proposed or adopted regulatory changes or developments;

· anticipated or pending investigations, proceedings, or litigation that involve or affect us;

· successful management of reputational risk; and

· domestic and international economic factors unrelated to our performance.

The stock market and, in particular, the market for financial institution stocks, has experienced significant volatility. As a result, the market price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate more than usual and cause significant price variations to occur. The trading price of the shares of our common stock and the value of our other securities will depend on many factors, which may change from time to time, including, without limitation, our financial condition, performance, creditworthiness and prospects, future sales of our equity or equity related securities, and other factors identified above in “Forward-Looking Statements,” and in this Item 1A — “Risk Factors.”  The capital and credit markets can experience volatility and disruption. Such volatility and disruption can reach unprecedented levels, resulting in downward pressure on stock prices and credit availability for certain issuers without regard to those issuers’ underlying financial strength. A significant decline in our stock price could result in substantial losses for individual stockholders and could lead to costly and disruptive securities litigation.

31

Statutory restrictions and restrictions by our regulators on dividends and other distributions from the Bank may adversely impact us by limiting the amount of distributions the Bancorp may receive. Statutory and contractual restrictions and our regulators may also restrict the Bancorp’s ability to pay dividends.

The ability of the Bank to pay dividends to us is limited by various regulations and statutes, including California law, and our ability to pay dividends on our outstanding stock is limited by various regulations and statutes, including Delaware law.

A substantial portion of Bancorp’s cash flow has in earlier years come from dividends that the Bank pays to us. Various statutory provisions restrict the amount of dividends that the Bank can pay to us without regulatory approval.

The Federal Reserve Board has previously issued Federal Reserve Supervision and Regulation Letter SR-09-4 that states that bank holding companies are expected to inform and consult with the Federal Reserve supervisory staff prior to taking any actions that could result in a diminished capital base, including any payment or increase in the rate of dividends. In addition, we have agreed under the memorandum of understanding with the FRB SF that we will not, without the FRB SF’s prior written approval, (i) receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank, or (ii) declare or pay any dividends, make any payments on trust preferred securities, or make any other capital distributions. There can be no assurance that our regulators will approve the payment of such dividends.  Further, if we are not current in our payment of dividends on our Series B Preferred Stock or interest on our Junior Subordinated Notes, we may not pay dividends on our common stock.

If the Bank were to liquidate, the Bank’s creditors would be entitled to receive distributions from the assets of the Bank to satisfy their claims against the Bank before Bancorp, as a holder of the equity interest in the Bank, would be entitled to receive any of the assets of the Bank as a distribution or dividend.

The restrictions described above, together with the potentially dilutive impact of the Warrant, described below, could have a negative effect on the value of our common stock. Moreover, holders of our common stock are entitled to receive dividends only when, as and if declared by our Board of Directors. Although we have historically paid cash dividends on our common stock, we are not required to do so and our Board of Directors could reduce or eliminate our common stock dividend in the future.  

Our outstanding preferred stock impacts net income available to our common stockholders and earnings per common share, and the Warrant as well as other potential issuances of equity securities may be dilutive to holders of our common stock.

The dividends declared and the accretion on discount on our outstanding preferred stock will reduce the net income available to common stockholders and our earnings per common share. Our outstanding preferred stock is perpetual and currently bears a dividend rate of 5% per annum.  If we do not redeem or otherwise retire our preferred stock, this dividend rate increases to 9% per annum commencing in December 2013. Our outstanding preferred stock will also receive preferential treatment in the event of our liquidation, dissolution, or winding up. Additionally, the ownership interest of the existing holders of our common stock will be diluted to the extent the Warrant is exercised. The 1,846,374 shares of common stock underlying the Warrant represent approximately 2.3% of the shares of our common stock outstanding as of December 31, 2012 (including the shares issuable upon exercise of the Warrant in total shares outstanding). Although the U.S. Treasury has agreed not to vote any of the shares of common stock it receives upon exercise of the Warrant, a transferee of any portion of the Warrant or of any shares of common stock acquired upon exercise of the Warrant is not bound by this restriction. In addition, to the extent options to purchase common stock under our stock option plans are exercised, holders of our common stock will incur additional dilution.  

32

We are not restricted from issuing additional common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities. If we sell additional equity or convertible debt securities, these sales could result in increased dilution to our stockholders. See “We may need to raise additional capital which may dilute the interests of holders of our common stock or otherwise have an adverse effect on their investment” below. 

The issuance of additional shares of preferred stock could adversely affect holders of common stock, which may negatively impact their investment.

Our Board of Directors is authorized to issue additional classes or series of preferred stock without any action on the part of the stockholders. The board of directors also has the power, without stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including voting rights, dividend rights and preferences over the common stock with respect to dividends or upon the liquidation, dissolution, or winding up of our business and other terms. If we issue preferred stock in the future that has a preference over the common stock with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if we issue preferred stock with voting rights that dilute the voting power of the common stock, the rights of holders of the common stock or the market price of the common stock could be adversely affected.  

Our outstanding debt securities restrict our ability to pay dividends on our capital stock.

We have issued an aggregate of $121.1 million in trust preferred securities (collectively, the “Trust Preferred Securities).” Payments to investors in respect of the Trust Preferred Securities are funded by distributions on certain series of securities issued by us, with similar terms to the relevant series of Trust Preferred Securities, which we refer to as the “Junior Subordinated Notes.” In addition, in September 2006, the Bank issued $50.0 million in subordinated debt in a private placement (the “Bank Subordinated Debt”). If we are unable to pay interest in respect of the Junior Subordinated Notes (which will be used to make distributions on the Trust Preferred Securities), or if any other event of default occurs, then we will generally be prohibited from declaring or paying any dividends or other distributions, or redeeming, purchasing or acquiring, any of our capital securities, including the common stock, during the next succeeding interest payment period applicable to any of the Junior Subordinated Notes.

If the Bank is unable to pay interest in respect of the Bank Subordinated Debt, or if any other event of default has occurred and is continuing on the Bank Subordinated Debt, then the Bank will be prohibited from declaring or paying dividends or other distributions, or redeeming, purchasing or acquiring, any of its capital stock, during the next succeeding interest payment applicable to the Bank Subordinated Debt. As a result, the Bank will be prohibited from making dividend payments to us, which, in turn could affect our ability to pay dividends on our capital securities, including the common stock. 

Moreover, any other financing agreements that we enter into in the future may limit our ability to pay cash dividends on our capital stock, including the common stock. In the event that any other financing agreements in the future restrict our ability to pay such dividends, we may be unable to pay dividends in cash on the common stock unless we can refinance amounts outstanding under those agreements. 

We may need to raise additional capital which may dilute the interests of holders of our common stock or otherwise have an adverse effect on their investment.

Should economic conditions deteriorate, particularly in the California commercial real estate and residential real estate markets where our business is concentrated, we may need to raise more capital to support any additional provisions for loan losses and loan charge-offs. In addition, we may need to raise more capital to meet other regulatory requirements, including new required capital standards, if our losses are higher than expected, if we are unable to meet our capital requirements or if additional capital is required for our growth. There can be no assurances that we would succeed in raising any such additional capital, and any capital we obtain may dilute the interests of holders of our common stock, or otherwise have an adverse effect on their investment.

33

The soundness of other financial institutions could adversely affect us.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, and other institutions. Many of these transactions expose us to credit risk in the event of default of our counterparty. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the financial instrument exposure due us.  The failure of financial institutions can also result in increased FDIC assessments for the Deposit Insurance Fund. Any such losses or increased assessments could have a material adverse effect on our financial condition and results of operations.

Item 1B.  Unresolved Staff Comments.

The Company has not received written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued not less than 180 days before the end of its 2012 fiscal year and that remain unresolved.

Item 2.     Properties.

Cathay General Bancorp

The Bancorp currently neither owns nor leases any real or personal property.  The Bancorp uses the premises, equipment, and furniture of the Bank at 777 North Broadway, Los Angeles, California 90012 and at 9650 Flair Drive, El Monte, California 91731 in exchange for payment of a management fee to the Bank.

Cathay Bank

The Bank’s head office is located in a 36,727 square foot building in the Chinatown area of Los Angeles. The Bank owns both the building and the land upon which the building is situated.  The Bank maintains certain of its administrative offices at a seven-story 102,548 square foot office building located at 9650 Flair Drive, El Monte, California 91731. The Bank also owns this building and land in El Monte.

 The Bank owns its branch offices in Monterey Park, Alhambra, Westminster, San Gabriel, City of Industry, Cupertino, Artesia, New York City, Flushing (2 locations), and Chicago. In addition, the Bank has certain operating and administrative departments located at 4128 Temple City Boulevard, Rosemead, California, where it owns the building and land with approximately 27,600 square feet of space.

The other branch and representative offices and other properties are leased by the Bank under leases with expiration dates ranging from June 2013 to March 2023, exclusive of renewal options. As of December 31, 2012, the Bank’s investment in premises and equipment totaled $102.6 million, net of accumulated depreciation.  See Note 8 and Note 14 to the Consolidated Financial Statements.

Item 3.     Legal Proceedings.

The Company and its subsidiaries and their property are not currently a party or subject to any material pending legal proceeding.

34

Item 4.     Mine Safety Disclosures.

Not Applicable.

Executive Officers of the Registrant.

The table below sets forth the names, ages, and positions at the Bancorp and the Bank of all executive officers of the Company as of February 15, 2013.

Name	Age	Present Position and Principal Occupation During the Past Five Years
Dunson K.  Cheng	68	Chairman of the Board of Directors of Bancorp and the Bank since 1994; Director, President, and Chief Executive Officer of Bancorp since 1990;  President of the Bank since 1985; Director of the Bank since 1982.
Peter Wu	64	Director, Executive Vice Chairman, and Chief Operating Officer of Bancorp and the Bank since October 20, 2003.
Anthony M.  Tang	59	Director of Bancorp since 1990; Executive Vice President of Bancorp since 1994; Chief Lending Officer of the Bank since 1985; Director of the Bank since 1986; Senior Executive Vice President of the Bank since December 1998.
Heng W.  Chen	60	Executive Vice President, Chief Financial Officer, and Treasurer of Bancorp since June 2003; Executive Vice President of the Bank since June 2003; Chief Financial Officer of the Bank since January 2004.
Irwin Wong	64	Executive Vice President-Branch Administration of the Bank from 1999 to February 2011; Executive Vice President and Chief Risk Officer of the Bank since February 2011.
Kim R. Bingham	56	Executive Vice President and Chief Credit Officer of the Bank since August 2004.
Perry P.  Oei	50	Senior Vice President of Bancorp and the Bank since January 2004; General Counsel of Bancorp and the Bank since July 2001; Secretary of Bancorp and the Bank since August 2010.

PART II

Item 5.     Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Market Information

Our common stock is listed on the NASDAQ Global Select Market under the symbol “CATY.”  The closing price of our common stock on February 15, 2013, was $20.14 per share, as reported by the NASDAQ Global Select Market.

35

The following table sets forth the high and low closing prices as reported on the NASDAQ Global Select Market for the periods presented:

	Year Ended December 31,
	2012				2011
	High		Low		High		Low
First quarter	$	18.19	$	14.93	$	18.87	$	15.63
Second quarter		18.16		15.18		17.90		14.81
Third quarter		18.14		15.71		17.06		10.21
Fourth quarter		19.82		16.61		15.19		10.69

Holders

As of February 15, 2013, there were approximately 1,639 holders of record of our common stock.

Dividends

The cash dividends per share declared by quarter were as follows:

	Year Ended December 31,
	2012		2011
First quarter	$	0.01	$	0.01
Second quarter		0.01		0.01
Third quarter		0.01		0.01
Fourth quarter		0.01		0.01
Total	$	0.04	$	0.04

For information concerning restrictions on the payment of dividends, see Part II — Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Capital Resources — Dividend Policy,” and Note 13 to the Consolidated Financial Statements.

Performance Graph

The graph and accompanying information furnished below shows the cumulative total stockholder return over the past five years assuming the investment of $100 on December 31, 2007 (and the reinvestment of dividends thereafter) in each of our common stock, the S&P 500 Index and the SNL Western Bank Index.  The SNL Western Bank Index is a market-weighted index comprised of publicly traded banks and bank holding companies (including the Company) most of which are based in California and the remainder of which are based in eight other western states, including Oregon, Washington, and Nevada.  We will furnish, without charge, on the written request of any person who is a stockholder of record as of the record date for the 2013 annual meeting of stockholders, a list of the companies included in the SNL Western Bank Index. Requests for this information should be addressed to Perry Oei, Secretary, Cathay General Bancorp, 777 North Broadway, Los Angeles, California 90012.

NOTE: The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, the future performance of, or returns on, our common stock. Such information furnished herewith shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not be deemed to be “soliciting material” or to be “filed” under the Securities Act or the Securities Exchange Act with the Securities and Exchange Commission except to the extent that the Company specifically requests that such information be treated as soliciting material or specifically incorporates it by reference into a filing under the Securities Act or the Securities Exchange Act.

36

Unregistered Sales of Equity Securities

There were no sales of any equity securities by the Company during the period covered by this Annual Report on Form 10-K that were not registered under the Securities Act.

 Issuer Purchases of Equity Securities

As of December 31, 2012, Bancorp may repurchase up to 622,500 shares of common stock under the November 2007 stock repurchase program, subject to regulatory limitations.   No shares were repurchased from 2008 through 2012.

Item 6. Selected Financial Data.

The following table presents our selected historical consolidated financial data, and is derived in part from our audited Consolidated Financial Statements.  The selected historical consolidated financial data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere herein and with Part II — Item 7—  “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

37

Selected Consolidated Financial Data

	Year Ended December 31,
	2012			2011			2010			2009			2008
	(Dollars in thousands, except share and per share data)
Income Statement
Interest income	$	429,744		$	453,571		$	489,594		$	528,731		$	589,951
Interest expense		108,491			139,881			191,688			246,039			294,804
Net interest income before provision for credit losses		321,253			313,690			297,906			282,692			295,147
(Reversal)/Provision for credit losses		(9,000	)		27,000			156,900			307,000			106,700
Net interest income/(loss) after provision for credit losses		330,253			286,690			141,006			(24,308	)		188,447
Securities gains/(losses)		18,026			21,131			18,695			55,644			(5,971	)
Other non-interest income		28,481			29,761			13,556			23,010			24,878
Non-interest expense		192,589			185,566			175,711			183,037			136,676
(Loss)/income before income tax expense		184,171			152,016			(2,454	)		(128,691	)		70,678
Income tax (benefit)/expense		66,128			51,261			(14,629	)		(61,912	)		19,554
Net income/(loss)		118,043			100,755			12,175			(66,779	)		51,124
Less: net income attributable to noncontrolling interest		605			605			610			611			603
Net income/(loss) attributable to Cathay General Bancorp		117,438			100,150			11,565			(67,390	)		50,521
Dividends on preferred stock		(16,488	)		(16,437	)		(16,388	)		(16,338	)		(1,140	)
Net income/(loss) attributable to common stockholders	$	100,950		$	83,713		$	(4,823	)	$	(83,728	)	$	49,381
Net income/(loss) attributable to common stockholders per common share
Basic	$	1.28		$	1.06		$	(0.06	)	$	(1.59	)	$	1.00
Diluted	$	1.28		$	1.06		$	(0.06	)	$	(1.59	)	$	1.00
Cash dividends paid per common share	$	0.040		$	0.040		$	0.040		$	0.205		$	0.420
Weighted-average common shares
Basic		78,719,133			78,633,317			77,073,954			52,629,159			49,414,824
Diluted		78,723,297			78,640,652			77,073,954			52,629,159			49,529,793
Statement of Condition
Investment securities	$	2,065,248		$	2,447,982		$	2,843,669		$	3,550,114		$	3,083,817
Net loans (1)		7,235,587			6,844,483			6,615,769			6,678,914			7,340,181
Loans held for sale		-			760			2,873			54,826			-
Total assets		10,694,089			10,644,864			10,801,986			11,588,232			11,582,639
Deposits		7,383,225			7,229,131			6,991,846			7,505,040			6,836,736
Federal funds purchased and securities sold under agreements to repurchase		1,250,000			1,400,000			1,561,000			1,557,000			1,662,000
Advances from the Federal Home Loan Bank		146,200			225,000			550,000			929,362			1,449,362
Borrowings from other financial institutions		18,713			19,800			27,576			26,532			19,500
Long-term debt		171,136			171,136			171,136			171,136			171,136
Total equity		1,629,504			1,515,633			1,436,105			1,312,744			1,301,387
Common Stock Data
Shares of common stock outstanding		78,778,288			78,652,557			78,531,783			63,459,590			49,508,250
Book value per common share	$	17.12		$	15.75		$	14.80		$	16.49		$	20.90
Profitability Ratios
Return on average assets		1.11	%		0.94	%		0.10	%		(0.58	%)		0.47	%
Return on average stockholders' equity		7.48			6.78			0.81			(5.20	)		4.91
Dividend payout ratio		2.68			3.14			27.16			n/m			42.02
Average equity to average assets ratio		14.87			13.98			12.45			11.29			9.58
Efficiency ratio		52.37			50.90			53.22			50.65			43.52

* n/m, not meaningful

(1) Net loans represent gross loans net of loan participations sold, allowance for loan losses, and unamortized deferred loan fees.

38

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

The following discussion is intended to provide information to facilitate the understanding and assessment of the consolidated financial condition and results of operations of the Bancorp and its subsidiaries.  It should be read in conjunction with the audited Consolidated Financial Statements and Notes appearing elsewhere in this Annual Report on Form 10-K.

The Bank offers a wide range of financial services.  It currently operates 20 branches in Southern California, 11 branches in Northern California, eight branches in New York State, one branch in Massachusetts, two branches in Texas, three branches in Washington State, three branches in Illinois, one branch in New Jersey, one branch in Hong Kong and two representative offices (one in Shanghai, China, and one in Taipei, Taiwan).  The Bank is a commercial bank, servicing primarily individuals, professionals, and small to medium-sized businesses in the local markets in which its branches are located.

The financial information presented herein includes the accounts of the Bancorp, its subsidiaries, including the Bank, and the Bank’s consolidated subsidiaries.  All material transactions between these entities are eliminated.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our Consolidated Financial Statements.  Actual results may differ from these estimates under different assumptions or conditions.

Certain accounting policies involve significant judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances.

Management believes the following are critical accounting policies that require the most significant judgments and estimates used in the preparation of the Consolidated Financial Statements:

Allowance for Credit Losses

The determination of the amount of the provision for credit losses charged to operations reflects management’s current judgment about the credit quality of the loan portfolio and takes into consideration    changes in lending policies and procedures, changes in economic and business conditions, changes in the nature and volume of the portfolio and in the terms of loans, changes in the experience, ability, and depth of lending management, changes in the volume and severity of past due, non-accrual, and adversely classified or graded loans, changes in the quality of the loan review system, changes in the value of underlying collateral for collateral-dependent loans, the existence and effect of any concentrations of credit and the effect of competition, legal and regulatory requirements, and other external factors. The nature of the process by which we determine the appropriate allowance for loan losses requires the exercise of considerable judgment.  The allowance is increased by the provision for loan losses and decreased by charge-offs when management believes the uncollectibility of a loan is confirmed.  Subsequent recoveries, if any, are credited to the allowance.  A weakening of the economy or other factors that adversely affect asset quality could result in an increase in the number of delinquencies, bankruptcies, or defaults, and a higher level of non-performing assets, net charge-offs, and provision for loan losses in future periods.

39

The total allowance for credit losses consists of two components: specific allowances and general allowances. To determine the adequacy of the allowance in each of these two components, we employ two primary methodologies, the individual loan review analysis methodology and the classification migration methodology.  These methodologies support the basis for determining allocations between the various loan categories and the overall adequacy of our allowance to provide for probable losses inherent in the loan portfolio. These methodologies are further supported by additional analysis of relevant factors such as the historical losses in the portfolio, and environmental factors which include trends in  delinquency and non-accrual, and other significant factors, such as the national and local economy, the volume and composition of the portfolio, strength of management and loan staff, underwriting standards, and the concentration of credit.

The Bank’s management allocates a specific allowance for “Impaired Credits,” in accordance with Accounting Standard Codification (“ASC”) Section 310-10-35.  For non-Impaired Credits, a general allowance is established for those loans internally classified and risk graded Pass, Minimally Acceptable, Special Mention, or Substandard based on historical losses in the specific loan portfolio and a reserve based on environmental factors determined for that loan group. The level of the general allowance is established to provide coverage for management’s estimate of the credit risk in the loan portfolio by various loan segments not covered by the specific allowance. The allowance for credit losses is discussed in more detail in “Risk Elements of the Loan Portfolio– Allowance for Credit Losses” below.

Investment Securities

The classification and accounting for investment securities are discussed in detail in Note 1 to the Consolidated Financial Statements.  Under ASC Topic 320, formerly SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, investment securities must be classified as held-to-maturity, available-for-sale, or trading. The appropriate classification is based partially on our ability to hold the securities to maturity and largely on management's intentions with respect to either holding or selling the securities. The classification of investment securities is significant since it directly impacts the accounting for unrealized gains and losses on securities. Unrealized gains and losses on trading securities flow directly through earnings during the periods in which they arise, whereas available-for-sale securities are recorded as a separate component of stockholders' equity (accumulated other comprehensive income or loss) and do not affect earnings until realized. The fair values of our investment securities are generally determined by reference to quoted market prices and reliable independent sources.  We are obligated to assess, at each reporting date, whether there is an "other-than-temporary" impairment to our investment securities.  ASC Topic 320 requires us to assess whether we have the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  Other-than-temporary impairment related to credit losses will be recognized in earnings.  Other-than-temporary impairment related to all other factors will be recognized in other comprehensive income.

Income Taxes

The provision for income taxes is based on income reported for financial statement purposes, and differs from the amount of taxes currently payable, since certain income and expense items are reported for financial statement purposes in different periods than those for tax reporting purposes.  Taxes are discussed in more detail in Note 12 to the Consolidated Financial Statements.  Accrued taxes represent the net estimated amount due or to be received from taxing authorities.  In estimating accrued taxes, we assess the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory, judicial, and regulatory guidance in the context of our tax position.  

40

We account for income taxes using the asset and liability approach, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.  A valuation allowance is established for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Goodwill and Goodwill Impairment

Goodwill represents the excess of costs over fair value of assets of businesses acquired.  ASC Topic 805, formerly SFAS No. 141, Business Combinations (Revised 2007), requires an entity to recognize the assets, liabilities and any non-controlling interest at fair value as of the acquisition date.  Contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt.  ASC Topic 805 also requires an entity to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed.  Contingent considerations are to be recognized at fair value on the acquisition date in a business combination and would be subject to the probable and estimable recognition criteria of ASC Topic 450, “Accounting for Contingencies.”   Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC Topic 350, formerly SFAS No. 142.  SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360, formerly SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

Our policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.  Accounting standards require management to estimate the fair value of each reporting unit in making the assessment of impairment at least annually.  

The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350.  The two-step impairment testing process conducted by us, if needed, begins by assigning net assets and goodwill to our three reporting units- Commercial Lending, Retail Banking, and East Coast Operations.  We then complete “step one” of the impairment test by comparing the fair value of each reporting unit (as determined in Note 1 to the Consolidated Financial Statements below) with the recorded book value (or “carrying amount”) of its net assets, with goodwill included in the computation of the carrying amount.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired, and “step two” of the impairment test is not necessary.  If the carrying amount of a reporting unit exceeds its fair value, step two of the impairment test is performed to determine the amount of impairment.  Step two of the impairment test compares the carrying amount of the reporting unit’s goodwill to the “implied fair value” of that goodwill.  The implied fair value of goodwill is computed by assuming all assets and liabilities of the reporting unit would be adjusted to the current fair value, with the offset as an adjustment to goodwill.  This adjusted goodwill balance is the implied fair value used in step two.  An impairment charge is recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value.

41

Valuation of Other Real Estate Owned (OREO)

Real estate acquired in the settlement of loans is initially recorded at fair value, less estimated costs to sell.  Specific valuation allowances on other real estate owned are recorded through charges to operations to recognize declines in fair value subsequent to foreclosure.  Gains on sales are recognized when certain criteria relating to the buyer’s initial and continuing investment in the property are met.

Results of Operations

Overview

For the year ended December 31, 2012, we reported net income attributable to common stockholders of $101.0 million, or $1.28 per diluted share, compared to net income attributable to common stockholders of $83.7 million, or $1.06 per share, in 2011, and net loss attributable to common stockholders of $4.8 million, or $0.06 per share, in 2010.  The $17.3 million increase in net income from 2011 to 2012 was primarily the results of a decrease of $36.0 million in the provision for credit losses, a decrease of $8.1 million in costs associated with debt redemptions, a $7.6 million increase in net interest income, a decrease of $4.2 million in FDIC assessments, and a decrease of $1.8 million in operation expenses of affordable housing investment offset by an increase of $14.9 million in income tax expense, an increase of $6.5 million in salaries and incentive compensation, an increase of $5.6 million in litigation accrual expense, an increase of $4.5 million in other real estate owned (“OREO”) expenses, and a decrease of $3.1 million in gains on sale of securities.  The return on average assets in 2012 was 1.11%, improving from 0.94% in 2011, and from 0.10% in 2010.  The return on average stockholders’ equity was 7.48% in 2012, improving from 6.78% in 2011, and from 0.81% in 2010.

Highlights

· Net income increased $17.2 million, or 17.3%, to $117.4 million for the year ended December 31, 2012, compared to net income of $100.2 million for the year ended December 31, 2011.

· Memorandum of Understanding of Cathay Bank lifted by the CDFI and FDIC as of November 7, 2012.

· Commercial loans increased $258.8 million, or 13.9%, during 2012, to $2.1 billion at December 31, 2012, compared to $1.9 billion at December 31, 2011.   Residential mortgage loans increased $174.0 million, or 17.9%, to $1.1 billion at December 31, 2012, from $972.3 million at December 31, 2011.

· Non-performing assets decreased $149.7 million, or 49.8%, to $150.9 million at December 31, 2012, from $300.6 million at December 31, 2011.

· Net charge-offs decreased $51.5 million, or 77.9%, to $14.7 million for the year ended December 31, 2012, from $66.2 million for the year ended December 31, 2011.

42

 Net income/(loss) available to common stockholders and key financial performance ratios are presented below for the three years indicated:

	2012			2011			2010
	(Dollars in thousands, except share and per share data)
Net income	$	117,438		$	100,150		$	11,565
Dividends on preferred stock		(16,488	)		(16,437	)		(16,388	)
Net income/(loss) available to common stockholders	$	100,950		$	83,713		$	(4,823	)
Basic earnings/(loss) per common share	$	1.28		$	1.06		$	(0.06	)
Diluted earnings/(loss) per common share	$	1.28		$	1.06		$	(0.06	)
Return on average assets		1.11	%		0.94	%		0.10	%
Return on average stockholders' equity		7.48	%		6.78	%		0.81	%
Total average assets	$	10,617,004		$	10,629,217		$	11,489,165
Total average equity	$	1,579,195		$	1,485,545		$	1,430,433
Efficiency ratio		52.37	%		50.90	%		53.22	%
Effective income tax rate		36.02	%		33.86	%		477.45	%

Net Interest Income

Net interest income increased $7.6 million, or 2.4%, from $313.7 million in 2011 to $321.3 million in 2012.  Taxable-equivalent net interest income, using a statutory Federal income tax rate of 35%, totaled $323.5 million in 2012, compared with $316.0 million in 2011, an increase of $7.5 million, or 2.4%.  Interest income on tax-exempt securities was $4.2 million, or $6.4 million on a tax-equivalent basis, in 2012 compared to $4.2 million, or $6.5 million on a tax-equivalent basis, in 2011.  The increase in net interest income was due primarily to the decreases in interest expense paid for time deposits and the prepayment of Federal Home Loan Bank advances and securities sold under agreements to repurchase.

Average loans for 2012 were $7.10 billion, a $134.5 million, or a 1.9%, increase from $6.96 billion in 2011.  Compared with 2011, average commercial loans increased $284.0 million, or 17.1%, and average residential mortgage loans increased $91.6 million, or 8.0%.  Offsetting the above increases was a decrease of $121.1 million, or 3.2%, in average commercial mortgage loans and a decrease of $118.0 million, or 37.3%, in average real estate construction loans.  Average investment securities were $2.35 billion in 2012, a decrease of $270.5 million, or 10.3%, from 2011, due primarily to decreases of U.S. agency securities of $325.7 million.

Average interest bearing deposits were $6.23 billion in 2012, an increase of $83.7 million, or 1.4%, from $6.14 billion in 2011 primarily due to increases of $238.9 million in all deposit types, offset primarily by decreases of $155.2 million in brokered time deposits.  Average FHLB advances and other borrowings decreased $280.9 million, or 88.2%, to $37.7 million in 2012 from $318.6 million in 2011 primarily due to prepayments of FHLB advances in 2012.  Average securities sold under agreements to repurchase   decreased $86.9 million, or 6.0%, to $1.36 billion in 2012 from $1.45 billion in 2011 primarily due to prepayments of securities sold under agreements to repurchase in 2012.

Taxable-equivalent interest income decreased $23.9 million, or 5.2%, to $432.0 million in 2012 primarily due to decline in volume on investment securities and decreases in loan yields and by a change in the mix of interest-earning assets as discussed below:

· Increase in volume:  Average interest-earning assets increased $37.1 million, or 0.4%, to $9.87 billion in 2012, compared with the average interest-earning assets of $9.84 billion in 2011.   The increase in average loans balance of $134.5 million in 2012 and increase in average interest bearing deposits of $253.6 million, offset by decreases in average investment securities of $270.4 million and decreases in average Federal funds sold and securities purchased under agreements to resell of $69.5 million, contributed to the slight increase in interest income.

43

· Decrease in rate: The average yield of interest bearing assets decreased 25 basis points to 4.38% in 2012 from 4.63% in 2011.  Rate on taxable investment securities decreased 53 basis points from 3.34% in 2011 to 2.81% in 2012.  The decrease in taxable investment securities yields caused a $12.3 million decline in interest income.  Rate on loans decreased 16 basis points from 5.24% in 2011 to 5.08% in 2012.  The decrease in loan yield caused a $10.9 million decline in interest income.

· Change in the mix of interest-earnings assets:  Average gross loans, which generally have a higher yield than other types of investments, comprised 71.9% of total average interest-earning assets in 2012, an increase from 70.8% in 2011.  Average securities comprised 23.8% of total average interest-bearing assets in 2012, a decrease from 26.6% in 2011.

Interest expense decreased by $31.4 million to $108.5 million in 2012 compared with $139.9 million in 2011 primarily due to decreased cost from time deposits, FHLB advances and securities sold under agreements to repurchase.  The overall decrease in interest expense was primarily due to a net decrease in rate and a net decrease in volume as discussed below:

· Decrease in volume:  Average interest-bearing liabilities decreased $284.1 million in 2012, due primarily to the decrease in brokered time deposits, the decrease in FHLB advances, and the decrease in securities sold under agreements to repurchase.  The decrease in volume caused interest expense to decline by $10.5 million.

· Decline in rate:  The average cost of interest bearing liabilities decreased 34 basis points to 1.39% in 2012 from 1.73% in 2011 due primarily to a decrease of 25 basis points in the average cost of interest bearing deposits to 0.76% in 2012 from 1.01% in 2011 and a decrease of 306 basis points in average cost of FHLB advances and other borrowings to 0.72% in 2012 from 3.78% in 2011.  The decline in rate caused interest expense to decline by $20.9 million.

· Change in the mix of interest-bearing liabilities: Average interest bearing deposits of $6.23 billion increased to 79.9% of total interest-bearing liabilities in 2012 compared to 76.0% in 2011.  Offsetting the increases, average FHLB advances and other borrowing decreased to 0.5% of total interest-bearing liabilities in 2012 compared to 3.9% in 2011.

Our taxable-equivalent net interest margin, defined as taxable-equivalent net interest income to average interest-earning assets, increased 7 basis points to 3.28% in 2012 from 3.21% in 2011.  The increase in net interest margin from the prior year primarily resulted from increases in loans, decreases in the rate on interest bearing deposits, and the prepayment of FHLB advances and securities sold under agreements to repurchase contributed to the increase in the net interest margin.

Net interest income increased $15.8 million, or 5.3%, from $297.9 million in 2010 to $313.7 million in 2011.  Taxable-equivalent net interest income, using a statutory Federal income tax rate of 35%, totaled $316.0 million in 2011, compared with $298.4 million in 2010, an increase of $17.6 million, or 5.9%.  Interest income on tax-exempt securities was $4.2 million, or $6.5 million on a tax-equivalent basis, in 2011 compared to $854,000, or $1.3 million on a tax-equivalent basis, in 2010.  The increase in net interest income was due primarily to the decreases in interest expense paid for time deposits and the prepayment of Federal Home Loan Bank advances and securities sold under agreements to repurchase.

Average loans for 2011 were $6.96 billion, a $61.7 million, or 0.9%, increase from $6.90 billion in 2010.  Compared with 2010, average commercial loans increased $306.6 million, or 22.6%, and average residential mortgage loans increased $181.8 million, or 19.0%.  Offsetting the above increases was a decrease of $202.1 million, or 5.0%, in average commercial mortgage loans and a decreased of $223.8 million, or 41.4%, in average real estate construction loans.  Average investment securities were $2.62 billion in 2011, a decrease of $884.6 million, or 25.3%, from 2010, due primarily to decreases of U.S. agency securities of $812.6 million.

Average interest bearing deposits were $6.14 billion in 2011, a decrease of $357.9 million, or 5.5%, from $6.50 billion in 2010 primarily due to decreases of $442.9 million in brokered time deposits offset primarily by increases of $42.8 million in saving deposits.  Average FHLB advances and other borrowings decreased $524.7 million, or 62.2%, to $318.6 million in 2011 from $843.3 million in 2010 primarily due to prepayments of FHLB advances in 2011.  Average securities sold under agreements to repurchase   decreased $111.9 million, or 7.2%, to $1.45 billion in 2011 from $1.56 billion in 2010 primarily due to prepayments of securities sold under agreements to repurchase in 2011.

44

Taxable-equivalent interest income decreased $34.2 million, or 7.0%, to $455.8 million in 2011 primarily due to decline in volume on investment securities and decreases in loan yields and by a change in the mix of interest-earning assets as discussed below:

· Decrease in volume:  Average interest-earning assets decreased $942.1 million, or 8.7%, to $9.84 billion in 2011, compared with the average interest-earning assets of $10.78 billion in 2010.   The decrease in average investment securities balance of $884.6 million in 2011 caused primarily the $26.3 million decline in interest income.

· Decrease in yield on loans: Yield on loans decreased 28 basis points from 5.52% in 2010 to 5.24% in 2011.  The decrease in loan yield caused a $19.5 million decline in interest income.

· Change in the mix of interest-earnings assets:  Average gross loans, which generally have a higher yield than other types of investments, comprised 70.8% of total average interest-earning assets in 2011, an increase from 64.0% in 2010.  Average securities comprised 26.6% of total average interest-bearing assets in 2011, a decrease from 32.5% in 2010.

Interest expense decreased by $51.8 million to $139.9 million in 2011 compared with $191.7 million in 2010 primarily due to decreased cost from time deposits and FHLB advances.  The overall decrease in interest expense was primarily due to a net decrease in rate and a net decrease in volume as discussed below:

· Decrease in volume:  Average interest-bearing liabilities decreased $994.4 million in 2011, due primarily to the decrease in brokered time deposits, the decrease in FHLB advances, and the decrease in securities sold under agreements to repurchase.  The decrease in volume caused interest expense to decline by $31.4 million.

· Decline in rate:  The average cost of interest bearing liabilities decreased 38 basis points to 1.73% in 2011 from 2.11% in 2010 due primarily to a decrease of 28 basis points in the average cost of interest bearing deposits to 1.01% in 2011 from 1.29% in 2010 and a decrease of 67 basis points in average cost of FHLB advances and other borrowings to 3.78% in 2011 from 4.45%.  The decline in rate caused interest expense to decline by $20.4 million.

· Change in the mix of interest-bearing liabilities: Average interest bearing deposits of $6.14 billion increased to 76.0% of total interest-bearing liabilities in 2011 compared to 71.6% in 2010.  Offsetting the increases, average FHLB advances and other borrowing decreased to 3.9% of total interest-bearing liabilities in 2011 compared to 9.3% in 2010.

Our taxable-equivalent net interest margin, defined as taxable-equivalent net interest income to average interest-earning assets, increased 44 basis points to 3.21% in 2011 from 2.77% in 2010.  The increase in net interest margin from the prior year primarily resulted from decreases in the rate on interest bearing deposits, and the prepayment of FHLB advances and securities sold under agreement to repurchase contributed to the increase in the net interest margin.

45

        The following table sets forth information concerning average interest-earning assets, average interest-bearing liabilities, and the yields and rates paid on those assets and liabilities.  Average outstanding amounts included in the table are daily averages.

Interest-Earning Assets and Interest-Bearing Liabilities
						Average								Average								Average
	2012			Interest		Yield/			2011			Interest		Yield/			2010			Interest		Yield/
	Average			Income/		Rate			Average			Income/		Rate			Average			Income/		Rate
	Balance			Expense (4)		(1)(2)			Balance			Expense (4)		(1)(2)			Balance			Expense (4)		(1)(2)
	(Dollars in thousands)
Interest-Earning Assets:
Commercial loans	$	1,946,986		$	81,684		4.20	%	$	1,662,937		$	72,188		4.34	%	$	1,356,368		$	63,124		4.65	%
Residential mortgages		1,232,573			60,644		4.92			1,140,936			57,541		5.04			959,112			49,823		5.19
Commercial mortgages		3,701,613			207,541		5.61			3,822,757			220,070		5.76			4,024,863			240,747		5.98
Real estate construction loans		198,363			10,440		5.26			316,323			14,352		4.54			540,151			26,334		4.88
Other loans		15,541			334		2.15			17,583			429		2.44			18,382			634		3.45
Loans (1)		7,095,076			360,643		5.08			6,960,536			364,580		5.24			6,898,876			380,662		5.52
Taxable securities		2,216,857			62,395		2.81			2,484,629			83,083		3.34			3,476,259			106,568		3.07
Tax-exempt securities (3)		131,530			6,401		4.87			134,245			6,489		4.83			27,258			1,314		4.82
FHLB stock		47,938			485		1.01			58,999			177		0.30			68,780			237		0.34
Federal funds sold & securities purchased under agreements to resell		14,986			18		0.12			84,493			83		0.10			6,932			14		0.20
Interest-bearing deposits		367,138			2,042		0.56			113,566			1,430		1.26			300,471			1,259		0.42
Total interest-earning assets	$	9,873,525		$	431,984		4.38		$	9,836,468		$	455,842		4.63		$	10,778,576		$	490,054		4.55
Non-interest Earning Assets:
Cash and due from banks		126,476								161,711								95,996
Other non-earning assets		819,986								872,638								876,771
Total non-interest earning assets		946,462								1,034,349								972,767
Less: Allowance for loan losses		(194,385	)							(233,744	)							(254,420	)
Deferred loan fees		(8,598	)							(7,856	)							(7,758	)
Total Assets	$	10,617,004							$	10,629,217							$	11,489,165
Interest-Bearing Liabilities:
Interest-bearing demand deposits	$	516,246		$	792		0.15			426,252			756		0.18			397,434			927		0.23
Money market deposits		1,059,841			5,938		0.56			979,253			7,351		0.75			966,888			8,733		0.90
Savings deposits		451,022			365		0.08			411,953			482		0.12			369,190			694		0.19
Time deposits		4,197,906			40,278		0.96			4,323,833			53,625		1.24			4,765,632			73,808		1.55
Total interest-bearing deposits		6,225,015			47,373		0.76			6,141,291			62,214		1.01			6,499,144			84,162		1.29
Federal funds purchased		-			-		-			27			0		1.29			-			-		-
Securities sold under agreements to repurchase		1,361,475			55,699		4.09			1,448,363			60,733		4.19			1,560,215			66,141		4.24
FHLB advances and other borrowings		37,717			270		0.72			318,606			12,044		3.78			843,321			37,533		4.45
Long-term debt		171,136			5,149		3.01			171,136			4,890		2.86			171,136			3,852		2.25
Total interest-bearing liabilities		7,795,343			108,491		1.39			8,079,423			139,881		1.73			9,073,816			191,688		2.11
Non-interest Bearing Liabilities:
Demand deposits		1,157,343								996,215								911,351
Other liabilities		85,123								68,034								73,565
Stockholders' equity		1,579,195								1,485,545								1,430,433
Total liabilities and stockholders' equity	$	10,617,004							$	10,629,217							$	11,489,165
Net interest spread (4)							2.99	%							2.90	%							2.44	%
Net interest income (4)				$	323,493							$	315,961							$	298,366
Net interest margin (4)							3.28	%							3.21	%							2.77	%

(1) Yields and amounts of interest earned include loan fees.   Non-accrual loans are included in the average balance.

(2) Calculated by dividing net interest income by average outstanding interest-earning assets.

(3) The average yield has been adjusted to a fully taxable-equivalent basis for certain securities of states and political subdivisions and other securities held using a statutory Federal income tax rate of 35%.

(4) Net interest income, net interest spread, and net interest margin on interest-earning assets have been adjusted to a fully taxable-equivalent basis using a statutory Federal income tax rate of 35%.

46

Taxable-Equivalent Net Interest Income — Changes Due to Rate and Volume(1)

	2012 - 2011 Increase/(Decrease) in Net Interest Income Due to:									2011 - 2010 Increase/(Decrease) in Net Interest Income Due to:
	Change in Volume			Change in Rate			Total Change			Change in Volume			Change in Rate			Total Change
	(In thousands)
Interest-Earning Assets
Deposits with other banks	$	1,767		$	(1,155	)	$	612		$	(1,155	)	$	1,326		$	171
Federal funds sold and securities purchased under agreements to resell		(80	)		15			(65	)		(1,179	)		1,248			69
Taxable securities		(8,380	)		(12,308	)		(20,688	)		(32,493	)		9,008			(23,485	)
Tax-exempt securities (2)		(132	)		44			(88	)		5,171			4			5,175
FHLB Stock		(39	)		347			308			(31	)		(29	)		(60	)
Loans		6,965			(10,902	)		(3,937	)		3,376			(19,458	)		(16,082	)
Total increase (decrease) in interest income		101			(23,959	)		(23,858	)		(26,311	)		(7,901	)		(34,212	)
Interest-Bearing Liabilities
Interest-bearing demand deposits		146			(110	)		36			63			(234	)		(171	)
Money market deposits		567			(1,980	)		(1,413	)		110			(1,492	)		(1,382	)
Savings deposits		42			(159	)		(117	)		73			(285	)		(212	)
Time deposits		(1,521	)		(11,826	)		(13,347	)		(6,410	)		(13,773	)		(20,183	)
Securities sold under agreemensts to repurchase		(3,580	)		(1,454	)		(5,034	)		(4,697	)		(711	)		(5,408	)
FHLB advances and other borrowings		(6,134	)		(5,640	)		(11,774	)		(20,521	)		(4,968	)		(25,489	)
Long-term debt		-			259			259			-			1,038			1,038
Total decrease in interest expense		(10,480	)		(20,910	)		(31,390	)		(31,382	)		(20,425	)		(51,807	)
Change in net interest income	$	10,581		$	(3,049	)	$	7,532		$	5,071		$	12,524		$	17,595

(1) Changes in interest income and interest expense attributable to changes in both volume and rate have been allocated proportionately to changes due to volume and changes due to rate.

(2) The amount of interest earned has been adjusted to a fully tax-equivalent basis for certain securities of states and political subdivisions and other securities held using a statutory Federal income tax rate of 35%.

Provision for Credit Losses

The provision for credit losses represents the charge against current earnings that is determined by management, through a credit review process, as the amount needed to maintain an allowance for loan losses and an allowance for off-balance sheet unfunded credit commitments that management believes to be sufficient to absorb credit losses inherent in the Bank’s loan portfolio and credit commitments.  The Bank recorded a negative $9.0 million provision for credit losses in 2012 compared with $27.0 million in 2011, and $156.9 million in 2010.  Net charge-offs for 2012 were $14.7 million, or 0.2% of average loans, compared to net charge-offs for 2011 of $66.2 million, or 1.0% of average loans, and compared to net charge-offs for 2010 of $126.4 million, or 1.8% of average loans.  The decreases in provision for credit losses and net charge-offs in 2012 were primarily due to decreases in non-performing loans.

47

Non-interest Income

Non-interest income decreased $4.4 million, or 8.6%, to $46.5 million for 2012, from $50.9 million for 2011, and compared to $32.3 million for 2010.  Non-interest income includes depository service fees, letters of credit commissions, securities gains (losses), gains (losses) from loan sales, gains from sale of premises and equipment, and other sources of fee income.   These other fee-based services include wire transfer fees, safe deposit fees, fees on loan-related activities, fee income from our Wealth Management division, and foreign exchange fees.

The decrease in non-interest income of $4.4 million, or 8.6%, from 2011 to 2012 was primarily due to a combination of the following:

· A $3.1 million decrease in securities gains.  We sold securities of $544.2 million and recorded net gains on sale of securities of $18.0 million in 2012 compared to security sales of $1.3 billion with $21.1 million net gains on sale of securities in 2011.

· A $2.6 million decrease in gains on sale of loans.

· A $1.2 million decrease in foreign exchange income.

The increase in non-interest income of $18.6 million, or 57.8%, from 2010 to 2011 was primarily due to a combination of the following:

· A $9.6 million decrease in loss on the value of interest rate swap agreements due to higher unrealized losses recognized during 2010.

· A $2.4 million increase in securities gains.  We sold securities of $1.3 billion and recorded net gains on sale of securities of $21.1 million in 2011 compared to security sales of $1.1 billion with $19.3 million net gains on sale of securities in 2010.

· A $2.3 million increase in gains on sale of loans.

· A $1.2 million increase in wealth management commissions.

· A $1.2 million increase in letters of credit commissions.

· A $1.1 million increase in venture capital income mainly due to venture capital investment distributions.

· A $1.1 million increase in commissions from foreign currency and exchange transactions.

Non-interest Expense

Non-interest expense includes expenses related to salaries and benefits of employees, occupancy expenses, marketing expenses, computer and equipment expenses, amortization of core deposit intangibles, and other operating expenses.  Non-interest expense totaled $192.6 million in 2012 compared with $185.6 million in 2011.  The increase of $7.0 million, or 3.8%, in non-interest expense in 2012 compared to 2011 was primarily due to a combination of the following:

· Salaries and employee benefits increased $6.5 million, or 9.1%, primarily due to the hiring of new employees as well as the addition of temporary employees related to the upcoming core system conversion in July 2013.

· An accrual of $5.8 million related to a jury verdict in a lender liability case on a construction loan where Cathay Bank owns a 50% interest.

· OREO expenses increased $4.5 million, or 43%, primarily due to decreases of $4.9 million in gains on OREO transactions.

· Professional service expense increased $1.6 million, or 7.7%, and computer and equipment expenses increased $1.1 million, or 12.7%, due primarily to the upcoming core system conversion.

· Marketing expenses increased $1.4 million primarily due to special events celebrating the 50th anniversary of the Bank.

· Offsetting the above increases were a $8.1 million decrease in costs associated with debt redemptions due to prepayment penalties on prepayment of FHLB advances and securities sold under agreements to repurchase, a $4.2 million decrease in FDIC and state assessments, and a $1.8 million decrease in operating expenses of affordable housing investments.

48

The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, increased to 52.37% in 2012 compared to 50.90% in 2011 due primarily to higher non-interest expenses as explained above.

Non-interest expense totaled $185.6 million in 2011 compared with $175.7 million in 2010.  The increase of $9.9 million, or 5.6%, in non-interest expense in 2011 compared to 2010 was primarily due to a combination of the following:

· Salaries and employee benefits increased $13.0 million, or 22.1%, primarily due to increases in incentive compensation and the hiring of new employees.

· Costs associated with debt redemption increased $6.0 million, 41.9%, primarily due to prepayment penalties on prepaying FHLB advances.

· Professional service expense increased $2.6 million, or 14.6%, due primarily to increases in legal expenses, collection expenses, and consulting expenses.

· Occupancy expense increased $2.0 million, or 16.7%, primarily due to a correction in the depreciation life for certain components of our administrative office building made in 2010.

· Offsetting the above increases were a $7.1 million decrease in FDIC and state assessments, a $5.4 million decrease in OREO expenses, and a $3.2 million decrease in write-down on loans held for sale.

The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, decreased to 50.90% in 2011 compared to 53.22% in 2010.

Income Tax Expense

Income tax expense was $66.1 million in 2012, compared to an income tax expense of $51.3 million in 2011, and income tax benefit of $14.6 million in 2010.  The effective tax rate was 36.0% for 2012, 33.9% for 2011, and 477% for 2010.  The effective tax rate differed from the composite statutory composite rate of 42% primarily as a result of low income housing and other tax credits totaling $9.4 million recognized in 2012, $10.1 million recognized in 2011, and $11.2 million recognized in 2010.  The income tax benefit in 2010 was primarily due to the net loss.

Our tax returns are open for audits by the Internal Revenue Service back to 2010 and by the California Franchise Tax Board (“FTB”) of the State of California back to 2003.  We are currently under audit by the FTB for the years 2003 to 2007.  From time to time, there may be differences in opinion with respect to the tax treatment accorded transactions.  When, and if, such differences occur and the related tax effects become probable and estimable, such amounts will be recognized.

Financial Condition     

Total assets were $10.7 billion at December 31, 2012, an increase of $49.2 million, or 0.5%, from $10.6 billion at December 31, 2011, primarily due to increases of $369.9 million in gross loans,  increases of $117.0 million in short-term investments, and increases of $27.0 million in cash and due from banks, offset by decreasesof $382.7 million in investment securities, decreases of $46.3 million in OREO, and decreases of $37.5 million from income tax receivable and deferred tax assets

49

Investment Securities

Investment securities were $2.1 billion and represented 19.3% of total assets at December 31, 2012, compared with $2.4 billion, or 23.0%, of total assets at December 31, 2011.  The following table summarizes the carrying value of our portfolio of securities for each of the past two years:

	As of December 31,
	2012		2011
	(In thousands)
Securities Held-to-Maturity:
U.S. government sponsored entities	$	-	$	99,966
State and municipal securities		129,037		129,577
Mortgage-backed securities		634,757		913,990
Corporate debt securities		9,974		9,971
Total securities held-to-maturity	$	773,768	$	1,153,504
Securities Available-for-Sale:
U.S. treasury securities	$	509,971	$	-
U.S. government sponsored entities		-		501,226
State and municipal securities		-		1,928
Mortgage-backed securities		416,694		337,631
Collateralized mortgage obligations		10,168		16,486
Asset-backed securities		141		166
Corporate debt securities		335,977		380,429
Mutual funds		6,079		6,035
Preferred stock of government sponsored entities		2,335		1,654
Trust preferred securities		10,115		45,963
Other equity securities		-		2,960
Total securities available-for-sale	$	1,291,480	$	1,294,478
Total investment securities	$	2,065,248	$	2,447,982

ASC Topic 320 requires an entity to assess whether it has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  If either of these conditions is met, an entity must recognize an other-than-temporary impairment (“OTTI”) to its investment securities.  If an entity does not intend to sell the debt security and will not be required to sell the debt security, the entity must consider whether it will recover the amortized cost basis of the security.  If the present value of expected cash flows is less than the amortized cost basis of the security, OTTI shall be considered to have occurred.  OTTI is then separated into the amount of the total impairment related to credit losses and the amount of the total impairment related to all other factors.  An entity determines the impairment related to credit losses by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.  OTTI related to the credit loss is thereafter recognized in earnings.  OTTI related to all other factors is recognized in other comprehensive income.  OTTI not related to the credit loss for a held-to-maturity security should be recognized separately in a new category of other comprehensive income and amortized over the remaining life of the debt security as an increase in the carrying value of the security only when the entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its remaining amortized cost basis.  The Company has both the ability and the intent to hold and it is not more likely than not that the Company will be required to sell those securities with unrealized losses before recovery of their amortized cost basis.

50

The Company's unrealized loss on investments in corporate bonds relates to a number of investments in bonds of financial institutions, all of which were investment grade at the date of acquisition and as of December 31, 2012.  The unrealized losses were primarily caused by the widening of credit and liquidity spreads since the dates of acquisition. The contractual terms of those investments do not permit the issuers to settle the security at a price less than the amortized cost of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that these bonds would not be settled at a price less than the amortized cost of the investment. Because the Company does not intend to sell and would not be required to sell these investments until a recovery of fair value, which may be maturity, it does not consider its investments in these corporate bonds to be other-than-temporarily impaired at December 31, 2012.

The temporarily impaired securities represent 16.9% of the fair value of investment securities as of December 31, 2012.  Unrealized losses for securities with unrealized losses for less than twelve months represent 2.4%, and securities with unrealized losses for twelve months or more represent 4.4%, of the historical cost of these securities.  Unrealized losses on these securities generally resulted from increases in interest rate spreads subsequent to the date that these securities were purchased.  At December 31, 2012, 34 issues of securities had unrealized losses for 12 months or longer and seven issues of securities had unrealized losses of less than 12 months.

At December 31, 2012, management believed the impairment was temporary and, accordingly, no impairment loss has been recognized in our consolidated statements of operations.  We expect to recover the amortized cost basis of our debt securities, and have no intent to sell and will not be required to sell available-for-sale debt securities that have declined below their cost before their anticipated recovery.  The table below shows the fair value, unrealized losses, and number of issuances of the temporarily impaired securities in our investment securities portfolio as of December 31, 2012, and December 31, 2011:

	As of December 31, 2012
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair		Unrealized		No. of		Fair		Unrealized		No. of		Fair		Unrealized		No. of
	Value		Losses		Issuances		Value		Losses		Issuances		Value		Losses		Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Total securities held-to-maturity	$	-	$	-		-	$	-	$	-		-	$	-	$	-		-
Securities Available-for-Sale
U.S. treasury securities	$	49,969	$	5		1							$	49,969	$	5		1
Mortgage-backed securities		231		1		2		170		1		6		401		2		8
Mortgage-backed securities-Non-agency		-		-		-		96		2		1		96		2		1
Collateralized mortgage obligations		-		-		-		439		35		4		439		35		4
Asset-backed securities		-		-		-		141		4		1		141		4		1
Corporate debt securities		52,468		2,532		4		253,430		11,570		22		305,898		14,102		26
Total securities available-for-sale	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41
Total investment securities	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41

51

	As of December 31, 2011
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair		Unrealized		No. of		Fair		Unrealized		No. of		Fair		Unrealized		No. of
	Value		Losses		Issuances		Value		Losses		Issuances		Value		Losses		Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Corporate debt securities	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Total securities held-to-maturity	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Securities Available-for-Sale
U.S. government sponsored entities	$	49,993	$	7		1	$	-	$	-		-	$	49,993	$	7		1
Mortgage-backed securities		564		4		8		35		1		2		599		5		10
Mortgage-backed securities-Non-agency		-		-		-		6,719		431		2		6,719		431		2
Collateralized mortgage obligations		-		-		-		570		238		4		570		238		4
Asset-backed securities		-		-		-		166		6		1		166		6		1
Corporate debt securities		185,577		14,201		17		172,857		17,528		19		358,434		31,729		36
Mutual funds		1,987		13		1		-		-		-		1,987		13		1
Trust preferred securities		5,674		24		2		-		-		-		5,674		24		2
Total securities available-for-sale	$	243,795	$	14,249		29	$	180,347	$	18,204		28	$	424,142	$	32,453		57
Total investment securities	$	253,430	$	14,586		30	$	180,347	$	18,204		28	$	433,777	$	32,790		58

52

The scheduled maturities and taxable-equivalent yields by security type are presented in the following tables:

Securites Portfolio Maturity Distribution and Yield Analysis:
	As of December 31, 2012
				After One			After Five
	One Year			Year to			Years to			Over Ten
	or Less			Five Years			Ten Years			Years			Total
	(Dollars in thousands)
Maturity Distribution:
Securities Held-to-Maturity:
State and municipal securities	$	-		$	-		$	52,261		$	76,776		$	129,037
Mortgage-backed securities		-			-			-			634,757			634,757
Corporate debt securities		-			-			9,974			-			9,974
Total securities held-to-maturity	$	-		$	-		$	62,235		$	711,533		$	773,768
Securities Available-for-Sale:
U.S. treasury securities	$	349,880		$	160,091		$	-		$	-		$	509,971
Mortgage-backed securities(1)		60			141			55,633			360,860			416,694
Collateralized mortgage obligations(1)		-			-			8,446			1,722			10,168
Asset-backed securities(1)		-			-			-			141			141
Corporate debt securities		-			210,009			125,968			-			335,977
Mutual funds		-			-			-			6,079			6,079
Preferred stock of government sponsored entities (2)		-			-			-			2,335			2,335
Trust preferred securities		-			-			-			10,115			10,115
Other equity securities		-			-			-			-			-
Total securities available-for-sale	$	349,940		$	370,241		$	190,047		$	381,252		$	1,291,480
Total investment securities	$	349,940		$	370,241		$	252,282		$	1,092,785		$	2,065,248
Weighted-Average Yield:
Securities Held-to-Maturity:
State and municipal securities		-			-			4.60	%		4.89	%		4.77	%
Mortgage-backed securities		-			-			-			3.83			3.83
Corporate debt securities		-			-			2.45			-			2.45
Total securities held-to-maturity		0.00	%		0.00	%		4.26	%		3.95	%		3.97	%
Securities Available-for-Sale:
U.S. treasury securities		0.16	%		0.30	%		-			-			0.21	%
Mortgage-backed securities(1)		4.92			6.70			4.45			2.73			2.96
Collateralized mortgage obligations(1)		-			-			4.70			7.56			5.18
Asset-backed securities(1)		-			-			-			2.25			2.25
Corporate debt securities		-			2.02			2.25			-			2.12
Mutual funds		-			-			-			2.42			2.42
Trust preferred securities		-			-			-			5.63			5.63
Total securities available-for-sale		0.17	%		1.28	%		3.00	%		2.81	%		1.69	%
Total investment securities		0.17	%		1.28	%		3.31	%		3.55	%		2.55	%

(1) Securities reflect stated maturities and do not reflect the impact of anticipated prepayments.

(2) There is no stated maturity for equity securities.

(3) Weighted average yield has been adjusted to a fully-taxable equivalent basis.

53

Loans

      Loans represented 71.9% of average interest-earning assets during 2012, compared with 70.8% during 2011.  Gross loans, excluding loans held for sale, increased by $369.9 million, or 5.2%, to $7.43 billion at December 31, 2012, compared with $7.06 billion at December 31, 2011.  The increase in gross loans was primarily attributable to the following:

•  Commercial loans increased $258.8 million, or 13.9%, to $2.13 billion at December 31, 2012, compared to $1.87 billion at December 31, 2011.  Commercial loans consist primarily of short-term loans (typically with a maturity of one year or less) to support general business purposes, or to provide working capital to businesses in the form of lines of credit, trade-finance loans, loans for commercial purposes secured by cash, and SBA loans.

•  Total residential mortgage loans increased by $174.0 million, or 17.9%, to $1.15 billion at December 31, 2012, compared to $972.3 million at December 31, 2011, primarily due to the low level of interest rates.

•  Commercial mortgage loans increased $19.6 million, or 0.5%, to $3.77 billion at December 31, 2012, compared to $3.75 billion at December 31, 2011. Total commercial mortgage loans accounted for 50.7% of gross loans at December 31, 2012, compared to 53.1% at December 31, 2011.  Commercial mortgage loans include primarily commercial retail properties, shopping centers, and owner-occupied industrial facilities, and, secondarily, office buildings, multiple-unit apartments, hotels, and multi-tenanted industrial properties, and are typically secured by first deeds of trust on such commercial properties.  In addition, the Bank provides medium-term commercial real estate loans secured by commercial or industrial buildings where the borrower either uses the property for business purposes or derives income from tenants.

•  Real estate construction loans decreased $56.4 million, or 23.8%, to $181.0 million at December 31, 2012, compared to $237.4 million at December 31, 2011.

Our lending relates predominantly to activities in the states of California, New York, Texas, Washington, Massachusetts, Illinois, and New Jersey, although we have some loans to domestic clients who are engaged in international trade.  Loans outstanding in our branch in Hong Kong were $166.9 million as of December 31, 2012, compared to $160.5 million as of December 31, 2011.

54

      The classification of loans by type and amount outstanding as of December 31 for each of the past five years is presented below:

Loan Type and Mix

	As of December 31,
	2012			2011			2010			2009			2008
	(In thousands)
Commercial loans	$	2,127,107		$	1,868,275		$	1,441,167		$	1,307,880		$	1,620,438
Residential mortgage loans and equity lines		1,340,082			1,186,969			1,061,330			878,266			791,497
Commercial mortgage loans		3,768,452			3,748,897			3,940,061			4,065,155			4,132,850
Real estate construction loans		180,950			237,372			409,986			626,087			913,168
Installment and other loans		12,556			17,699			16,077			21,754			14,415
Gross loans		7,429,147			7,059,212			6,868,621			6,899,142			7,472,368
Less:
Allowance for loan losses		(183,322	)		(206,280	)		(245,231	)		(211,889	)		(122,093	)
Unamortized deferred loan fees		(10,238	)		(8,449	)		(7,621	)		(8,339	)		(10,094	)
Total loans and leases, net	$	7,235,587		$	6,844,483		$	6,615,769		$	6,678,914		$	7,340,181
Loans held for sale	$	-		$	760		$	2,873		$	54,826		$	-

The loan maturities in the table below are based on contractual maturities.   As is customary in the banking industry, loans that meet underwriting criteria can be renewed by mutual agreement between us and the borrower.  Because we are unable to estimate the extent to which our borrowers will renew their loans, the table is based on contractual maturities.   As a result, the data shown below should not be viewed as an indication of future cash flows.

55

Contractual Maturity of Loan Portfolio
	Within One Year		One to Five Years		Over Five Years		Total
	(In thousands)
Commercial loans
Floating rate	$	1,237,743	$	396,300	$	39,540	$	1,673,583
Fixed rate		413,410		33,886		6,228		453,524
Residential mortgage loans and equity lines
Floating rate		487		1,125		231,744		233,356
Fixed rate		5,475		17,871		1,083,380		1,106,726
Commercial mortgage loans
Floating rate		459,619		1,372,634		838,298		2,670,551
Fixed rate		189,113		631,017		277,771		1,097,901
Real estate construction loans
Floating rate		124,229		39,523		-		163,752
Fixed rate		17,198		-		-		17,198
Installment and other loans
Floating rate		5,953		-		-		5,953
Fixed rate		6,330		273		-		6,603
Total Loans	$	2,459,557	$	2,492,629	$	2,476,961	$	7,429,147
Floating rate	$	1,828,031	$	1,809,582	$	1,109,582	$	4,747,195
Fixed rate		631,526		683,047		1,367,379		2,681,952
Total Loans		2,459,557		2,492,629		2,476,961		7,429,147
Allowance for loan losses								(183,322	)
Unamortized deferred loan fees								(10,238	)
Net loans							$	7,235,587

Deposits

The Bank primarily uses customer deposits to fund its operations, and to a lesser extent borrowings in the form of securities sold under agreements to repurchase, advances from the Federal Home Loan Bank, and other borrowings.  The Bank’s deposits are generally obtained from the Bank’s geographic market area.  The Bank utilizes traditional marketing methods to attract new customers and deposits, by offering a wide variety of products and services and utilizing various forms of advertising media.   Although the vast majority of the Bank’s deposits are retail in nature, the Bank does engage in certain wholesale activities, primarily accepting time deposits from political subdivisions and public agencies.  The Bank considers wholesale deposits to be an alternative borrowing source rather than a customer relationship and, as such, their levels are determined by management’s decisions as to the most economic funding sources.  Brokered-deposits totaled $65.0 million, or 0.9% of total deposits, at December 31, 2012, compared to $138.9 million, or 1.9%, at December 31, 2011.

The Company’s total deposits increased $154.1 million, or 2.1%, to $7.38 billion at December 31, 2012, from $7.23 billion at December 31, 2011, primarily due to a $235.3 million, or 24.7%, increase in money market deposits, a $194.7 million, or 18.1%, increase in non-interest bearing demand deposits, a $141.6 million, or 31.4%, increase in NOW deposits, and a $53.8 million, or 12.8%, increase in savings deposits, offset by a $188.8 million, or 22.7%, decrease in time deposits under $100,000 and a $282.5 million, or 8.1%, decrease in time deposits of $100,000 or more.       

56

The following table displays the deposit mix for the past three years:

Deposit Mix

	Year Ended December 31,
	2012					2011					2010
	Amount		Percentage			Amount		Percentage			Amount		Percentage
	(Dollars in thousands)
Demand deposits	$	1,269,455		17.2	%	$	1,074,718		14.9	%	$	930,300		13.3	%
NOW deposits		593,133		8.0			451,541		6.2			418,703		6.0
Money market deposits		1,186,771		16.1			951,516		13.2			982,617		14.0
Saving deposits		473,805		6.4			420,030		5.8			385,245		5.5
Time deposits under $100,000		644,191		8.7			832,997		11.5			1,081,266		15.5
Time deposits of $100,000 or more		3,215,870		43.6			3,498,329		48.4			3,193,715		45.7
Total	$	7,383,225		100.0	%	$	7,229,131		100.0	%	$	6,991,846		100.0	%

Average total deposits increased $244.8 million, or 3.4%, to $7.38 billion in 2012 compared with average total deposits of $7.14 billion in 2011.

The following table displays average deposits and rates for the past five years:

Average Deposits and Average Rates

	2012					2011					2010					2009					2008
	Amount		%			Amount		%			Amount		%			Amount		%			Amount		%
	(Dollars in thousands)
Demand deposits	$	1,157,343		-	%	$	996,215		-	%	$	911,351		-	%	$	781,391		-	%	$	772,982		-	%
NOW deposits		516,246		0.15			426,252		0.18			397,434		0.23			295,770		0.36			255,185		0.61
Money market deposits		1,059,841		0.56			979,253		0.75			966,888		0.90			890,427		1.49			736,739		1.84
Saving deposits		451,022		0.08			411,953		0.12			369,190		0.19			338,781		0.24			334,222		0.36
Time deposits		4,197,906		0.96			4,323,833		1.24			4,765,632		1.55			5,084,309		2.33			4,530,923		3.56
Total	$	7,382,358		0.64	%	$	7,137,506		0.87	%	$	7,410,495		1.14	%	$	7,390,678		1.81	%	$	6,630,051		2.68	%

Management considers the Bank’s time deposits of $100,000 or more (Jumbo CDs) to be generally less volatile than other wholesale funding sources primarily because:

• approximately 67.4% of the Bank’s Jumbo CDs have been on deposit with the Bank for two years or more;

•  the Jumbo CD portfolio is widely-held with 14,716 individual accounts averaging approximately $219,000 per account owned by 9,619 individual depositors as of  December 31, 2012; and

•  the ratio of relatively higher percentage of Jumbo CDs to total deposits exists in most of the Asian-American banks in our California market because of a higher savings rate within the communities we serve.

Management monitors the Jumbo CD portfolio to identify any changes in the deposit behavior in the market and of the customers the Bank is serving.

57

Of our Jumbo CDs, approximately 90.0% mature within one year as of December 31, 2012.  The following tables display time deposits of $100,000 or more by maturity:

Time Deposits of $100,000 or More by Maturity

	At December 31, 2012 (In thousands)
Less than three months	$	1,079,519
Three to six months		646,497
Six to twelve months		1,169,696
Over one year		320,158
Total	$	3,215,870

The following table displays time deposits with a remaining term of more than one year at December 31, 2012:

Maturities of Time Deposits with a Remaining Term

of More Than One Year for Each

of the Five Years Following December 31, 2012

	(In thousands)
2014	$	263,847
2015		67,735
2016		1,499
2017		20,901
2018		3

Borrowings

Borrowings include securities sold under agreements to repurchase, Federal funds purchased, funds obtained as advances from the Federal Home Loan Bank (“FHLB”) of San Francisco, and borrowings from other financial institutions.

At December 31, 2012, there were no borrowings from other financial institutions compared to $880,000 with a weighted average rate of 0.55% at December 31, 2011.

Securities sold under agreements to repurchase were $1.3 billion with a weighted average rate of 3.84% at December 31, 2012, compared to $1.4 billion with a weighted average rate of 4.14% at December 31, 2011.  In May 2011, the Company prepaid a security sold under an agreement to repurchase of $50 million with a rate of 4.83% and incurred a prepayment penalty of $1.7 million.  In 2012, the Company modified $200.0 million of securities sold under agreements to repurchase by extending the term by an additional four years on average, reducing the rate of these agreements by an average of 168 basis points and removing the callable feature of these borrowings.  In 2012, the Company prepaid three securities sold under an agreement to repurchase for the total of $150 million with a weighted average rate of 4.43% and incurred prepayment penalties of $9.4 million.  Seven floating-to-fixed rate agreements totaling $400.0 million have initial floating rates for a period of time ranging from six months to one year, with floating rates ranging from the three-month LIBOR minus 200 basis points to three-month LIBOR minus 340 basis points. Thereafter, the rates are fixed for the remainder of the term, with interest rates ranging from 4.52% to 5.07%.  After the initial floating rate term, the counter parties have the right to terminate the transaction at par at the fixed rate reset date and quarterly thereafter. Thirteen fixed-to-floating rate agreements totaling $650.0 million have initial fixed rates ranging from 1.00% to 3.50% with initial fixed rate terms ranging from six months to 18 months.  For the remainder of the seven year term, the rates float at 8% minus the three-month LIBOR rate with a maximum rate ranging from 3.25% to 3.79% and minimum rate of 0.0%.  After the initial fixed rate term, the counter parties have the right to terminate the transaction at par at the floating rate reset date and quarterly thereafter.  The table below provides summary data for the $1.05 billion of callable securities sold under agreements to repurchase as of December 31, 2012:

58

(Dollars in millions)	Fixed-to-floating																		Floating-to-fixed						Total
Rate type	Float Rate																		Fixed Rate
Rate index	8% minus 3 month LIBOR
Maximum rate		3.79	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%
Minimum rate		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
No. of agreements		3			1			4			3			1			1			3			4			20
Amount	$	150.0		$	50.0		$	200.0		$	150.0		$	50.0		$	50.0		$	200.0		$	200.0		$	1,050.0
Weighted average rate		3.78	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%		4.69	%		5.00	%		4.04	%
Final maturity		2014			2014			2014			2015			2015			2015			2014			2017

The table below provides summary data for non-callable fixed rate securities sold under agreements to repurchase as of December 31, 2012:

Maturity	No. of Agreements		Amount (In thousands)		Weighted Average Interest Rate
3 years to 5 years		2	$	100,000		2.71	%
Over 5 years		2		100,000		2.86	%
Total		4	$	200,000		2.78	%

These transactions are accounted for as collateralized financing transactions and recorded at the amount at which the securities were sold. We may have to provide additional collateral for the repurchase agreements, as necessary.  The underlying collateral pledged for the repurchase agreements consists of U.S. Treasury securities, U.S. government agency security debt, and mortgage-backed securities with a fair value of $1.4 billion as of December 31, 2012, and $1.6 billion as of December 31, 2011.

The table below provides comparative data for securities sold under agreements to repurchase for the years indicated:

	2012			2011			2010
	(Dollars in thousands)
Average amount outstanding during the year (1)	$	1,361,475		$	1,448,363		$	1,560,215
Maximum amount outstanding at month-end (2)		1,400,000			1,559,000			1,566,000
Balance, December 31		1,250,000			1,400,000			1,561,000
Rate, December 31		3.84	%		4.14	%		4.18	%
Weighted average interest rate for the year		4.09	%		4.19	%		4.24	%

(1) Average balances were computed using daily averages.

(2) Highest month-end balances were January 2012, January 2011, and September 2010.

59

Advances from the FHLB were $146.2 million with a weighted average rate of 0.44% at December 31, 2012, compared to $225.0 million with weighted average rate of 2.08% at December 31, 2011.  The Company prepaid an advance from the FHLB of $100.0 million at a rate of 4.60% and incurred prepayment penalties of $2.8 million in 2012, and prepaid advances from the FHLB totaling $450.0 million with a weighted average rate of 4.39% and incurred prepayment penalties of $18.5 million in 2011.

Long-term Debt

On September 29, 2006, the Bank issued $50.0 million in subordinated debt in a private placement transaction (the “Bank Subordinated Debt”).  The debt had an original maturity term of 10 years, was unsecured and bore interest at a rate of three-month LIBOR plus 110 basis points, payable on a quarterly basis.  In March 2011, the maturity term was extended for an additional year.  As part of the extension agreement, the rate was increased from LIBOR plus 110 basis points to LIBOR plus 330 basis points for 2011 and 2012, after which time it reverts back to LIBOR plus 110 basis points.  At December 31, 2012, the per annum interest rate on the subordinated debt was 3.61% compared to 3.88% at December 31, 2011.  The Bank Subordinated Debt was issued through the Bank and qualifies as Tier 2 capital for regulatory reporting purposes and is included in long-term debt in the accompanying Consolidated Balance Sheets.

We established three special purpose trusts in 2003 and two in 2007 for the purpose of issuing Guaranteed Preferred Beneficial Interests in their Subordinated Debentures to outside investors (“Capital Securities”).   The proceeds from the issuance of the Capital Securities as well as our purchase of the common stock of the special purpose trusts were invested in Junior Subordinated Notes of the Company (“Junior Subordinated Notes”).   The trusts exist for the purpose of issuing the Capital Securities and investing in Junior Subordinated Notes.   Subject to some limitations, payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts, or the redemption of the Capital Securities, are guaranteed by the Company to the extent the trusts have funds on hand at such time.   The obligations of the Company under the guarantees and the Junior Subordinated Notes are subordinate and junior in right of payment to all indebtedness of the Company and will be structurally subordinated to all liabilities and obligations of the Company’s subsidiaries.  The Company has the right to defer payments of interest on the Junior Subordinated Notes at any time or from time to time for a period of up to twenty consecutive quarterly periods with respect to each deferral period.  Under the terms of the Junior Subordinated Notes, the Company may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if it has deferred payment of interest on any Junior Subordinated Notes.

At December 31, 2012, Junior Subordinated Notes totaled $121.1 million with a weighted average interest rate of 2.47% compared to $121.1 million with a weighted average rate of 2.72% at December 31, 2011.  The Junior Subordinated Notes have a stated maturity term of 30 years.  The Junior Subordinated Notes issued qualify as Tier 1 capital for regulatory reporting purposes. The trusts are not consolidated with the Company in accordance with an accounting pronouncement that took effect in December 2003.

Off-Balance-Sheet Arrangements, Commitments, Guarantees, and Contractual Obligations

The following table summarizes our contractual obligations and commitments to make future payments as of December 31, 2012.   Payments for deposits and borrowings do not include interest.   Payments related to leases are based on actual payments specified in the underlying contracts.   Loan commitments and standby letters of credit are presented at contractual amounts; however, since many of these commitments are expected to expire unused or only partially used, the total amounts of these commitments do not necessarily reflect future cash requirements.

60

	Payment Due by Period
	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(In thousands)
Contractual obligations:
Securities sold under agreements to repurchase (1)	$	-	$	850,000	$	200,000	$	-	$	1,050,000
Securities sold under agreements to repurchase (2)		-		-		100,000		100,000		200,000
Advances from the Federal Home Loan Bank		125,000		-		21,200		-		146,200
Other borrowings		-		-		-		18,713		18,713
Long-term debt		-		-		50,000		121,136		171,136
Operating leases		6,084		7,948		2,645		661		17,338
Deposits with stated maturity dates		3,506,075		331,583		22,400		3		3,860,061
Total contractual obligations and other commitments	$	3,637,159	$	1,189,531	$	396,245	$	240,513	$	5,463,448
Other commitments:
Commitments to extend credit		1,105,138		310,586		132,279		192,460		1,740,463
Standby letters of credit		44,060		593		19		-		44,672
Commercial letters of credit		71,073		-		-		-		71,073
Bill of lading guarantees		77		-		-		-		77
Total contractual obligations and other commitments	$	1,220,348	$	311,179	$	132,298	$	192,460	$	1,856,285

(1)	These repurchase agreements have a final maturity of 5-year, 7-year and 10-year from origination date but are callable on a quarterly basis after six months, one year, or 18 months for the 7-year term and one year for the 5-year and 10-year term.
(2)	These repurchase agreements are non-callable.

In the normal course of business, we enter into various transactions, which, in accordance with U.S. generally accepted accounting principles, are not included in our Consolidated Balance Sheets.   We enter into these transactions to meet the financing needs of our customers.  These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the Consolidated Balance Sheets.

Loan Commitments.   We enter into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes.   Substantially all of our commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding.   We minimize our exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures.   Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for credit losses.

Standby Letters of Credit.   Standby letters of credit are written conditional commitments issued by us to secure the obligations of a customer to a third party.   In the event the customer does not perform in accordance with the terms of an agreement with the third party, we would be required to fund the commitment.  The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment.   If the commitment is funded, we would be entitled to seek reimbursement from the customer.  Our policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements.

61

Capital Resources

         Stockholders’ Equity

In 2010, the Company sold $132.3 million of new common stock consisting of 15,028,409 shares at an average price of $8.80 per share.  Net of issuance costs and fees, this issuance added $124.9 million to common stockholders’ equity.  The Company did not sell any common stock in 2012 or in 2011.

Total equity of $1.63 billion at December 31, 2012, was up $113.9 million, or 7.5%, compared to $1.52 billion at December 31, 2011.  The increase in stockholders’ equity was due to a $118.0 million increase from net income, an increase of $9.2 million in unrealized gains on securities, amortization of unearned compensation of $2.1 million, option exercise of $764,000, and reinvestment of dividends of $291,000, offset by payments of dividends on preferred stock of $13.5 million, payments of dividends on common stock of $3.1 million, and a tax short-fall of $620,000 mainly from the expiration of stock options.  The Company paid common stock cash dividends of $0.04 per common share in 2012 and in 2011.

We have participated in the U.S. Treasury TARP Capital Purchase Program under the Emergency Economic Stabilization Act of 2008.  Pursuant to this program, on December 5, 2008, the U.S. Treasury purchased 258,000 shares of our Series B Preferred Stock in the amount of $258.0 million.  The Series B Preferred Stock pays cumulative compounding dividends at a rate of 5% per year for the first five years, and thereafter at a rate of 9% per year.  The shares are non-voting, other than class voting rights on matters that could adversely affect the shares. They are callable at par after three years.  In conjunction with the purchase of senior preferred shares, the U.S. Treasury received warrants to purchase 1,846,374 shares of common stock at the exercise price of $20.96 with an aggregate market price equal to $38.7 million, 15% of the senior preferred stock amount that U.S. Treasury invested.  The exercise price of $20.96 was calculated based on the average of closing prices of our common stock on the 20 trading days ending on the last trading day prior to November 17, 2008, the date that we received the preliminary approval for the capital purchase from the U.S. Treasury.  The Company also adopted the U.S. Treasury’s standards for executive compensation and corporate governance for the period during which the U.S. Treasury holds securities issued under this program.  See Part I — Item 1A — “Risk Factors” for a discussion of some of the factors that may affect us.

As of December 31, 2012, we remained authorized to purchase up to 622,500 shares of our common stock under our November 2007 stock repurchase program.  No shares were repurchased during the years from 2008 to 2012.  As long as the U. S. Treasury owns any of our Series B Preferred Stock, we are precluded from any repurchase of our common stock unless we are current in our dividend payments on our Series B Preferred Stock.  As discussed below under “Capital Resources- Regulatory Matters,” we are also subject to other restrictions on the repurchase of our common stock.

         Capital Adequacy

      Management seeks to retain our capital at a level sufficient to support future growth, protect depositors and stockholders, and comply with various regulatory requirements.  The primary measure of capital adequacy is based on the ratio of risk-based capital to risk-weighted assets.   At December 31, 2012, Tier 1 risk-based capital ratio of 17.36%, total risk-based capital ratio of 19.12%, and Tier 1 leverage capital ratio of 13.82%, continued to place the Bancorp in the “well capitalized” category, which is defined as institutions with Tier 1 risk-based capital ratio equal to or greater than 6.00%, total risk-based capital ratio equal to or greater than 10.00%, and Tier 1 leverage capital ratio equal to or greater than 5.00%.   The comparable ratios for the Bancorp at December 31, 2011, were Tier 1 risk-based capital ratio of 15.97%, total risk-based capital ratio of 17.85%, and Tier 1 leverage capital ratio of 12.93%.

62

Cathay Real Estate Investment Trust, of which 100% of the common stock is owned by the Bank, sold $4.4 million during 2003 and $4.2 million during 2004 of its 7.0% Series A Non-Cumulative preferred stock to accredited investors.  During 2005, the Trust repurchased $131,000 of its preferred stock.  This preferred stock qualifies as Tier 1 capital under current regulatory guidelines.

        A table displaying the Bancorp’s and the Bank’s capital and leverage ratios at December 31, 2012, and 2011, is included in Note 22 to the Consolidated Financial Statements.

Dividend Policy

Holders of common stock are entitled to dividends as and when declared by our Board of Directors out of funds legally available for the payment of dividends. Although we have historically paid cash dividends on our common stock, we are not required to do so. Commencing with the second quarter of 2009, our Board of Directors reduced our common stock dividend to $.08 per share and to $.01 per share thereafter. In January 2010, we adopted a capital management and dividend policy as part of our Three-Year Capital and Strategic Plan which included a policy to refrain from paying dividends in excess of $.01 per share per quarter, except when covered by operating earnings. On November 17, 2010, the Federal Reserve issued guidance that bank holding companies with U. S. Government investments still outstanding should not increase dividend payouts.  The amount of future dividends will depend on earnings, financial condition, approval by our regulators, the repayment of our Series B Preferred Stock, capital requirements, and other factors, and will be determined by our Board of Directors in accordance with the capital management and dividend policy.

Substantially all of the revenues of the Company available for payment of dividends derive from amounts paid to it by the Bank. The terms of the Bank Subordinated Debt limit the ability of the Bank to pay dividends to us if the Bank is not current in paying interest on the Bank Subordinated Debt or another event of default has occurred. Under the memorandum of understanding we entered into with the Federal Reserve Bank of San Francisco (FRB SF), we agreed that we will not, without the FRB SF’s prior written approval, receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank. The Bank did not pay dividends to Bancorp in both 2010 and 2011.  In our February 27, 2012 three-year capital and strategic plan submitted to our regulators, we indicated that, subject to regulatory approval, the Bank expected to pay a dividend of $23.9 million to Bancorp during the second quarter of 2012 to increase Bancorp’s cash balance to equal at least two years of Bancorp’s operating expenses and then additional quarterly dividends beginning in the third quarter of 2012 in an amount which would maintain cash balances at Bancorp equal to at least two years of Bancorp’s operating expenses.  In addition, on December 27, 2012 after receipt of regulatory approvals, the Bank paid a special dividend of $125.0 million to Bancorp to provide funding for a partial repayment of the Series B Preferred Stock.  The Bank paid dividends totaling $154.7 million to Bancorp during 2012.

The terms of our Series B Preferred Stock and Junior Subordinated Notes also limit our ability to pay dividends on our common stock. If we are not current in our payment of dividends on our Series B Preferred Stock or in our payment of interest on our Junior Subordinated Notes, we may not pay dividends on our common stock.  The Federal Reserve Board has previously issued Federal Reserve Supervision and Regulation Letter SR-09-4 that states that bank holding companies are expected to inform and consult with the Federal Reserve supervisory staff prior to declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid. As a result of losses incurred in 2009, we were expected to so inform and consult with the Federal Reserve supervisory staff prior to declaring or paying any dividends in the future.  Bancorp received Federal Reserve approval to make payments on our Series B Preferred Stock and Junior Subordinated Notes. There can be no assurance that our regulators will approve the payment of such dividends.

63

Under California State banking law, the Bank may not without regulatory approval pay a cash dividend which 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, 2012, was restricted to approximately $80.8 million.

    Regulatory Matters

On December 17, 2009, the Bancorp entered into a memorandum of understanding with the Federal Reserve Bank of San Francisco (“FRB SF”) under which we agreed that we will not, without the FRB SF’s prior written approval, (i) receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank, or (ii) declare or pay any dividends, make any payments on trust preferred securities, or make any other capital distributions. We do not believe that this agreement regarding dividends from the Bank will have a material adverse effect on our operations.  We had retained a portion of the proceeds from our common stock offerings to be used, for among other things, payments of future dividends on our common and preferred stock and payments on trust preferred securities.  At December 31, 2012, our cash on hand totaled $161.9 million which is sufficient to cover future dividends on our common stock at the current quarterly rate of $.01 per share, on our preferred stock, and interest on our Trust Preferred Securities, subject to FRB SF approval, for the next twelve months.

Under the memorandum, we also agreed to submit to the FRB SF for review and approval a plan to maintain sufficient capital at the Company on a consolidated basis and at the Bank, a dividend policy for the Bancorp, a plan to improve management of our liquidity position and funds management practices, and a liquidity policy and contingency funding plan for the Bancorp. As part of our compliance with the memorandum, on January 22, 2010, we submitted to the FRB SF a Three-Year Capital and Strategic Plan that updates a previously submitted plan and establishes, among other things, targets for our Tier 1 risk-based capital ratio, total risk-based capital ratio, Tier 1 leverage capital ratio and tangible common risk-based ratio, each of which, where applicable, are above the minimum requirements for a well-capitalized institution. In addition, we agreed to notify the FRB SF prior to effecting certain changes to our senior executive officers and board of directors and we are limited and/or prohibited, in certain circumstances, in our ability to enter into contracts to pay and to make golden parachute severance and indemnification payments. We also agreed in the memorandum that we will not, without the prior written approval of the FRB SF, directly or indirectly, (i) incur, renew, increase or guaranty any debt, (ii) issue any trust preferred securities, or (iii) purchase, redeem, or otherwise acquire any of our stock. The target, actual, and any excess or deficiency capital levels of the Three-Year Capital and Strategic Plan submitted to the FRB SF are as follows as of December 31, 2012:

	Tier 1 risk-based capital ratio			Total risk-based capital ratio			Tier 1 leverage capital ratio			Tangible common risk-based ratio *
Actual		17.36	%		19.12	%		13.82	%		12.68	%
Target Levels		11.50	%		13.50	%		9.50	%		5.00	%
Excess		5.86	%		5.62	%		4.32	%		7.68	%

* Tier 1 risk-based capital excluding preferred stock, trust preferred stock and REIT preferred stock divided by total risk-weighted assets.

The Bancorp has taken appropriate steps to comply with the terms of its memorandum of understanding with the FRB SF and we believe we are in compliance with the memorandum. We do not believe that the memorandum or our compliance activities will have a material adverse effect on our operations or financial condition, including liquidity. If we fail to comply with the terms of the memorandum, that failure could lead to additional enforcement action by the FRB SF that could have a material adverse effect on our operations or financial condition. At December 31, 2012, we are in compliance with the applicable target ratios.

64

Until it was terminated as of November 7, 2012, the Bank was subject to a memorandum of understanding with the California Department of Financial Institutions (“DFI”) and the Federal Deposit Insurance Corporation (“FDIC’) that was entered into on March 1, 2010, by which the Bank agreed to undertake certain steps to strengthen its operations. The Bank was required to develop and implement, within specified time periods, plans satisfactory to the DFI and the FDIC to reduce commercial real estate concentrations, to enhance and to improve the quality of our stress testing of the Bank’s loan portfolio, and to revise our loan policy in connection therewith; to developand adopt a strategic plan addressing improved profitability and capital ratios and to reduce the Bank’s overall risk profile; to develop and adopt a capital plan; to develop and implement a plan to improve asset quality, including the methodology for calculating the loss reserve allocation and evaluating its adequacy; and to develop and implement a plan to reduce dependence on wholesale funding. In addition, we are required to report our progress to the DFI and FDIC on a quarterly basis. As part of our compliance with the Bank memorandum, on April 30, 2010, we submitted to the DFI and the FDIC a Three-Year Capital Plan that updated the Three-Year Capital and Strategic Plan previously submitted to the FRB SF on January 22, 2010, and established, among other things, targets for our Tier 1 risk-based capital ratio and total risk-based capital ratio, each of which are above the minimum requirements for a well-capitalized institution and effective June 30, 2010, a target Tier 1 to total tangible assets ratio. We were in compliance with the applicable target ratios through the date of termination of the memorandum.

Risk Elements of the Loan Portfolio

     Non-performing Assets

Non-performing assets include loans past due 90 days or more and still accruing interest, non-accrual loans, and OREO.  Our policy is to place loans on non-accrual status if interest and principal or either interest or principal is past due 90 days or more, or in cases where management deems the full collection of principal and interest unlikely.  After a loan is placed on non-accrual status, any previously accrued but unpaid interest is reversed and charged against current income and subsequent payments received are generally first applied towards the outstanding principal balance of the loan.  Depending on the circumstances, management may elect to continue the accrual of interest on certain past due loans if partial payment is received and/or the loan is well collateralized and in the process of collection.   The loan is generally returned to accrual status when the borrower has brought the past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled.

       Management reviews the loan portfolio regularly for problem loans.  During the ordinary course of business, management becomes aware of borrowers that may not be able to meet the contractual requirements of the loan agreements.   Such loans are placed under closer supervision with consideration given to placing the loan on non-accrual status, the need for an additional allowance for loan losses, and (if appropriate) partial or full charge-off.

Total non-performing portfolio assets, excluding non-accrual loans held for sale, decreased $149.7 million, or 49.8%, to $150.9 million at December 31, 2012, compared to $300.6 million at December 31, 2011, primarily due to a $97.3 million decrease in non-accrual loans, a $46.3 million decrease in OREO, and a $6.1 million decrease in accruing loans past due 90 days or more     

As a percentage of gross loans, excluding loans held for sale, plus OREO, our non-performing assets decreased to 2.02% at December 31, 2012, from 4.20% at December 31, 2011. The non-performing portfolio loan coverage ratio, defined as the allowance for credit losses to non-performing loans, increased to 176.7% at December 31, 2012, from 100.2% at December 31, 2011.

65

The following table presents the breakdown of total non-accrual, past due, and restructured loans for the past five years:

Non-accrual, Past Due and Restructured Loans

	December 31,
	2012			2011			2010			2009			2008
	(Dollars in thousands)
Accruing loans past due 90 days or more	$	630		$	6,726		$	5,006		$	-		$	6,733
Non-accrual loans		103,902			201,197			242,319			280,643			181,202
Total non-performing loans		104,532			207,923			247,325			280,643			187,935
Real estate acquired in foreclosure and other assets		46,384			92,713			77,740			71,014			63,892
Total non-performing assets	$	150,916		$	300,636		$	325,065		$	351,657		$	251,827
Accruing troubled debt restructurings (TDRs)	$	144,695		$	120,016		$	136,800		$	54,992		$	924
Non-accrual TDRs (included in non-accrual loans	$	47,731		$	50,870		$	28,146		$	41,609		$	11,614
Non-accrual loans held for sale	$	-		$	760		$	2,873		$	54,826		$	-
Non-performing assets as a percentage of gross loans and other real estate owned at year-end		2.02	%		4.20	%		4.68	%		5.05	%		3.34	%
Allowance for credit losses as a percentage of gross loans		2.49	%		2.95	%		3.60	%		3.15	%		1.73	%
Allowance for credit losses as a percentage of non-performing loans		176.68	%		100.20	%		100.10	%		77.36	%		68.87	%

      The effect of non-accrual loans on interest income for the past five years is presented below:

	2012		2011		2010		2009		2008
	(In thousands)
Non-accrual Loans
Contractual interest due	$	6,621	$	13,049	$	17,304	$	23,746	$	14,043
Interest recognized		1,006		71		4,853		9,830		8,782
Net interest foregone	$	5,615	$	12,978	$	12,451	$	13,916	$	5,261

As of December 31, 2012, there were no commitments to lend additional funds to those borrowers whose loans had been restructured, were considered impaired, or were on non-accrual status.

Non-accrual Loans

At December 31, 2012, total non-accrual portfolio loans of $103.9 million decreased $97.3 million, or 48.4%, from $201.2 million at December 31, 2011.  The allowance for the collateral-dependent impaired loans is calculated by the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals, sales contract, or other available market price information. The allowance for collateral-dependent impaired loans varies from loan to loan based on the collateral coverage of the loan at the time of designation as non-performing. We continue to monitor the collateral coverage, based on recent appraisals, on these loans on a quarterly basis and adjust the allowance accordingly.

Non-accrual portfolio loans at December 31, 2012, consisted of two residential construction loans totaling $3.0 million, three non-farm non-residential construction loans totaling $33.3 million, 35 commercial real estate loans totaling $29.6 million, five land loans totaling $6.1 million, 31 commercial loans totaling $20.0 million, and 49 residential mortgage loans totaling $11.9 million. Non-accrual loans also include those troubled debt restructurings that do not qualify for accrual status.  The comparable numbers for 2011 were five residential construction loans totaling $25.3 million, three non-farm non-residential construction loans totaling $20.7 million, 46 commercial real estate loans totaling $96.8 million, 11 land loans totaling $11.0 million, 46 commercial loans totaling $30.7 million, and 56 residential mortgage loans totaling $16.7 million.

66

No loans were held for sale at December 31, 2012, compared to $760,000 at December 31, 2011.  In 2012, we added three new loans of $16.0 million, sold four loans of $16.2 million for a net loss on sale of $26,000, and transferred a loan of $500,000 to held for investment. At December 31, 2011, non-accrual loans held for sale of $760,000 decreased $2.1 million from $2.9 million at December 31, 2010.  In 2011, we added six new loans of $4.4 million, transferred one loan of $2.9 million to OREO, and sold four loans of $3.6 million for a net gain on sale of $88,000.  At December 31, 2011, loans held for sale were comprised of a commercial construction loan of $500,000 and a residential mortgage loan of $260,000.   The following tables present the type of properties securing the non-accrual portfolio loans and the type of businesses the borrowers engaged in as of the dates indicated:

	December 31, 2012				December 31, 2011
	Real Estate (1)		Commercial		Real Estate (1)		Commercial
	(In thousands)
Type of Collateral
Single/Multi-family residence	$	20,996	$	2,073	$	52,896	$	3,078
Commercial real estate		56,895		1,433		106,665		1,929
Land		6,053		-		10,975		-
Personal Property (UCC)		-		16,452		-		25,654
Total	$	83,944	$	19,958	$	170,536	$	30,661

(1) Real estate includes commercial mortgage loans, real estate construction loans, and residential mortgage loans and equity lines.

	December 31, 2012				December 31, 2011
	Real Estate (1)		Commercial		Real Estate (1)		Commercial
	(In thousands)
Type of Business
Real estate development	$	56,995	$	2,387	$	120,623	$	1,518
Wholesale/Retail		15,398		3,908		33,675		5,833
Food/Restaurant		562		341		-		817
Import/Export		-		13,309		-		22,493
Other		10,989		13		16,238		-
Total	$	83,944	$	19,958	$	170,536	$	30,661

(1) Real estate includes commercial mortgage loans, real estate construction loans, and residential mortgage loans and equity lines.

    Other Real Estate Owned

At December 31, 2012, the net carrying value of other real estate owned (“OREO”) decreased $46.3 million, or 50.0%, to $46.4 million from $92.7 million at December 31, 2011. OREO located in California was $12.2 million and was comprised primarily of six parcels of land zoned for residential purpose of $9.1 million, three office and commercial use buildings of $1.7 million, one commercial building construction project of $740,000, one residential construction project of $530,000, and one single family residential property of $179,000.  OREO located in Texas was $29.6 million and was comprised of four office and commercial use buildings of $14.4 million, four parcels of land zoned for residential purposes of $12.6 million, two commercial building construction projects of $1.3 million, one parcel of land zoned for non-residential purposes of $1.1 million, and one single family residential property of $169,000.  OREO located in the state of Washington was $1.6 million and was comprised one parcel of land zoned for residential purpose of $733,000 and one commercial construction project of $870,000.  OREO located in the state of New York was a retail store of $1.2 million.  OREO located in the state of Nevada was $1.1 million and was comprised of a commercial use building.  OREO in all other states was $752,000 and was comprised of a commercial use property of $376,000 and one retail store of $376,000.

67

For 2011, OREO located in California was $32.3 million and was comprised primarily of five parcels of land zoned for residential purpose of $9.9 million, four parcels of land zoned for commercial purposes of $4.8 million, two commercial building construction projects of $3.5 million, one residential construction project of $588,000, twelve office and commercial use buildings of $13.2 million, and two single family residential properties of $395,000.  OREO located in Texas was $48.6 million and was comprised of eight commercial use buildings of $33.5 million, three parcels of land zoned for residential purposes of $11.7 million, three commercial building construction projects of $2.4 million, and three single family residential properties of $959,000.  OREO located in the state of Washington was $3.9 million and was comprised of two retail stores $1.6 million, three parcels of land zoned for residential purposes of $1.2 million, one commercial construction project of $658,000, and three single family residential properties of $531,000.  OREO located in the state of Nevada was $4.8 million and was comprised of a parcel of land zoned for residential purposes of $3.5 million and one commercial use building of $1.3 million.  OREO in all other states was $3.0 million and was comprised of three commercial use properties of $2.1 million and four single family residential properties of $878,000.

Troubled Debt Restructurings

A troubled debt restructuring (“TDR”) is a formal modification of the terms of a loan when the Bank, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower.  The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date.  Although these loan modifications are considered under ASC Subtopic 310-40, formerly SFAS 15, to be troubled debt restructurings, the loans must have, pursuant to the Bank’s policy, performed under the restructured terms and have demonstrated sustained performance under the modified terms for six months before being returned to accrual status.  The sustained performance considered by management pursuant to its policy includes the periods prior to the modification if the prior performance met or exceeded the modified terms.  This would include cash paid by the borrower prior to the restructure to set up interest reserves.

Troubled debt restructurings on accrual status totaled $144.7 million at December 31, 2012, and were comprised of 61 loans, an increase of $24.7 million, compared to 32 loans totaling $120.0 million at December 31, 2011.  TDRs at December 31, 2012, were comprised of sixteen retail shopping and commercial use building loans of $68.1 million, fifteen office and commercial use building loans of $40.4 million, two hotel loans of $12.4 million, seventeen single family residential loans of $19.1 million, two land loans of $2.3 million, six commercial loans of $1.3 million, and three multi-family residential loans of $1.1 million.  We expect that the troubled debt restructuring loans on accruing status as of December 31, 2012, which are all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans.  The comparable TDRs at December 31, 2011, were comprised of eleven retail shopping and commercial use building loans of $74.4 million, seven office and commercial use building loans of $23.8 million, one hotel loan of $7.9 million, ten single family residential loans of $13.3 million, one land loan of $635,000 and two commercial loans of $39,000.  A summary of TDRs by type of loans and by accrual/non-accrual status is shown below:

68

		December 31, 2012
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	531	$	3,020	$	-	$	413	$	3,964
Real estate construction loans			-		-		-		5,834		5,834
Commercial mortgage loans			27,003		16,656		739		85,783		130,181
Residential mortgage loans			1,461		1,024		-		2,231		4,716
Total accruing TDRs		$	28,995	$	20,700	$	739	$	94,261	$	144,695

	December 31, 2012
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	912	$	-	$	1,518	$	-	$	2,430
Real estate construction loans		-		16,767		9,579		-		-		26,346
Commercial mortgage loans		1,685		2,817		5,746		-		5,076		15,324
Residential mortgage loans		275		2,010		586		-		760		3,631
Total non-accrual TDRs	$	1,960	$	22,506	$	15,911	$	1,518	$	5,836	$	47,731

	December 31, 2011
Accruing TDRs	Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	12,933	$	1,756	$	-	$	431	$	15,120
Real estate construction loans		16,820		9,659		-		5,776		32,255
Commercial mortgage loans		471		37,796		2,071		28,935		69,273
Residential mortgage loans		1,294		587		-		1,487		3,368
Total accruing TDRs	$	31,518	$	49,798	$	2,071	$	36,629	$	120,016

	December 31, 2011
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	616	$	1,859	$	1,506	$	-	$	3,981
Real estate construction loans		-		13,579		12,376		-		-		25,955
Commercial mortgage loans		2,633		9,727		-		-		5,076		17,436
Residential mortgage loans		311		2,427		449		-		311		3,498
Total non-accrual TDRs	$	2,944	$	26,349	$	14,684	$	1,506	$	5,387	$	50,870

69

The activity within our TDR loans for 2012 and 2011 are shown below:

Accruing TDRs	2012			2011
	(In thousands)
Beginning balance	$	120,016		$	136,800
New restructurings		53,958			60,863
Restructured loans restored to accrual status		8,356			709
Charge-offs		(251	)		(2,341	)
Payments		(5,159	)		(46,313	)
Restructured loans placed on non-accrual		(32,225	)		(28,969	)
Expiration of loan concession		-			(733	)
Ending balance	$	144,695		$	120,016

Non-accrual TDRs	2012			2011
	(In thousands)
Beginning balance	$	50,870		$	28,146
New restructurings		12,304			13,269
Restructured loans placed on non-accrual		32,225			28,969
Charge-offs		(4,182	)		(7,303	)
Payments		(33,931	)		(3,355	)
Foreclosures		(1,199	)		(8,147	)
Restructured loans restored to accrual status		(8,356	)		(709	)
Ending balance	$	47,731		$	50,870

    Impaired Loans

A loan is considered impaired when it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement based on current circumstances and events.  The assessment for impairment occurs when and while such loans are on non-accrual as a result of delinquency status of over 90 days or receipt of information indicating that full collection of principal is doubtful, or when the loan has been restructured in a troubled debt restructuring. Those loans with a balance less than our defined selection criteria, generally a loan amount is $500,000 or less, are treated as a homogeneous portfolio.  If loans meeting the defined criteria are not collateral dependent, we measure the impairment based on the present value of the expected future cash flows discounted at the loan’s effective interest rate.  If loans meeting the defined criteria are collateral dependent, we measure the impairment by using the loan’s observable market price or the fair value of the collateral.  We obtain an appraisal to determine the amount of impairment at the date that the loan becomes impaired.  The appraisals are based on “as is” or bulk sale valuations.  To ensure that appraised values remain current, we generally obtain an updated appraisal every six months from qualified independent appraisers.  Furthermore, if the most current appraisal is dated more than three months prior to the effective date of the impairment test, we validate the most current value with third party market data appropriate to the location and property type of the collateral.  If the third party market data indicates that the value of our collateral has declined since the most recent valuation date, we adjust downward the value of the property to reflect current market conditions.  If the fair value of the collateral is less than the recorded amount of the loan, we then recognize impairment by creating or adjusting an existing valuation allowance with a corresponding charge to the provision for loan losses.  If an impaired loan is expected to be collected through liquidation of the collateral, the amount of impairment, excluding disposal costs, which range between 3% to 6% of the fair value, depending on the size of impaired loan, is charged off against the allowance for loan losses.  Non-accrual impaired loans are not returned to accruing status unless the unpaid interest has been brought current and full repayment of the recorded balance is expected or if the borrower has made six consecutive monthly payments of the scheduled amounts due, and are continued to be reviewed for impairment until they are no longer reported as troubled debt restructurings.

70

We identified impaired loans with a recorded investment of $248.6 million at December 31, 2012, compared to $322.0 million at December 31, 2011.   The average balance of impaired loans was $277.8 million in 2012 and $361.4 million in 2011.  We considered all non-accrual loans to be impaired.  Interest recognized on impaired loans totaled $8.2 million in 2012 and $5.3 million in 2011.  As of December 31, 2012, $83.9 million, or 80.8%, of the $103.9 million of non-accrual portfolio loans was secured by real estate.  As of December 31, 2011, $170.5 million, or 84.8%, of the $201.2 million of non-accrual loans was secured by real estate. In light of declining property values in the current economic downturn affecting the real estate markets, the Bank has obtained current appraisals, sales contract, or other available market price information which provides updated factors in evaluating potential loss.

At December 31, 2012, $12.2 million of the $183.3 million allowance for loan losses was allocated for impaired loans and $171.1 million was allocated to the general allowance.  At December 31, 2011, $7.6 million of the $206.3 million allowance for loan losses was allocated for impaired loans and $198.7 million was allocated to the general allowance.   The amount of the allowance for loan losses allocated to impaired loans increased from 2011 to 2012 as a result of the addition of two impaired construction loans.  In 2012, net loan charge-offs were $14.7 million, or 0.21%, of average loans, compared to $66.2 million, or 0.95%, of average loans in 2011.

The allowance for credit losses to non-accrual loans increased to 177.8% at December 31, 2012, from 103.6% at December 31, 2011.  Non-accrual loans also include those troubled debt restructurings that do not qualify for accrual status.

        The following table presents impaired loans and the related allowance and charge-off as of the dates indicated:

	Impaired Loans
	At December 31, 2012						At December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(Dollars in thousands)
With no allocated allowance
Commercial loans	$	29,359	$	18,963	$	-	$	46,671	$	38,194	$	-
Real estate construction loans		9,304		7,277		-		134,837		78,767		-
Commercial mortgage loans		189,871		152,957		-		187,580		149,034		-
Residential mortgage and equity lines		4,303		4,229		-		8,555		7,987		-
Subtotal	$	232,837	$	183,426	$	-	$	377,643	$	273,982	$	-
With allocated allowance
Commercial loans	$	7,804	$	4,959	$	1,467	$	11,795	$	7,587	$	3,336
Real estate construction loans		54,718		34,856		8,158		-		-		-
Commercial mortgage loans		14,163		12,928		1,336		29,722		28,023		2,969
Residential mortgage and equity lines		14,264		12,428		1,222		13,813		12,381		1,249
Subtotal	$	90,949	$	65,171	$	12,183	$	55,330	$	47,991	$	7,554
Total impaired loans	$	323,786	$	248,597	$	12,183	$	432,973	$	321,973	$	7,554

71

        Loan Interest Reserves

In accordance with customary banking practice, construction loans and land development loans are originated where interest on the loan is disbursed from pre-established interest reserves included in the total original loan commitment.  Our construction and land development loans generally include optional renewal terms after the maturity of the initial loan term.  New appraisals are obtained prior to extension or renewal of these loans in part to determine the appropriate interest reserve to be established for the new loan term.  Loans with interest reserves are underwritten to the same criteria, including loan to value and, if applicable, pro forma debt service coverage ratios, as loans without interest reserves.  Construction loans with interest reserves are monitored on a periodic basis to gauge progress towards completion.  Interest reserves are frozen if it is determined that additional draws would result in a loan to value ratio that exceeds policy maximums based on collateral property type.  Our policy limits in this regard are consistent with supervisory limits and range from 65% in the case of land to 85% in the case of 1- to 4-family residential construction projects.

As of December 31, 2012, construction loans of $51.8 million were disbursed with pre-established interest reserves of $9.7 million compared to $16.8 million of such loans disbursed with pre-established interest reserves of $3.2 million at December 31, 2011.  The balance for construction loans with interest reserves which have been extended was $4.0 million with pre-established interest reserves of $314,000, at December 31, 2012, and zero at December 31, 2011.  Land loans of $11.2 million were disbursed with pre-established interest reserves of $978,000 at December 31, 2012, compared to $10.8 million land loans disbursed with pre-established interest reserves of $223,000 at December 31, 2011.  The balance for land loans with interest reserves which have been extended was zero at December 31, 2012, compared to $9.5 million at December 31, 2011. 

At December 31, 2012, the Bank had no loans on non-accrual status with available interest reserves.  At December 31, 2012, $3.0 million of non-accrual residential construction loans, $33.3 million of non-accrual non-residential construction loans, and $4.2 million of non-accrual land loans had been originated with pre-established interest reserves.  At December 31, 2011, $13.4 million of non-accrual residential construction loans, $20.7 million of non-accrual non-residential construction loans, and $7.9 million of non-accrual land loans had been originated with pre-established interest reserves.  While loans with interest reserves are typically expected to be repaid in full according to the original contractual terms, some loans require one or more extensions beyond the original maturity.  Typically, these extensions are required due to construction delays, delays in sales or lease of property, or some combination of these two factors.

    Loan Concentration

Most of our business activity is with customers located in the predominantly Asian areas of California; New York City; Dallas and Houston, Texas; Seattle, Washington; Boston, Massachusetts; Chicago, Illinois; and New Jersey.  We have no specific industry concentration, and generally our loans are collateralized with real property or other pledged collateral.  Loans are generally expected to be paid off from the operating profits of the borrowers, refinancing by another lender, or through sale by the borrowers of the secured collateral.  We experienced no loan concentrations to multiple borrowers in similar activities that exceeded 10% of total loans as of December 31, 2012.

The Federal banking regulatory agencies issued final guidance on December 6, 2006, regarding risk management practices for financial institutions with high or increasing concentrations of commercial real estate ("CRE") loans on their balance sheets. The regulatory guidance reiterates the need for sound internal risk management practices for those institutions that have experienced rapid growth in CRE lending, have notable exposure to specific types of CRE, or are approaching or exceeding the supervisory criteria used to evaluate the CRE concentration risk, but the guidance is not to be construed as a limit for CRE exposure. The supervisory criteria are: (1) total reported loans for construction, land development, and other land represent 100% of the institution's total risk-based capital, and (2) both total CRE loans represent 300% or more of the institution's total risk-based capital and the institution's CRE loan portfolio has increased 50% or more within the last thirty-six months.  Since January 2010, the Bank’s internal limit for CRE loans has been 300% of total capital.  Total loans for construction, land development, and other land represented 19% of total risk-based capital as of December 31, 2012, and 23% as of December 31, 2011.  Total CRE loans represented 228% of total risk-based capital as of December 31, 2012, and 236% as of December 31, 2011.  See Part I — Item 1A — “Risk Factors” for a discussion of some of the factors that may affect us.

72

Allowance for Credit Losses

The Bank maintains the allowance for credit losses at a level that is considered adequate to cover the estimated and known inherent risks in the loan portfolio and off-balance sheet unfunded credit commitments. Allowance for credit losses is comprised of allowances for loan losses and for off-balance sheet unfunded credit commitments. With this risk management objective, the Bank’s management has an established monitoring system that is designed to identify impaired and potential problem loans, and to permit periodic evaluation of impairment and the adequacy level of the allowance for credit losses in a timely manner.  

In addition, the Board of Directors of the Bank has established a written credit policy that includes a credit review and control system which it believes should be effective in ensuring that the Bank maintains an adequate allowance for credit losses. The Board of Directors provides oversight for the allowance evaluation process, including quarterly evaluations, and determines whether the allowance is adequate to absorb losses in the credit portfolio. The determination of the amount of the allowance for credit losses and the provision for credit losses is based on management’s current judgment about the credit quality of the loan portfolio and takes into consideration known relevant internal and external factors that affect collectibility when determining the appropriate level for the allowance for credit losses. The nature of the process by which the Bank determines the appropriate allowance for credit losses requires the exercise of considerable judgment. Additions to the allowance for credit losses are made by charges to the provision for credit losses. Identified credit exposures that are determined to be uncollectible are charged against the allowance for credit losses. Recoveries of previously charged off amounts, if any, are credited to the allowance for credit losses. A weakening of the economy or other factors that adversely affect asset quality can result in an increase in the number of delinquencies, bankruptcies, and defaults, and a higher level of non-performing assets, net charge-offs, and provision for loan losses. See Part I — Item 1A — “Risk Factors” for additional factors that could cause actual results to differ materially from forward-looking statements or historical performance.   

The allowance for loan losses was $183.3 million and the allowance for off-balance sheet unfunded credit commitments was $1.4 million at December 31, 2012, and represented the amount that the Company believes to be sufficient to absorb credit losses inherent in the Company’s loan portfolio including unfunded commitments.  The allowance for credit losses, the sum of allowance for loan losses and for off-balance sheet unfunded credit commitments, $184.7 million at December 31, 2012, compared to $208.3 million at December 31, 2011, a decrease of $23.6 million, or 11.4%.  The allowance for credit losses represented 2.49% of period-end gross loans, excluding loans held for sale, and 176.7% of non-performing portfolio loans at December 31, 2012.  The comparable ratios were 2.95% of period-end gross loans, excluding loans held for sale, and 100.2% of non-performing portfolio loans at December 31, 2011.

73

The following table sets forth the information relating to the allowance for loan losses, charge-offs, recoveries, and the reserve for off-balance sheet credit commitments for the past five years:

Allowance for Credit Losses
	Amount Outstanding as of December 31,
	2012			2011			2010			2009			2008
Allowance for Loan Losses	(Dollars in thousands)
Balance at beginning of year	$	206,280		$	245,231		$	211,889		$	122,093		$	64,983
(Reversal)/provision for credit losses		(9,000	)		27,000			156,900			307,000			106,700
Reversal of/(transfer to) reserve for off-balance sheet credit commitments		706			268			2,870			2,125			(2,756	)
Charge-offs :
Commercial loans		(17,707	)		(11,745	)		(21,609	)		(59,370	)		(12,932	)
Construction loans-residential		(391	)		(20,801	)		(14,889	)		(71,147	)		(20,653	)
Construction loans-other		(774	)		(16,699	)		(30,432	)		(22,128	)		-
Real estate loans		(13,616	)		(27,327	)		(47,765	)		(52,931	)		(5,291	)
Real estate land loans		(278	)		(1,054	)		(24,060	)		(16,967	)		(9,553	)
Installment loans and other loans		(25	)		-			-			(4	)		(254	)
Total charge-offs		(32,791	)		(77,626	)		(138,755	)		(222,547	)		(48,683	)
Recoveries:
Commercial loans		1,949			1,774			4,712			904			1,750
Construction loans-residential		3,788			3,808			5,448			1,140			83
Construction loans-other		2,365			665			553			-			-
Real estate loans		8,820			4,539			933			461			-
Real estate land loans		1,202			621			668			692			-
Installment loans and other loans		3			-			13			21			16
Total recoveries		18,127			11,407			12,327			3,218			1,849
Balance at end of year	$	183,322		$	206,280		$	245,231		$	211,889		$	122,093
Reserve for off-balance sheet credit commitments
Balance at beginning of year	$	2,069		$	2,337		$	5,207		$	7,332		$	4,576
Provision (reversal)/transfer for credit losses		(706	)		(268	)		(2,870	)		(2,125	)		2,756
Balance at end of year	$	1,363		$	2,069		$	2,337		$	5,207		$	7,332
Average loans outstanding during the year (1)	$	7,094,197		$	6,959,331		$	6,879,457		$	7,262,831		$	7,214,689
Ratio of net charge-offs to average loans outstanding during the year (1)		0.21	%		0.95	%		1.84	%		3.02	%		0.65	%
(Reversal)/provision for credit losses to average loans outstanding during the year (1)		(0.13	)%		0.39	%		2.28	%		4.23	%		1.48	%
Allowance for credit losses to non-performing portfolio loans at year-end (2)		176.68	%		100.20	%		100.10	%		77.36	%		68.87	%
Allowance for credit losses to gross loans at year-end (1)		2.49	%		2.95	%		3.60	%		3.15	%		1.73	%

(1) Excluding loans held for sale

(2) Excluding non-accrual loans held for sale

Our allowance for loan losses consists of the following:

 •  Specific allowance: For impaired loans, we provide specific allowances for loans that are not collateral dependent based on an evaluation of the present value of the expected future cash flows discounted at the loan’s effective interest rate and for loans that are collateral dependent based on the fair value of the underlying collateral, which is determined based on the most recent valuation information received, which may be adjusted based on factors such as changes in market conditions from the time of valuation.  If the measure of the impaired loan is less than the recorded investment in the loan, the deficiency will be charged off against the allowance for loan losses or, alternatively, a specific allocation will be established.

74

• General allowance: The unclassified portfolio is segmented on a group basis. Segmentation is determined by loan type and common risk characteristics.  The non-impaired loans are grouped into 23 segments: two commercial segments, ten commercial real estate segments, three residential construction segments, three non-residential construction segments, one SBA segment, one installment loans segment, one residential mortgage segment, one equity lines of credit segment, and one overdrafts segment.  The allowance is provided for each segmented group based on the group’s historical loan loss experience aggregated based on loan risk classifications which takes into account the current financial condition of the borrowers and guarantors, the prevailing value of the underlying collateral if collateral dependent, charge-off history, management’s knowledge of the portfolio, general economic conditions, and environmental factors which include the trends in delinquency and non-accrual, and other significant factors, such as the national and local economy, volume and composition of the portfolio, strength of management and loan staff, underwriting standards, and concentration of credit. In addition, management reviews reports on past-due loans to ensure appropriate classifications.  During the second quarter of 2009, in light of the continued deterioration in the economy and the increases in non-accrual loans and charge-offs, and based in part on regulatory considerations, we shortened the period used in the migration analysis from five years to four years to better reflect the impact of the most recent charge-offs, which increased the allowance for loan losses by $3.9 million; we increased the general allowance to reflect the higher loan delinquency trends, the weaker national and local economy and the increased difficulty in assigning loan grades, which increased the allowance for loan losses by $13.2 million, and we also applied the environmental factors described above to loans rated Minimally Acceptable, Special Mention and Substandard, which increased the allowance for loan losses by $11.8 million.  During the fourth quarter of 2009, we changed our migration loss analysis to reduce the weighting of the first two years of the four-year migration analysis by half to better reflect the impact of more recent losses, and further segmented the construction loan portfolios into three geographic segments.  The changes made during the fourth quarter of 2009 did not have a significant impact on the allowance for loan losses.  During the first quarter of 2010, we increased the number of segments for commercial real estate loans from one to ten.  In addition, we changed our migration loss analysis to use as the reserve factor for loans rated Pass the total weighted average losses during the last four years for each loan segment as well as the weighting for the four-year migration so that the first two years are weighted one-third and the most recent two years are weighted two-thirds.  The changes made during the first quarter of 2010 increased the allowance for loan losses by $10.4 million.  During the second quarter of 2010, we further refined our methodology to give greater weighting to the most recent twelve months of charge-offs in the calculation of the loan loss reserve percentage for Pass rated loans, which increased the allowance for loan losses by $10.4 million; we discontinued the weighting in the four-year migration analysis for loans rated lower than Pass, which increased the allowance for loan losses by $7.1 million, and we increased the environmental factors for purchased syndicated loans, which increased the allowance for loan  losses by $2.0 million.   During the first quarter of 2011, we combined the number of segments for construction loans from nine to two by consolidating the previous three geographic groups of East Coast, Texas and all other regions into one bankwide region in light of the convergence of credit quality for construction loans of the three separate regions, which increased the allowance for loan losses by $4.8 million.

75

The table set forth below reflects management’s allocation of the allowance for loan losses by loan category and the ratio of each loan category to the total loans as of the dates indicated:

Allocation of Allowance for Loan Losses

	As of December 31,
	2012					2011					2010					2009					2008
	Amount		Percentage of Loans in Each Category to to Average Gross Loans			Amount		Percentage of Loans in Each Category to to Average Gross Loans			Amount		Percentage of Loans in Each Category to to Average Gross Loans			Amount		Percentage of Loans in Each Category to to Average Gross Loans			Amount		Percentage of Loans in Each Category to to Average Gross Loans
	(Dollars in thousands)
Type of Loans:
Commercial loans	$	66,101		27.4	%	$	65,658		23.9	%	$	63,919		19.7	%	$	57,815		20.2	%	$	44,508		21.7	%
Residential mortgage loans and equity lines		11,703		17.4			10,795		16.4			9,668		13.9			8,480		11.4			2,678		10.2
Commercial mortgage loans		82,473		52.2			108,021		54.9			128,347		58.3			100,494		56.8			35,060		55.7
Real estate construction loans		23,017		2.8			21,749		4.5			43,261		7.8			45,086		11.3			39,820		12.1
Installment and other loans		28		0.2			57		0.3			36		0.3			14		0.3			27		0.3
Total	$	183,322		100.0	%	$	206,280		100.0	%	$	245,231		100.0	%	$	211,889		100.0	%	$	122,093		100.0	%

The increase of $443,000 in the allowance allocated to commercial loans to $66.1 million at December 31, 2012, from $65.7 million at December 31, 2011, is due primarily to the growth of commercial loans.  Commercial loans increased $258.8 million, or 13.9%, from $1.9 billion at December 31, 2011 to $2.1 billion at December 31, 2012.  At December 31, 2012, thirty-one commercial loans totaling $20.0 million were on non-accrual status.  At December 31, 2011, forty-six commercial loans totaling $30.7 million were on non-accrual status.  Commercial loans comprised 9.6% of impaired loans and 19.2% of non-accrual portfolio loans at December 31, 2012, compared to 14.2% of impaired loans and 15.2% of non-accrual portfolio loans at December 31, 2011.

The allowance allocated to residential mortgage loans and equity lines increased $908,000, to $11.7 million at December 31, 2012, from $10.8 million at December 31, 2011, primarily due to an increase in residential mortgage loans of $174.0 million, or 17.9%, to $1.1 billion at December 31, 2012, from $972.3 million at December 31, 2011.

The allowance allocated to commercial mortgage loans decreased from $108.0 million at December 31, 2011, to $82.5 million at December 31, 2012, which was primarily due to the decrease in classified commercial mortgage loans to $261.2 million at December 31, 2012, from $403.5 million at December 31, 2011.   The overall allowance for total commercial mortgage loans was 2.2% at December 31, 2012, compared to 2.9% at December 31, 2011.  At December 31, 2012, 40 commercial mortgage loans, excluding non-accrual loans held for sale, totaling $35.7 million were on non-accrual status.  At December 31, 2011, 57 commercial mortgage loans, excluding non-accrual loans held for sale, totaling $107.8 million were on non-accrual status.  Commercial mortgage loans comprised 66.7% of impaired loans and 34.4% of non-accrual portfolio loans at December 31, 2012, compared to 55.0% of impaired loans and 53.6% of non-accrual portfolio loans at December 31, 2011.

The allowance allocated for construction loans increased $1.3 million to $23.0 million, or 12.7%, of construction loans at December 31, 2012, compared to $21.7 million, or 9.2%, of construction loans at December 31, 2011, primarily due to increases in reserves based on prior loss experience from construction loans.  Five construction loans totaling $36.3 million were on non-accrual status at December 31, 2012, compared to eight loans totaling $46.0 million at December 31, 2011.  Construction loans comprised 17.0% of impaired loans and 34.9% of non-accrual portfolio loans at December 31, 2012, compared to 24.5% of impaired loans and 22.9% of non-accrual portfolio loans at December 31, 2011.

76

Also, see Part I — Item 1A — “Risk Factors” for additional factors that could cause actual results to differ materially from forward-looking statements or historical performance.

Liquidity

        Liquidity is our ability to maintain sufficient cash flow to meet maturing financial obligations and customer credit needs, and to take advantage of investment opportunities as they are presented in the marketplace.  Our principal sources of liquidity are growth in deposits, proceeds from the maturity or sale of securities and other financial instruments, repayments from securities and loans, Federal funds purchased, securities sold under agreements to repurchase, and advances from the FHLB.  At December 31, 2012, our liquidity ratio (defined as net cash and short-term and marketable securities to net deposits and short-term liabilities) decreased to 15.3% primarily due to lower securities balances, compared to 15.8% at December 31, 2011.

        The Bank is a shareholder of the FHLB, which enables the Bank to have access to lower-cost FHLB financing when necessary.  At December 31, 2012, the Bank had an approved credit line with the FHLB of San Francisco totaling $1.23 billion.  Total advances from the FHLB of San Francisco were $146.2 million at December 31, 2012.  These borrowings bear fixed rates and are secured by loans.  See Note 10 to the Consolidated Financial Statements.  At December 31, 2012, the Bank pledged $211.6 million of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.  The Bank had borrowing capacity of $193.9 million from the Federal Reserve Bank Discount Window at December 31, 2012.

        Liquidity can also be provided through the sale of liquid assets, which consist of Federal funds sold, securities purchased under agreements to resell, and securities available-for-sale.  At December 31, 2012, investment securities totaled $2.07 billion, with $1.45 billion pledged as collateral for borrowings and other commitments.  The remaining $618.4 million was available as additional liquidity or to be pledged as collateral for additional borrowings.

 Approximately 90.8% of our time deposits mature within one year or less as of December 31, 2012.  Management anticipates that there may be some outflow of these deposits upon maturity due to the keen competition in the Bank’s marketplace.  However, based on our historical runoff experience, we expect the outflow will not be significant and can be replenished through our normal growth in deposits.  Management believes all the above-mentioned sources will provide adequate liquidity for the next twelve months to the Bank to meet its operating needs.

The business activities of the Bancorp consist primarily of the operation of the Bank and limited activities in other investments.  Under the memorandum of understanding the Bancorp entered into with the FRB SF, we agreed that we will not, without the FRB SF’s prior written approval, receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank. The Bank did not pay a dividend to the Bancorp in 2010 or 2011, but paid dividends of $154.7 million to Bancorp following regulatory approval in 2012, and will pay additional dividends with regulatory approval in 2013  to maintain Bancorp’s cash balance equal to at least two years of Bancorp’s operating expenses and to be in a position, subject to regulatory approval, to repurchase in installments during 2013 the Series B Preferred Stock issued to the U.S. Treasury under the TARP Capital Purchase Program.

Also, see Note 14 to the Consolidated Financial Statements regarding commitments and contingencies.

77

Recent Accounting Pronouncements

See Note 1 to the Consolidated Financial Statements for details of recent accounting pronouncements and their expected impact, if any, on the Consolidated Financial Statements.

Item 7A.            Quantitative and Qualitative Disclosures about Market Risk.

Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates.   The principal market risk to the Company is the interest rate risk inherent in our lending, investing, deposit taking and borrowing activities, due to the fact that interest-earning assets and interest-bearing liabilities do not re-price at the same rate, to the same extent, or on the same basis.

We monitor and manage our interest rate risk through analyzing the re-pricing characteristics of our loans, securities, deposits, and borrowings on an on-going basis.   The primary objective is to minimize the adverse effects of changes in interest rates on our earnings, and ultimately the underlying market value of equity, while structuring our asset-liability composition to obtain the maximum spread.  Management uses certain basic measurement tools in conjunction with established risk limits to regulate its interest rate exposure.   Due to the limitation inherent in any individual risk management tool, we use a simulation model to measure and quantify the impact to our profitability as well as to estimate changes to the market value of our assets and liabilities.

We use a net interest income simulation model to measure the extent of the differences in the behavior of the lending, investing, and funding rates to changing interest rates, so as to project future earnings or market values under alternative interest rate scenarios.  Interest rate risk arises primarily through the traditional business activities of extending loans, investing securities, accepting deposits, and borrowings.  Many factors, including economic and financial conditions, movements in interest rates, and consumer preferences affect the spread between interest earned on assets and interest paid on liabilities.  The net interest income simulation model is designed to measure the volatility of net interest income and net portfolio value, defined as net present value of assets and liabilities, under immediate rising or falling interest rate scenarios in 25 basis points increments.

        Although the modeling is helpful in managing interest rate risk, it does require significant assumptions for the projection of loan prepayment rates on mortgage related assets, loan volumes and pricing, and deposit and borrowing volume and pricing, that might prove inaccurate.  Because these assumptions are inherently uncertain, the model cannot precisely estimate net interest income, or precisely predict the effect of higher or lower interest rates on net interest income.  Actual results will differ from simulated results due to the timing, magnitude, and frequency of interest rate changes, the differences between actual experience and the assumed volume, changes in market conditions, and management strategies, among other factors.  The Company monitors its interest rate sensitivity and attempts to reduce the risk of a significant decrease in net interest income caused by a change in interest rates.

We establish a tolerance level in our policy to define and limit interest income volatility to a change of plus or minus 15% when the hypothetical rate change is plus or minus 200 basis points.  When the net interest rate simulation projects that our tolerance level will be met or exceeded, we seek corrective action after considering, among other things, market conditions, customer reaction, and the estimated impact on profitability.  At December 31, 2012, if interest rates were to increase instantaneously by 100 basis points, the simulation indicated that our net interest income over the next twelve months would increase by 2.3%, and if interest rates were to increase instantaneously by 200 basis points, the simulation indicated that our net interest income over the next twelve months would increase by 7.2%.  Conversely, if interest rates were to decrease instantaneously by 100 basis points, the simulation indicated that our net interest income over the next twelve months would decrease by 0.2%, and if interest rates were to decrease instantaneously by 200 basis points, the simulation indicated that our net interest income over the next twelve months would decrease by 0.2%.

78

Our simulation model also projects the net market value of our portfolio of assets and liabilities.  We have established a tolerance level to value the net market value of our portfolio of assets and liabilities in our policy to a change of plus or minus 15% when the hypothetical rate change is plus or minus 200 basis points.  At December 31, 2012, if interest rates were to increase instantaneously by 200 basis points, the simulation indicated that the net market value of our portfolio of assets and liabilities would increase by 6.6%, and conversely, if interest rates were to decrease instantaneously by 200 basis points, the simulation indicated that the net market value of our assets and liabilities would increase by 0.4%.

Quantitative Information About Interest Rate Risk

The following table shows the carrying value of our financial instruments that are sensitive to changes in interest rates, categorized by expected maturity, as well as the instruments’ total fair values at December 31, 2012, and 2011.  For assets, expected maturities are based on contractual maturity.  For liabilities, we use our historical experience and decay factors to estimate the deposit runoffs of interest-bearing transactional deposits.  We use certain assumptions to estimate fair values and expected maturities which are described in Note 17 to the Consolidated Financial Statements.  Off-balance sheet commitments to extend credit, letters of credit, and bill of lading guarantees represent the contractual unfunded amounts.  Off-balance sheet financial instruments represent fair values.  The results presented may vary if different assumptions are used or if actual experience differs from the assumptions used.

79

																December 31,
	Average															2012					2011
	Interest			Expected Maturity Date at December 31,														Fair					Fair
	Rate			2013		2014		2015		2016		2017		Thereafter		Total		Value			Total		Value
	(Dollars in thousands)
Interest-Sensitive Assets:
Mortgage-backed securities and collateralized mortgage obligations		3.50	%	$	223,273	$	146,222	$	113,371	$	90,323	$	77,948	$	410,482	$	1,061,619	$	1,102,421		$	1,268,107	$	1,310,456
Other investment securities		1.53			349,879		160,091		9,855		-		200,155		283,648		1,003,628		1,012,965			1,179,877		1,187,999
Loans held-for-sale		-			-		-		-		-		-		-		-		-			760		760
Gross loans receivable:
Commercial		3.99			1,651,153		254,557		84,227		45,838		45,564		45,768		2,127,107		2,122,877			1,868,275		1,863,018
Residential mortgage		4.68			5,962		1,932		6,575		3,253		7,236		1,315,124		1,340,082		1,351,638			1,186,969		1,208,911
Commercial mortgage		5.16			648,732		393,793		459,963		519,761		630,134		1,116,069		3,768,452		3,695,865			3,748,897		3,715,144
Real estate construction		5.36			141,427		39,523		-		-		-		-		180,950		180,559			237,372		237,210
Installment & other		2.42			12,283		273		-		-		-		-		12,556		11,863			17,699		17,682
Trading securities		1.35			-		4,703				-		-		-		4,703		4,703			4,542		4,542
Interest Sensitive Liabilities:
Other interest-bearing deposits		0.67			351,485		347,886		228,025		1,326,313		-		-		2,253,709		2,253,709			1,823,088		1,823,088
Time deposits		0.83			3,506,076		263,847		67,735		1,499		20,901		3		3,860,061		3,865,851			4,331,326		4,343,232
Securities sold under agreements to repurchase		3.84			-		600,000		250,000		50,000		250,000		100,000		1,250,000		1,361,585			1,400,000		1,547,900
Advances from the Federal Home Loan Bank		0.44			125,000		-		-		-		21,200		-		146,200		146,789			225,000		227,825
Other borrowings from financial institutions		-			-		-		-		-		-		-		-					880		881
Other borrowings		2.95			-		-		-		-		-		18,713		18,713		14,573			18,920		18,920
Long-term debt		2.80			-		-		-		50,000		-		121,136		171,136		98,392			171,136		98,676
Off-Balance Sheet Financial Instruments:
Commitments to extend credit					1,105,138		281,710		28,876		91,748		40,531		192,460		1,740,463		(1,875	)		1,626,523		(1,253	)
Standby letters of credit					44,060		442		151		19		-		-		44,672		(204	)		62,076		(367	)
Other letters of credit					71,073		-		-		-		-		-		71,073		(34	)		64,233		(38	)
Bill of lading guarantees					77		-		-		-		-		-		77		-			187		-

Country Risk Exposures

The Company’s total assets were $10.7 billion and total foreign country risk net exposures were $844.6 million at December 31, 2012, compared to total assets of $10.6 billion and total foreign country risk net exposures of $751.3 million at December 31, 2011.  Total foreign country risk net exposures at December 31, 2012, were comprised primarily of $274.7 million from Hong Kong, $209.0 million from England, $149.0 million from China, $60.8 million from Switzerland, $60.0 million from France, $50.0 million from Australia, $17.9 million from Taiwan, $10.0 million from Luxembourg, $8.4 million from Canada, $2.5 million from Singapore, and $1.6 million from Macau. Total foreign country risk net exposures at December 31, 2011, were comprised primarily of $209.4 million from China, $164.5 million from Hong Kong, $149.6 million from England, $62.0 million from Australia, $57.4 million from France, $45.4 million from Switzerland, $30.1 million from Taiwan, $28.1 million from Canada, and $3.8 million from Singapore.

All foreign country risk net exposures were to non-sovereign counterparties except $16.2 million due from the Hong Kong Monetary Authority at December 31, 2012.

80

Unfunded exposures were $40.4 million at December 31, 2012, and were comprised of $40.0 million of unfunded loans to two financial institutions in China, a $250,000 unfunded loan to a corporation in Canada, and a $190,000 of unfunded loan to a borrower in Taiwan.   Unfunded exposures were $30.2 million at December 31, 2011, and were comprised of $19.3 million of unfunded loans to two financial institutions in China, a $10.0 million unfunded loan to a corporation in Canada, and $919,000 of unfunded loans to two borrowers in Taiwan.

Financial Derivatives

It is our policy not to speculate on the future direction of interest rates.  However, we enter into financial derivatives in order to seek mitigation of exposure to interest rate risks related to our interest-earning assets and interest-bearing liabilities.  We believe that these transactions, when properly structured and managed, may provide a hedge against inherent interest rate risk in our assets or liabilities and against risk in specific transactions.  In such instances, we may protect our position through the purchase or sale of interest rate futures contracts for a specific cash or interest rate risk position.  Other hedge transactions may be implemented using interest rate swaps, interest rate caps, floors, financial futures, forward rate agreements, and options on futures or bonds.  Prior to considering any hedging activities, we seek to analyze the costs and benefits of the hedge in comparison to other viable alternative strategies.  All hedges will require an assessment of basis risk and must be approved by the Bank’s Investment Committee.

We follow ASC Topic 815, which established accounting and reporting standards for financial derivatives, including certain financial derivatives embedded in other contracts, and hedging activities.  It requires the recognition of all financial derivatives as assets or liabilities in our Consolidated Balance Sheets and measurement of those financial derivatives at fair value.  The accounting treatment of changes in fair value is dependent upon whether or not a financial derivative is designated as a hedge and, if so, the type of hedge.

As of December 31, 2011, we had five interest rate swap agreements with two major financial institutions in the notional amount of $300.0 million for a period of three years.  These interest rate swaps were not structured to hedge against inherent interest rate risks related to our interest-earning assets and interest-bearing liabilities.  These five interest rate swap agreements all matured in the third quarter of 2012.  The net amount accrued on these interest rate swaps and the changes in the market value of these interest rate swaps were recorded as a reduction to other non-interest income in the amount of $288,000 in 2012 compared to $4.9 million in the same period a year ago.

The Company enters into foreign exchange forward contracts and foreign currency option contracts with various counter parties to mitigate the risk of fluctuations in foreign currency exchange rates for foreign exchange certificates of deposit, foreign exchange contracts, or foreign currency option contracts entered into with our clients. These contracts are not designated as hedging instruments and are recorded at fair value in our Consolidated Balance Sheets. Changes in the fair value of these contracts as well as the related foreign exchange certificates of deposit, foreign exchange contracts or foreign currency option contracts are recognized immediately in net income as a component of non-interest income. Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.  At December 31, 2012, the notional amount of option contracts totaled $209,000 with a net negative fair value of $2,000. Spot and forward contracts in the total notional amount of $188.1 million had a positive fair value of $2.9 million at December 31, 2012.  Spot and forward contracts in the total notional amount of $133.7 million had a negative fair value of $1.6 million at December 31, 2012. At December 31, 2011, the notional amount of option contracts totaled $4.3 million with a net positive fair value of $29,000.  Spot and forward contracts in the total notional amount of $238.6 million had a positive fair value, in the amount of $2.2 million, at December 31, 2011.  Spot and forward contracts in the total notional amount of $128.2 million had a negative fair value, in the amount of $486,000, at December 31, 2011.

81

Item 8.       Financial Statements and Supplementary Data.

        For financial statements, see “Index to Consolidated Financial Statements” on page F-1.

Item 9.       Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

      Not Applicable.

Item 9A.    Controls and Procedures.

Disclosure Controls and Procedures

The Company's principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K.  Based upon their evaluation, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There have not been any changes in the Company’s disclosure controls and procedures that occurred during its fourth fiscal quarter of 2012 that have materially affected or are reasonably likely to materially affect these controls and procedures.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act.  The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        As of December 31, 2012, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, the Company assessed the effectiveness of its internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).   Based on the assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2012, based on those criteria.

82

 KPMG LLP, the independent registered public accounting firm that audited the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K, has also issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012.  The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012, is included in this Item under the heading “Report of Independent Registered Public Accounting Firm” below.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act, that occurred during the fourth fiscal quarter of 2012 that have materially affected, or are reasonably likely to materially effect, the Company’s internal control over financial reporting.

83

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Cathay General Bancorp:

We have audited Cathay General Bancorp’s (the Company) internal control over financial reporting as of December 31, 2012, based oncriteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Cathay General Bancorp's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cathay General Bancorp maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission..

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheets of Cathay General Bancorp and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012, and our report dated March 1, 2013 expressed an unqualified opinion on those Consolidated Financial Statements.

/s/ KPMG LLP

Los Angeles, California

March 1, 2013

84

Item 9B.    Other Information.

None.

PART III

Item 10.     Directors, Executive Officers and Corporate Governance.

The information required by this item concerning our executive officers, directors, compliance with Section 16 of the Securities and Exchange Act of 1934, the code of ethics that applies to our principal executive officer, principal financial officer and principal accounting officer, and matters relating to corporate governance is incorporated herein by reference from the information set forth under the captions “Proposal One— Election of Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Board of Directors and Corporate Governance” and “Code of Ethics” in our Definitive Proxy Statement relating to our 2013 Annual Meeting of Stockholders (the “Proxy Statement”).

Item 11.    Executive Compensation.

The information required by this item is incorporated herein by reference from the information set forth under the captions “Board of Directors and Corporate Governance—Compensation of Directors,” “Executive Compensation,” and “Potential Payments Upon Termination or Change in Control,” in our Proxy Statement.

Item 12.     SecurityOwnership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth certain information as of December 31, 2012, with respect to compensation plans under which equity securities of the Company were authorized for issuance.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights		Weighted-average Exercise Price of Outstanding Options, Warrants, and Rights		Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans [Excluding Securities Reflected in Column (a)]
	(a)		(b)		(c)
Equity Compensation Plans Approved by Security Holders		3,996,630	$	29.45		2,364,947
Equity Compensation Plans Not Approved by Security Holders		-		-		-
Total		3,996,630	$	29.45		2,364,947

Security Ownership of Certain Beneficial Owners and Management

The information required by this item is incorporated herein by reference from the information set forth under the captions “Security Ownership of Certain Beneficial Owners” and “Proposal One— Election of Directors— Security Ownership of Nominees, Continuing Directors, and Named Executive Officers” in our Proxy Statement.

85

Item 13.     Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated herein by reference to the information set forth under the captions “Transactions with Related Persons, Promoters and Certain Control Persons” and “ Board of Directors and Corporate Governance— Director Independence” in our Proxy Statement.

Item 14.     Principal Accounting Fees and Services.

The information required by this item is incorporated herein by reference from the information set forth under the caption “Principal Accounting Fees and Services” in our Proxy Statement.

PART IV

Item 15.    Exhibits, Financial Statement Schedules.

Documents Filed as Part of this Report

(a)(1) Financial Statements

See “Index to Consolidated Financial Statements” on page F-1.

(a)(2) Financial Statement Schedules

Schedules have been omitted since they are not applicable, they are not required, or the information required to be set forth in the schedules is included in the Consolidated Financial Statements or Notes thereto.

(b) Exhibits

3.1	Restated Certificate of Incorporation. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.
3.1.1	Amendment to Restated Certificate of Incorporation. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.
3.2	Restated Bylaws. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.
3.2.1	Amendment to Restated Bylaws, effective October 20, 2003. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.
3.2.2	Amendment to Restated Bylaws, effective October 18, 2007. +

86

3.3	Certificate of Designation of Series A Junior Participating Preferred Stock. Previously filed with the Securities and Exchange Commission on February 28, 2012, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference.
3.4	Certificate of Designation of Fixed Rate Cumulative Perpetual Preferred Stock, Series B. Previously filed with Securities and Exchange Commission on December 5, 2008, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.
4.1	Indenture, dated as of March 30, 2007, between Cathay General Bancorp and LaSalle Bank National Association (including form of debenture). +
4.1.1	Amended and Restated Declaration of Trust of Cathay Capital Trust III, dated as of March 30, 2007. +
4.1.2	Guarantee Agreement, dated as of March 30, 2007, between Cathay General Bancorp and LaSalle Bank National Association. +
4.1.3	Form of Capital Securities of Cathay Capital Trust III (included within Exhibit 4.1.1). +
4.2	Warrant to purchase up to 1,846,374 shares of Common Stock, issued on December 5, 2008. Previously filed with Securities and Exchange Commission on December 5, 2008, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.
4.3	Form of Preferred Share Certificate for Fixed Rate Cumulative Perpetual Preferred Stock, Series B. Previously filed with Securities and Exchange Commission on December 5, 2008, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.
4.4	Distribution Agreement, dated as of September 9, 2009, between Cathay General Bancorp and J.P. Morgan Securities Inc. Previously filed with the Securities and Exchange Commission on September 23, 2009, as an exhibit to Bancorp’s Current Report on Form 8-K/A, and incorporated herein by reference.
4.5	Distribution Agreement, dated as of September 9, 2009, between Cathay General Bancorp and Deutsche Bank Securities Inc. Previously filed with the Securities and Exchange Commission on September 23, 2009, as an exhibit to Bancorp’s Current Report on Form 8-K/A, and incorporated herein by reference.
4.6	Purchase Agreement, dated as of October 13, 2009, between Cathay General Bancorp and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Previously filed with the Securities and Exchange Commission on October 14, 2009, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.
4.7	ATM Equity Offering SM Sales Agreement, dated November 23, 2009, between Cathay General Bancorp and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Previously filed with the Securities and Exchange Commission on November 23, 2009, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.

87

10.1	Form of Indemnity Agreements between Bancorp and its directors and certain officers. Previously filed with the Securities and Exchange Commission on February 28, 2012, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference.
10.2	Cathay Bank Employee Stock Ownership Plan, as amended and restated effective January 1, 2010. Previously filed with the Securities and Exchange Commission on February 28, 2011, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010, and incorporated herein by reference.**
10.2.1	Amendment No. 7 effective July 1, 2007, January 1, 2007, January 1, 2008, December 31, 2009, January 1, 2009, and January 1, 2010 to the Amended and Restated Cathay Bank Employee Stock Ownership Plan effective January 1, 1997. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference.**
10.3	Dividend Reinvestment Plan of Bancorp. Previously filed with the Securities and Exchange Commission on April 30, 1997, as an exhibit to Registration Statement No. 33-33767, and incorporated herein by reference.
10.4	Equity Incentive Plan of Bancorp effective February 19, 1998. Previously filed with the Securities and Exchange Commission on February 28, 2012, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference.**
10.4.1	First Amendment to Cathay Bancorp, Inc. Equity Incentive Plan. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
10.5	GBC Bancorp 1999 Employee Stock Incentive Plan. Previously filed with the Securities and Exchange Commission on February 28, 2012, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference.**
10.6	Cathay Bank Bonus Deferral Agreement (Amended and Restated). +**
10.7	Cathay General Bancorp 2005 Incentive Plan (Amended and Restated). +**
10.7.1	Form of Cathay General Bancorp 2005 Incentive Plan Restricted Stock Award Agreement. +**
10.7.2	Form of Cathay General Bancorp 2005 Incentive Plan Stock Option Agreement (Nonstatutory). +**
10.7.3	Form of Cathay General Bancorp 2005 Incentive Plan Stock Option Agreement (Nonstatutory) (Nonemployee Director). +**
10.7.4	Form of Cathay General Bancorp 2005 Incentive Plan Restricted Stock Unit Agreement. +**
10.7.5	Form of Cathay General Bancorp 2005 Incentive Plan Stock Award Agreement to be used for the purposes of granting certain salary awards. Previously filed with the Securities and Exchange Commission on June 8, 2012, as an exhibit to Bancorp’s Current Report on Form 8-K and incorporated herein by reference. +**

88

10.8	Letter Agreement, dated December 5, 2008, including the Securities Purchase Agreement — Standard Terms incorporated by reference therein, between the Company and the U.S. Treasury. Previously filed with Securities and Exchange Commission on December 5, 2008, as an exhibit to Bancorp’s Current Report on Form 8-K and incorporated herein by reference.
10.9	Form of Waiver, executed by each of Messrs. Dunson K. Cheng, Peter Wu, Anthony M. Tang, Heng W. Chen, Irwin Wong, Kim R. Bingham, and Perry P. Oei. Previously filed with Securities and Exchange Commission on December 5, 2008, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.**
10.9.1	Form of Consent, executed by each of Messrs. Dunson K. Cheng, Peter Wu, Anthony M. Tang, Heng W. Chen, Irwin Wong, Kim R. Bingham, and Perry P. Oei as to adoption of amendments to Benefit Plans as required by Section 111(b) of EESA. Previously filed with Securities and Exchange Commission on December 5, 2008, as an exhibit to Bancorp’s Current Report on Form 8-K, and incorporated herein by reference.**
10.9.2	Form of Consent, executed by each of Messrs. Dunson K. Cheng, Peter Wu, Anthony M. Tang, Heng W. Chen, Irwin Wong, Kim R. Bingham, and Perry P. Oei as to adoption of amendments to Benefit Plans as required by Section 111(b) of EESA, as amended by the American Recovery Reinvestment Act of 2009. Previously filed with the Securities and Exchange Commission on March 16, 2010, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2010, and incorporated herein by reference.**
10.10	Amended and Restated Change of Control Employment Agreement for Dunson K. Cheng dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
10.10.1	Amended and Restated Change of Control Employment Agreement for Peter Wu dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
10.10.2	Amended and Restated Change of Control Employment Agreement for Anthony M. Tang dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
10.10.3	Amended and Restated Change of Control Employment Agreement for Heng W. Chen dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**

89

10.10.4	Amended and Restated Change of Control Employment Agreement for Irwin Wong dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
10.10.5	Amended and Restated Change of Control Employment Agreement for Kim Bingham dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
10.10.6	Amended and Restated Change of Control Employment Agreement for Perry P. Oei dated as of December 18, 2008. Previously filed with the Securities and Exchange Commission on March 2, 2009, as an exhibit to Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.**
12.1	Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends. +
21.1	Subsidiaries of Bancorp.+
23.1	Consent of Independent Registered Public Accounting Firm.+
24.1	Power of Attorney.+
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.++
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.++
99.1	Certification for Years Following First Fiscal Year of the Principal Executive Officer Pursuant to Section 111(b) of the Emergency Economic Stabilization Act of 2008.+
99.2	Certification for Years Following First Fiscal Year of the Principal Financial Officer Pursuant to Section 111(b) of the Emergency Economic Stabilization Act of 2008.+
101.INS	XBRL Instance Document ***
101.SCH	XBRL Taxonomy Extension Schema Document ***
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document***
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document***
101.LAB	XBRL Taxonomy Extension Label Linkbase Document***
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document***

** Management contract or compensatory plan or arrangement.

90

*** XBRL (Extensible Business Reporting Language) information shall not be deemed to be filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, shall not be deemed to be filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise shall not be subject to liability under these sections, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

+ Filed herewith.

++  Furnished herewith.

91

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Cathay General Bancorp
	By:	/s/ Dunson K. Cheng
		Dunson K. Cheng
		Chairman, President, and Chief Executive Officer
Date: March 1, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Dunson K. Cheng	President, Chairman of	March 1, 2013
Dunson K.  Cheng	the Board, Director, and Chief Executive Officer (principal executive officer)
/s/ Heng W. Chen	Executive Vice President,	March 1, 2013
Heng W.  Chen	Chief Financial Officer/Treasurer (principal financial officer) (principal accounting officer)
/s/ Peter Wu	Director	March 1, 2013
Peter Wu
/s/ Anthony M. Tang	Director	March 1, 2013
Anthony M.  Tang
/s/ Kelly L. Chan	Director	March 1, 2013
Kelly L.  Chan
/s/ Michael M.Y. Chang	Director	March 1, 2013
Michael M.Y.  Chang
/s/ Thomas C.T. Chiu	Director	March 1, 2013
Thomas C.T.  Chiu
*	Director	March 1, 2013
Nelson Chung
/s/ Felix S. Fernandez	Director	March 1, 2013
Felix S. Fernandez

92

/s/ Jane Jelenko	Director	March 1, 2013
Jane Jelenko
/s/ Patrick S.D. Lee	Director	March 1, 2013
Patrick S.D. Lee
/s/ Ting Liu	Director	March 1, 2013
Ting Liu
/s/ Joseph C.H. Poon	Director	March 1, 2013
Joseph C.H.  Poon

*By:	/s/ Heng W. Chen
	Heng W. Chen
	Attorney-in-Fact**

** By authority of the power of attorney filed herewith.

93

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F - 2
Consolidated Balance Sheets at December 31, 2012 and 2011		F - 3
Consolidated Statements of Operations and Comprehensive Income for each of the years ended December 31, 2012, 2011, and 2010		F - 4
Consolidated Statements of Changes in Stockholders' Equity for each of the years ended December 31, 2012, 2011, and 2010		F - 5
Consolidated Statements of Cash Flows for each of the years ended December 31, 2012, 2011, and 2010		F - 6
Notes to Consolidated Financial Statements		F - 8
Parent-only condensed financial information of Cathay General Bancorp is included in Note 20 to the Consolidated Financial Statements in this Annual Report on Form 10-K		F - 52

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Cathay General Bancorp:

We have audited the accompanying Consolidated Balance Sheets of Cathay General Bancorp and subsidiaries (the Company) as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012. These Consolidated Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above present fairly, in all material respects, the financial position of Cathay General Bancorp and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012 in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cathay General Bancorp’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 1, 2013 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Los Angeles, California

March 1, 2013

F-2

CATHAY GENERAL BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2012			2011
	(In thousands, except share and per share data)
Assets
Cash and due from banks	$	144,909		$	117,888
Short-term investments and interest bearing deposits		411,983			294,956
Securities purchased under agreements to resell					-
Securities held-to-maturity (market value of $823,906 in 2012 and $1,203,977 in 2011		773,768			1,153,504
Securities available-for-sale (amortized cost of $1,290,676 in 2012 and $1,309,521 in 2011		1,291,480			1,294,478
Trading securities		4,703			4,542
Loans held for sale		-			760
Loans		7,429,147			7,059,212
Less: Allowance for loan losses		(183,322	)		(206,280	)
Unamortized deferred loan fees, net		(10,238	)		(8,449	)
Loans, net		7,235,587			6,844,483
Federal Home Loan Bank stock		41,272			52,989
Other real estate owned, net		46,384			92,713
Affordable housing investments, net		85,037			78,358
Premises and equipment, net		102,613			105,961
Customers’ liability on acceptances		41,271			37,300
Accrued interest receivable		26,015			32,226
Goodwill		316,340			316,340
Other intangible assets, net		6,132			11,598
Other assets		166,595			206,768
Total assets	$	10,694,089		$	10,644,864
Liabilities and Stockholders’ Equity
Deposits
Non-interest-bearing demand deposits	$	1,269,455		$	1,074,718
Interest-bearing deposits:
NOW deposits		593,133			451,541
Money market deposits		1,186,771			951,516
Savings deposits		473,805			420,030
Time deposits under $100,000		644,191			832,997
Time deposits of $100,000 or more		3,215,870			3,498,329
Total deposits		7,383,225			7,229,131
Securities sold under agreements to repurchase		1,250,000			1,400,000
Advances from the Federal Home Loan Bank		146,200			225,000
Other borrowings from financial institutions		-			880
Other borrowings for affordable housing investments		18,713			18,920
Long-term debt		171,136			171,136
Acceptances outstanding		41,271			37,300
Other liabilities		54,040			46,864
Total liabilities		9,064,585			9,129,231
Commitments and contingencies		-			-
Stockholders’ Equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding in 2012 and 2011		254,580			250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011		830			829
Additional paid-in-capital		768,925			765,641
Accumulated other comprehensive income/(loss), net		465			(8,732	)
Retained earnings		721,993			624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011		(125,736	)		(125,736	)
Total Cathay General Bancorp stockholders' equity		1,621,057			1,507,186
Noncontrolling interest		8,447			8,447
Total equity		1,629,504			1,515,633
Total liabilities and equity	$	10,694,089		$	10,644,864

See accompanying notes to Consolidated Financial Statements.

F-3

CATHAY GENERAL BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

	Year Ended December 31,
	2012			2011			2010
	(In thousands, except share
	and per share data)
INTEREST AND DIVIDEND INCOME
Loan receivable	$	360,643		$	364,580		$	380,662
Investment securities- taxable		62,395			83,083			106,568
Investment securities- nontaxable		4,161			4,218			854
Federal Home Loan Bank stock		485			177			237
Federal funds sold and securities purchased under agreement to resell		18			83			14
Deposits with banks		2,042			1,430			1,259
Total interest and dividend income		429,744			453,571			489,594
INTEREST EXPENSE
Time deposits of $100,000 or more		33,441			42,204			54,219
Other deposits		13,932			20,010			29,943
Interest on securities sold under agreements to repurchase		55,699			60,733			66,141
Advances from the Federal Home Loan Bank		270			12,033			37,527
Long-term debt		5,149			4,890			3,852
Short-term borrowings		-			11			6
Total interest expense		108,491			139,881			191,688
Net interest income before provision for credit losses		321,253			313,690			297,906
(Reversal)/provision for credit losses		(9,000	)		27,000			156,900
Net interest income/(loss) after provision for credit losses		330,253			286,690			141,006
NON-INTEREST INCOME
Securities gains, net		18,026			21,131			18,695
Letters of credit commissions		6,316			5,644			4,466
Depository service fees		5,453			5,420			5,220
Other operating income		16,712			18,697			3,870
Total non-interest income		46,507			50,892			32,251
NON-INTEREST EXPENSE
Salaries and employee benefits		78,377			71,849			58,835
Occupancy expense		14,608			14,225			12,188
Computer and equipment expense		9,591			8,508			8,230
Professional services expense		21,768			20,209			17,630
FDIC and State assessments		8,339			12,494			19,549
Marketing expense		4,607			3,175			3,160
Other real estate owned		15,116			10,583			16,011
Operations of investments in affordable housing		6,306			8,153			7,611
Amortization of core deposit premium		5,663			5,859			5,958
Cost associated with debt redemption		12,120			20,231			14,261
Other operating expense		16,094			10,280			12,278
Total non-interest expense		192,589			185,566			175,711
Income/(loss) before income tax (benefit)/expense		184,171			152,016			(2,454	)
Income tax expense/(benefit)		66,128			51,261			(14,629	)
Net income		118,043			100,755			12,175
Less: net income attributable to noncontrolling interest		605			605			610
Net income attributable to Cathay General Bancorp		117,438			100,150			11,565
Dividends on preferred stock		(16,488	)		(16,437	)		(16,388	)
Net income/(loss) attributable to common stockholders	$	100,950		$	83,713		$	(4,823	)
Other comprehensive loss, net of tax:
Unrealized holding gains arising during the year		19,645			4,538			7,714
Less: reclassification adjustment for gains included in net income		10,448			12,248			7,860
Total other comprehensive loss, net of tax		9,197			(7,710	)		(146	)
Total comprehensive income	$	126,635		$	92,440		$	11,419
Net income/(loss) attributable to common stockholders per common share
Basic	$	1.28		$	1.06		$	(0.06	)
Diluted	$	1.28		$	1.06		$	(0.06	)
Basic average common shares outstanding		78,719,133			78,633,317			77,073,954
Diluted average common shares outstanding		78,723,297			78,640,652			77,073,954

See accompanying notes to Consolidated Financial Statements.

F-4

CATHAY GENERAL BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Years Ended December 31, 2012, 2011, and 2010

(In thousands, except number of shares)

	Preferred Stock				Common Stock				Additional			Accumulated Other												Total
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital			Comprehensive Income			Retained Earnings			Treasury Stock			Noncontrolling Interest			Stockholders' Equity
Balance at December 31, 2009		258,000	$	243,967		63,459,590	$	677	$	634,623		$	(875	)	$	551,588		$	(125,736	)	$	8,500		$	1,312,744
Issuances of common stock —
Common stock issuance		-		-		15,028,409		150		124,778			-			-			-			-			124,928
Dividend Reinvestment Plan		-		-		28,778		-		310			-			-			-			-			310
Restricted stock units vested		-		-		15,006		-		-			-			-			-			-			-
Tax short-fall from stock options		-		-		-		-		(539	)		-			-			-			-			(539	)
Stock -based compensation		-		-		-		-		3,337			-			-			-			-			3,337
Cash dividends of $0.04 per share		-		-		-		-		-			-			(3,140	)		-			-			(3,140	)
Discount accretion and other adjustment on preferred stock		-		3,488		-		-		-			-			(3,488	)		-			-			-
Dividends on preferred stock		-		-		-		-		-			-			(12,900	)		-			(610	)		(13,510	)
Redemption of noncontrolling interest		-		-		-		-		-			-			-			-			(53	)		(53	)
Change in other comprehensive loss		-		-		-		-		-			(147	)		-			-			-			(147	)
Net income		-		-		-		-		-			-			11,565			-			610			12,175
Balance at December 31, 2010		258,000		247,455		78,531,783		827		762,509			(1,022	)		543,625			(125,736	)		8,447			1,436,105
Dividend Reinvestment Plan		-		-		21,281		1		286			-			-			-			-			287
Restricted stock units vested		-		-		12,633		-		-			-			-			-			-			-
Stock options exercised		-		-		86,860		1		1,306			-			-			-			-			1,307
Tax short-fall from stock options		-		-		-		-		(218	)		-			-			-			-			(218	)
Stock -based compensation		-		-		-		-		1,758			-			-			-			-			1,758
Cash dividends of $0.04 per share		-		-		-		-		-			-			(3,146	)		-			-			(3,146	)
Discount accretion and other adjustment on preferred stock		-		3,537		-		-		-			-			(3,537	)		-			-			-
Dividends on preferred stock		-		-		-		-		-			-			(12,900	)		-			(605	)		(13,505	)
Change in other comprehensive loss		-		-		-		-		-			(7,710	)		-			-			-			(7,710	)
Net income		-		-		-		-		-			-			100,150			-			605			100,755
Balance at December 31, 2011		258,000		250,992		78,652,557		829		765,641			(8,732	)		624,192			(125,736	)		8,447			1,515,633
Dividend Reinvestment Plan		-		-		17,956		-		291			-			-			-			-			291
Restricted stock units vested		-		-		11,814		-		-			-			-			-			-			-
Stock salary		-		-		45,937		-		788			-			-			-			-			788
Stock options exercised		-		-		50,024		1		763			-			-			-			-			764
Tax benefits from stock options		-		-		-		-		(620	)		-			-			-			-			(620	)
Stock -based compensation		-		-		-		-		2,062			-			-			-			-			2,062
Cash dividends of $0.04 per share		-		-		-		-		-			-			(3,149	)		-			-			(3,149	)
Discount accretion and other adjustment on preferred stock		-		3,588		-		-		-			-			(3,588	)		-			-			-
Dividends on preferred stock		-		-		-		-		-			-			(12,900	)		-			(605	)		(13,505	)
Change in other comprehensive loss		-		-		-		-		-			9,197						-			-			9,197
Net income		-		-		-		-		-			-			117,438			-			605			118,043
Balance at December 31, 2012		258,000	$	254,580		78,778,288	$	830	$	768,925		$	465		$	721,993		$	(125,736	)	$	8,447		$	1,629,504

See accompanying notes to Consolidated Financial Statements.

F-5

CATHAY GENERAL BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash Flows from Operating Activities
Net income	$	118,043		$	100,755		$	12,175
Adjustments to reconcile net income to net cash provided by operating activities:
(Reversal)/Provision for credit losses		(9,000	)		27,000			156,900
Provision for losses on other real estate owned		10,668			10,385			20,139
Deferred tax liability/(benefit)		4,784			13,808			(38,504	)
Depreciation		5,939			6,079			4,619
Net gains on sale and transfers of other real estate owned		(369	)		(5,243	)		(9,977	)
Net gains on sale of loans		(633	)		(3,354	)		(149	)
Net gains on sale of loans held for sale		-			(88	)		(779	)
Proceeds from sale of loans		59,589			46,377			7,481
Originations of loans held for sale		(58,930	)		(14,027	)		(7,332	)
Write-downs on loans held for sale		-			-			3,160
(Decrease)/increase in unrealized loss from interest rate swaps		(2,634	)		(3,874	)		5,814
Purchase of trading securities		(163	)		(745	)		(3,795	)
Write-down on venture capital and other investments		309			379			515
Write-down on impaired securities		181			200			492
Gain on sales and calls of securities		(18,025	)		(21,131	)		(19,253	)
Other non-cash interest		(200	)		(480	)		(794	)
Amortization of security premiums, net		5,306			4,233			6,667
Amortization of other intangible assets		5,798			5,965			6,034
Excess tax short-fall from stock options		620			290			539
Stock based compensation expense		2,062			1,758			3,337
Stock issued to officers as compensation		788			-			-
Decrease in accrued interest receivable		6,211			3,156			600
Noncontrolling interest		(605	)		(605	)		(610	)
Decrease/(increase) in other assets, net		37,093			(534	)		34,594
(Decrease)/increase in other liabilities		(2,256	)		3,746			(13,368	)
Net cash provided by operating activities		164,576			174,050			168,505
Cash Flows from Investing Activities
(Increase)/decrease in short-term investments		(117,027	)		(88,634	)		48,404
Decrease/(increase) in securities purchased under agreements to resell		-			110,000			(110,000	)
Purchase of investment securities available-for-sale		(517,513	)		(571,093	)		(3,366,780	)
Proceeds from maturity and call of investment securities available-for-sale		552,099			435,000			2,876,414
Proceeds from sale of investment securities available-for-sale		60,951			524,958			65,139
Purchase of mortgage-backed securities available-for-sale		(680,388	)		(541,356	)		-
Proceeds from repayment and sale of mortgage-backed securities available-for-sale		619,169			868,023			1,351,018
Purchase of investment securities held-to-maturity		-			-			(150,164	)
Purchase of mortgage-backed securities held-to-maturity		-			(480,083	)		(165,527	)
Proceeds from maturity and call of investment securities held-to-maturity		376,981			163,855			108,067
Redemption of Federal Home Loan Bank stock		11,717			10,884			7,918
Net increase in loans		(395,743	)		(362,054	)		(151,054	)
Purchase of premises and equipment		(3,108	)		(2,888	)		(4,979	)
Proceeds from sales of other real estate owned		47,866			61,406			91,154
Net increase in investment in affordable housing		(1,540	)		(968	)		(3,015	)
Net cash (used in)/provided by investing activities		(46,536	)		127,050			596,595
Cash Flows from Financing Activities
Net increase in demand deposits, NOW accounts, money market and saving deposits		625,360			180,940			224,122
Net (decrease)/increase in time deposits		(471,085	)		56,828			(736,549	)
Net (decrease)/increase in federal funds purchased and securities sold under agreement to repurchase		(150,000	)		(161,000	)		4,000
Advances from Federal Home Loan Bank		531,200			4,734,000			528,000
Repayment of Federal Home Loan Bank borrowings		(610,000	)		(5,059,000	)		(907,362	)
Cash dividends		(16,049	)		(16,046	)		(16,040	)
Issuance of common stock		-			-			124,928
Proceeds from other borrowings		-			-			1,253
Repayment of other borrowings		(880	)		(7,584	)		-
Proceeds from shares issued to Dividend Reinvestment Plan		291			287			310
Proceeds from exercise of stock options		764			1,306			-
Excess tax short-fall from share-based payment arrangements		(620	)		(290	)		(539	)
Net cash used in financing activities		(91,019	)		(270,559	)		(777,877	)
Increase/(decrease) in cash and cash equivalents		27,021			30,541			(12,777	)
Cash and cash equivalents, beginning of the year		117,888			87,347			100,124
Cash and cash equivalents, end of the year	$	144,909		$	117,888		$	87,347

See accompanying notes to Consolidated Financial Statements.

F-6

CATHAY GENERAL BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued)

	Year Ended December 31,
	2012		2011			2010
	(In thousands)
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest	$	112,411	$	142,644		$	197,762
Income taxes	$	36,083	$	53,148		$	13,369
Non-cash investing and financing activities:
Net change in unrealized holding gain on securities available-for-sale, net of tax	$	9,197	$	(7,710	)	$	(147	)
Transfers to other real estate owned from loans held for investment	$	14,389	$	83,941		$	98,653
Transfers to other real estate owned from loans held for sale	$	-	$	2,874		$	21,473
Loans transferred to loans held for sale	$	15,986	$	4,399		$	4,332
Loans transferred to loans held for investment from held for sale	$	500	$	-		$	-
Loans to facilitate the sale of other real estate owned	$	1,785	$	7,472		$	12,204
Loans to facilitate the sale of loans	$	-	$	6,094		$	23,500

See accompanying notes to Consolidated Financial Statements.

F-7

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Summary of Significant Accounting Policies

       The accompanying Consolidated Financial Statements include the accounts of Cathay General Bancorp (the “Bancorp”), a Delaware corporation, its wholly-owned subsidiaries, Cathay Bank (the “Bank”), a California state-chartered bank, six limited partnerships investing in affordable housing projects, and GBC Venture Capital, Inc. (together, the “Company”).  All significant inter-company transactions and balances have been eliminated in consolidation.  The Consolidated Financial Statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry.

        Organization and Background.  The business activities of the Bancorp consist primarily of the operations of the Bank, which owns 100% of the common securities of the following subsidiaries: Cathay Real Estate Investment Trust, GBC Real Estate Investments, Inc., Cathay Holdings LLC, Cathay Holdings 2, LLC, Cathay Holdings 3, LLC, Cathay Community Development Corporation and its wholly owned subsidiary, Cathay New Asia Community Development Corporation.

There are limited operating business activities currently at the Bancorp.  The Bank is a commercial bank, servicing primarily the individuals, professionals, and small to medium-sized businesses in the local markets in which its branches are located.  Its operations include the acceptance of checking, savings, and time deposits, and the making of commercial, real estate, and consumer loans.  The Bank also offers trade financing, letters of credit, wire transfer, foreign currency spot and forward contracts, Internet banking, investment services, and other customary banking services to its customers.

Use of Estimates.  The preparation of the Consolidated Financial Statements in accordance with GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the period.  Actual results could differ from those estimates.  The significant estimates subject to change relate to the allowance for loan losses, goodwill impairment assessment, other-than-temporary impairment analysis on investments, fair value disclosures, and the fair value of options granted.  The more significant of these policies are described below.

Concentrations. The Bank was incorporated in California and started its business from California. Therefore, loans originated and deposits solicited were mainly from California.  As of December 31, 2012, gross loans were primarily comprised of 50.7% of commercial mortgage loans and 28.6% of commercial loans.  As of December 31, 2012, approximately 63% of the Bank’s residential mortgages were for properties located in California.  Total deposits were comprised of 43.6% of time deposit of $100,000 or more (Jumbo CDs) at December 31, 2012, and approximately 67.4% of the Company’s Jumbo CDs have been on deposit with the Company for two years or more.

Allowance for Loan Losses.  The determination of the amount of the provision for loan losses charged to operations reflects management’s current judgment about the credit quality of the loan portfolio and takes into consideration changes in lending policies and procedures, changes in economic and business conditions, changes in the nature and volume of the portfolio and in the terms of loans, changes in the experience, ability and depth of lending management, changes in the volume and severity of past due, non-accrual and adversely classified or graded loans, changes in the quality of the loan review system, changes in the value of underlying collateral for collateral-dependent loans, the existence and effect of any concentrations of credit and the effect of competition, legal and regulatory requirements, and other external factors. The nature of the process by which loan losses is determined the appropriate allowance for loan losses requires the exercise of considerable judgment. The allowance is increased by the provision for loan losses and decreased by charge-offs when management believes the uncollectibility of a loan is confirmed.

F-8

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Subsequent recoveries, if any, are credited to the allowance. A weakening of the economy or other factors that adversely affect asset quality could result in an increase in the number of delinquencies, bankruptcies, or defaults, and a higher level of non-performing assets, net charge-offs, and provision for loan losses in future periods.

The total allowance for loan losses consists of two components: specific allowances and general allowances. To determine the adequacy of the allowance in each of these two components, two primary methodologies are employed, the individual loan review analysis methodology and the classification migration methodology.  These methodologies support the basis for determining allocations between the various loan categories and the overall adequacy of our allowance to provide for probable losses inherent in the loan portfolio. These methodologies are further supported by additional analysis of relevant factors such as the historical losses in the portfolio, and environmental factors which include trends in  delinquency and non-accrual, and other significant factors, such as the national and local economy, the volume and composition of the portfolio,  strength of management and loan staff, underwriting standards,  and the concentration of credit.  

The Bank’s management allocates a specific allowance for “Impaired Credits,” in accordance with Accounting Standard Codification (“ASC”) Section 310-10-35.  For non-Impaired Credits, a general allowance is established for those loans internally classified and risk graded Pass, Minimally Acceptable, Special Mention, or Substandard based on historical losses in the specific loan portfolio and a reserve based on environmental factors determined for that loan group. The level of the general allowance is established to provide coverage for management’s estimate of the credit risk in the loan portfolio by various loan segments not covered by the specific allowance.

Securities Purchased Under Agreements to Resell.  The Company purchases securities under agreements to resell with various terms.  These agreements are collateralized by agency securities and mortgage backed securities that are generally held by a third party custodian.  The purchases are over-collateralized to ensure against unfavorable market price movements.  In the event that the fair market value of the securities decreases below the collateral requirements under the related repurchase agreements, the counterparty is required to deliver additional securities.  The counterparties to these agreements are nationally recognized investment banking firms that meet credit eligibility criteria and with whom a master repurchase agreement has been duly executed.

      Securities.  Securities are classified as held-to-maturity when management has the ability and intent to hold these securities until maturity.  Securities are classified as available-for-sale when management intends to hold the securities for an indefinite period of time, or when the securities may be utilized for tactical asset/liability purposes, and may be sold from time to time to manage interest rate exposure and resultant prepayment risk and liquidity needs.  Securities are classified as trading securities when management intends to sell the securities in the near term.  Securities purchased are designated as held-to-maturity, available-for-sale, or trading securities at the time of acquisition.

      Securities held-to-maturity are stated at cost, adjusted for the amortization of premiums and the accretion of discounts on a level-yield basis.  The carrying value of these assets is not adjusted for temporary declines in fair value since the Company has the positive intent and ability to hold them to maturity.  Securities available-for-sale are carried at fair value, and any unrealized holding gains or losses are excluded from earnings and reported as a separate component of stockholders’ equity, net of tax, in accumulated other comprehensive income until realized.  Realized gains or losses are determined on the specific identification method.  Premiums and discounts are amortized or accreted as adjustment of yield on a level-yield basis.

F-9

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

ASC Topic 320 requires an entity to assess whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  If either of these conditions is met, an entity must recognize an other-than-temporary impairment (“OTTI”).  If an entity does not intend to sell the debt security and will not be required to sell the debt security, the entity must consider whether it will recover the amortized cost basis of the security.  If the present value of expected cash flows is less than the amortized cost basis of the security, OTTI shall have considered to have occurred.  OTTI is then separated into the amount of the total impairment related to credit losses and the amount of the total impairment related to all other factors.  An entity determines the impairment related to credit losses by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.  OTTI related to the credit loss is then recognized in earnings.  OTTI related to all other factors is recognized in other comprehensive income.  OTTI not related to the credit loss for a held-to-maturity security should be recognized separately in a new category of other comprehensive income and amortized over the remaining life of the debt security as an increase in the carrying value of the security only when the entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its remaining amortized cost basis.  The Company has both the ability and the intent to hold and it is not more likely than not that the Company will be required to sell those securities with unrealized losses before recovery of their amortized cost basis.

Trading securities are reported at fair value, with unrealized gains or losses included in income.

Investment in Federal Home Loan Bank (“FHLB”) Stock.   As a member of the FHLB system the Bank is required to maintain an investment in the capital stock of the FHLB.  The amount of investment is also affected by the outstanding advances under the line of credit the Bank maintains with the FHLB.  FHLB stock is carried at cost and is pledged as collateral to the FHLB.  FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value.  The carrying amount of the FHLB stock was $41.3 million at December 31, 2012, and $53.0 million at December 31, 2011.  As of December 31, 2012, 68,714 shares of FHLB stock was the minimum stock requirement based on outstanding FHLB borrowings of $146.2 million.  As of December 31, 2012, the Company owned 412,716 shares of FHLB stock.

      Loans.  Loans are carried at amounts advanced, less principal payments collected and net deferred loan fees.  Interest is accrued and earned daily on an actual or 360-day basis.  Interest accruals on business loans and non-residential real estate loans are generally discontinued whenever the payment of interest or principal is 90 days or more past due, based on contractual terms.  Such loans are placed on non-accrual status, unless the loan is well secured, and there is a high probability of recovery in full, as determined by management.  When loans are placed on a non-accrual status, previously accrued but unpaid interest is reversed and charged against current income, and subsequent payments received are generally first applied toward the outstanding principal balance of the loan.  The loan is generally returned to accrual status when the borrower has brought the past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled.  A non-accrual loan may also be returned to accrual status if all principal and interest contractually due are reasonably assured of repayment within a reasonable period and there has been a sustained period of payment performance, generally six months. Loan origination fees and commitment fees, offset by certain direct loan origination costs, are deferred and recognized over the contractual life of the loan as a yield adjustment.  The amortization utilizes the interest method.  If a loan is placed on non-accrual status, the amortization of the loan fees and the accretion of discounts are discontinued until the loan is returned to accruing status.

        Loans held for sale are carried at the lower of aggregate cost or fair value. Gains and losses are recorded in non-interest income based on the difference between sales proceeds, net of sales commissions, and carrying value.

        Loans Acquired Through Transfer. Loans acquired through the completion of a transfer, including loans acquired in a business combination, that have evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payment receivables are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance.  The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan.  Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or a valuation allowance.  Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life.  Decreases in expected cash flows are recognized as impairment.  Valuation allowance on these impaired loans reflect only losses incurred after the acquisition.

F-10

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Impaired Loans.  A loan is considered impaired when it is probable that the Bank will be unable to collect all amounts due (i.e. both principal and interest) according to the contractual terms of the loan agreement.  The measurement of impairment may be based on (1) the present value of the expected future cash flows of the impaired loan discounted at the loan’s original effective interest rate, (2) the observable market price of the impaired loan or (3) the fair value of the collateral of a collateral-dependent loan.  The amount by which the recorded investment in the loan exceeds the measure of the impaired loan is recognized by recording a valuation allowance with a corresponding charge to the provision for loan losses.  The Company stratifies its loan portfolio by size and treats smaller non-performing loans with an outstanding balance based on the Company’s defined criteria, generally where the loan amount is $500,000 or less, as a homogenous portfolio.  Once a loan has been identified as a possible problem loan, the Company conducts a periodic review of such loan in order to test for impairment.  When loans are placed on an impaired status, previously accrued but unpaid interest is reversed against current income and subsequent payments received are generally first applied toward the outstanding principal balance of the loan.

Troubled Debt Restructured Loan (“TDR”.) A TDR is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower.  The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the loan balance or accrued interest, or extension of the maturity date.  Although these loan modifications are considered TDRs, accruing TDR loans have, pursuant to the Bank’s policy, performed under the restructured terms and have demonstrated sustained performance under the modified terms for six months before being returned to accrual status.  The sustained performance considered by management pursuant to its policy includes the periods prior to the modification if the prior performance met or exceeded the modified terms.  This would include cash paid by the borrower prior to the restructure to set up interest reserves.  Loans classified as TDRs are reported as impaired loans.

Unfunded Loan Commitments.  Unfunded loan commitments are generally related to providing credit facilities to clients of the Bank, and are not actively traded financial instruments.  These unfunded commitments are disclosed as off-balance sheet financial instruments in Note 14 in the Notes to Consolidated Financial Statements.

        Letter of Credit Fees.  Issuance and commitment fees received for the issuance of commercial or standby letters of credit are recognized over the term of the instruments.

        Premises and Equipment.  Premises and equipment are carried at cost, less accumulated depreciation.  Depreciation is computed on the straight-line method based on the following estimated useful lives of the assets:

Type	Estimated Useful Life
Buildings (years)	15	to	45
Building improvements (years)	5	to	20
Furniture, fixtures, and equipment (years)	3	to	25
Leasehold improvements	Shorter of useful lives or the terms of the leases

Improvements are capitalized and amortized to occupancy expense based on the above table. Construction in process is carried at cost and includes land acquisition cost, architectural fees, general contractor fees, capitalized interest and other costs related directly to the construction of a property.

F-11

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

        Other Real Estate Owned.  Real estate acquired in the settlement of loans is initially recorded at fair value, less estimated costs to sell.  Specific valuation allowances on other real estate owned are recorded through charges to operations to recognize declines in fair value subsequent to foreclosure.  Gains on sales are recognized when certain criteria relating to the buyer’s initial and continuing investment in the property are met.

        Investments in Affordable Housing.  The Company is a limited partner in limited partnerships that invest in low-income housing projects that qualify for Federal and/or State income tax credits.  As further discussed in Note 7, the partnership interests are accounted for utilizing the equity method of accounting.  As of December 31, 2012, six of the limited partnerships in which the Company has an equity interest were determined to be variable interest entities for which the Company is the primary beneficiary.  The Company therefore consolidated the financial statements of these six limited partnerships into its Consolidated Financial Statements.

Investments in Venture Capital.  The Company invests in limited partnerships that invest in nonpublic companies.  These partnerships are commonly referred to as venture capital investments.  These limited partnership interests represent ownership of less than 5% and are carried under the cost method with other-than-temporary impairment charged against net income.

        Goodwill and Goodwill Impairment. Goodwill represents the excess of costs over fair value of assets of businesses acquired.  Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC Topic 350.  ASC Topic 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360, formerly, SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

The Company’s policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.  Accounting standards require management to estimate the fair value of each reporting unit in making the assessment of impairment at least annually.  

The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350.  The two-step impairment testing process conducted by us, if needed, begins by assigning net assets and goodwill to our three reporting units- Commercial Lending, Retail Banking, and East Coast Operations.  The Company then completes “step one” of the impairment test by comparing the fair value of each reporting unit (as determined based on the discussion below) with the recorded book value (or “carrying amount”) of its net assets, with goodwill included in the computation of the carrying amount.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired, and “step two” of the impairment test is not necessary.  If the carrying amount of a reporting unit exceeds its fair value, step two of the impairment test is performed to determine the amount of impairment.  Step two of the impairment test compares the carrying amount of the reporting unit’s goodwill to the “implied fair value” of that goodwill.  The implied fair value of goodwill is computed by assuming that all assets and liabilities of the reporting unit would be adjusted to the current fair value, with the offset as an adjustment to goodwill.  This adjusted goodwill balance is the implied fair value used in step two.  An impairment charge is recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value.

The Commercial Lending unit did not have any goodwill allocated to the unit and accordingly no goodwill impairment testing was performed for that unit.  The reporting unit fair values for the Retail Banking unit and the East Coast Operations were determined based on an equal weighting of (1) the fair value determined using a market approach using a combination of price to earnings multiples determined based on a representative peer group applied to 2012 and forecasted 2013 and 2014 earnings, and a price to book multiple and (2) the fair value determined using a dividend discount model with the discount rate determined using the same representative peer group.  A control premium was then applied to the unit fair values so determined as of December 31, 2012.

F-12

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

In determining the forecasted earnings for the Retail Banking unit and the East Coast Operations, the financial forecasts assume muted growth during the forecast period.  The principal driver of the Company’s negative operating results has been the Commercial Lending reporting unit where the vast majority of the Company’s loan losses have been incurred.  A summary of the respective unit fair value, carrying amounts and unit goodwill as well as the percentage by which fair value exceed carrying value of each reporting unit as of December 31, 2012, is shown below:

Reporting Units	Carrying Amount		Fair Value		Fair Value in Excess of Carrying Amount			Allocated Goodwill
	(Dollars in thousands)
Commercial Lending Unit	$	797,702	$	363,601		-			-
Retail Banking Unit		361,589		675,580		86.8	%		235,195
East Coast Operations		203,766		410,489		101.5	%		81,145
Total	$	1,363,057	$	1,449,670				$	316,340

If economic conditions were to worsen instead of improve as assumed in the key assumptions, then the forecasted earnings for the Retail Banking unit and the East Coast Operations could be significantly lower than projected.  In addition, a worsening of economic conditions could potentially reduce the price to earnings multiples and price to book multiples of peer groups for Retail Banking and East Coast Operations and result in a reduction in the fair value of these units even if the forecasted earnings were achieved.

       Core Deposit Premium.  Core deposit premium, which represents the purchase price over the fair value of the deposits acquired from other financial institutions, is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.  If a pattern of consumption cannot be reliably determined, straight-line amortization is used.  The Company assesses the recoverability of this intangible asset by determining whether the amortization of the premium balance over its remaining life can be recovered through the remaining deposit portfolio and amortizes core deposit premium over its estimated useful life.

        At December 31, 2012, the unamortized balance of core deposit premium was $4.9 million, which was net of accumulated amortization of $55.3 million.  Aggregate amortization expense for core deposit premium was $5.7 million for 2012, $5.9 million for 2011, and $6.0 million for 2010.  At December 31, 2012, the estimated aggregate amortization of core deposit premiums is $4.5 million for 2013 and $0.4 million for 2014.  At December 31, 2011, the unamortized balance of core deposit premium was $10.6 million, which was net of accumulated amortization of $49.8 million.

Securities Sold Under Agreements to Repurchase. The Company sells certain securities under agreements to repurchase.  The agreements are treated as collateralized financing transactions and the obligations to repurchase securities sold are reflected as a liability in the accompanying Consolidated Balance Sheets.  The securities underlying the agreements remain in the applicable asset accounts.

Stock-Based Compensation.  Stock-based compensation expense for stock options is calculated based on the fair value of the award at the grant date for those options expected to vest, and is recognized as an expense over the vesting period of the grant using the straight-line method.  The Company uses the Black-Scholes option pricing model to estimate the value of granted options.  This model takes into account the option exercise price, the expected life, the current price of the underlying stock, the expected volatility of the Company’s stock, expected dividends on the stock and a risk-free interest rate.  The Company estimates the expected volatility based on the Company’s historical stock prices for the period corresponding to the expected life of the stock options. Option compensation expense totaled $762,000 in 2012, $1.0 million in 2011, and $3.0 million in 2010.  Stock-based compensation is recognized ratably over the requisite service period for all awards.  Unrecognized stock-based compensation expense related to stock options totaled $129,000 at December 31, 2012, and is expected to be recognized over the next 2 months.

F-13

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Foreign Exchange Forwards and Foreign Currency Option Contracts.  We enter into foreign exchange forward contracts and foreign currency option contracts with correspondent banks to mitigate the risk of fluctuations in foreign currency exchange rates for foreign currency certificates of deposit, foreign exchange contracts or foreign currency option contracts entered into with our clients. These contracts are not designated as hedging instruments and are recorded at fair value in our Consolidated Balance Sheets. Changes in the fair value of these contracts as well as the related foreign currency certificates of deposit, foreign exchange contracts or foreign currency option contracts, are recognized immediately in net income as a component of non-interest income. Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.

Income Taxes.  The provision for income taxes is based on income reported for financial statement purposes, and differs from the amount of taxes currently payable, since certain income and expense items are reported for financial statement purposes in different periods than those for tax reporting purposes.  The Company accounts for income taxes using the asset and liability approach, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.  A valuation allowance is established for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Comprehensive Income/(loss).  Comprehensive income/(loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.  Comprehensive income/(loss) generally includes net income/(loss), foreign currency translation adjustments, minimum pension liability adjustments, unrealized gains and losses on investments in securities available-for-sale, and cash flow hedges.  Comprehensive income/(loss) and its components are reported and displayed in the Company’s consolidated statements of operations and comprehensive income/(loss).

        Net Income per Common Share.  Earnings per share (“EPS”) is computed on a basic and diluted basis.  Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shares in the earnings of the Company.  Potential dilution is excluded from computation of diluted per-share amounts when a net loss from operations exists.

Foreign Currency Translation.  The Company considers the functional currency of its foreign operations to be the United States dollar.  Accordingly, the Company remeasures monetary assets and liabilities at year-end exchange rates, while nonmonetary items are remeasured at historical rates.  Income and expense accounts are remeasured at the average rates in effect during the year, except for depreciation, which is remeasured at historical rates.  Foreign currency transaction gains and losses are recognized in income in the period of occurrence.

        Statement of Cash Flows.  Cash and cash equivalents include short-term highly-liquid investments that generally have an original maturity of three months or less.

F-14

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

       Segment Information and Disclosures.  Accounting principles generally accepted in the United States of America establish standards to report information about operating segments in annual financial statements and require reporting of selected information about operating segments in interim reports to stockholders.  It also establishes standards for related disclosures about products and services, geographic areas, and major customers.  The Company has concluded it has one operating segment.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standard Board (“FASB”) issued ASU 2011-04 “Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs.”     ASU 2011-04 amends Topic 820, “Fair Value Measurements and Disclosures,” to improve fair value measurement consistency in U.S. generally accepted accounting principles and International Financial Reporting Standards (“IFRS”).  The amendments also clarity the application of existing fair value measurement and disclosure requirements, change certain principles and requirements in Topic 820, and requires additional fair value disclosures.  ASU 2011-04 became effective on January 1, 2012.  Adoption of ASU 2011-04 did not have a significant impact on the Company’s Consolidated Financial Statements.

In September 2011, FASB issued ASU 2011-08 “Intangible- Goodwill and other.” ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. ASU 2011-08 became effective for interim and annual goodwill impairment tests performed after December 15, 2011.  Adoption of ASU 2011-08 did not have a significant impact on the Company’s Consolidated Financial Statements.

2.     Cash and Cash Equivalents

       The Company manages its cash and cash equivalents, which consist of cash on hand, amounts due from banks, federal funds sold, and short-term investments with original maturity of three months or less, based upon the Company’s operating, investment, and financing activities.  For the purpose of reporting cash flows, these same accounts are included in cash and cash equivalents.

The Company is required to maintain reserves with the Federal Reserve Bank.  Reserve requirements are based on a percentage of deposit liabilities.  The average reserve balances required were $12.9 million for 2012 and $12.2 million for 2011.    There were no federal funds sold in 2012 or in 2011.

3.     Securities Purchased under Agreements to Resell

Securities purchased under agreements to resell are usually collateralized by U.S. government agency and mortgage-backed securities.  The counter-parties to these agreements are nationally recognized investment banking firms that meet creditrequirements of the Company and with whom a master repurchase agreement has been duly executed.  There were no resale agreements at December 31, 2012, and at December 31, 2011.

The following table sets forth information with respect to securities purchased under agreements to resell.

	2012			2011
	(In thousands)
Balance, December 31	$	-		$	-
Annualized weighted-average interest rate, December 31		0.00	%		0.00	%
Daily average amount outstanding during the year	$	14,986		$	84,493
Weighted-average interest rate for the year		0.12	%		0.10	%
Maximum amount outstanding at any month end	$	50,000		$	255,000

        For those securities obtained under the resale agreements, the collateral is either held by a third party custodian or by the counter party and is segregated under written agreements that recognize the Company’s interest in the securities.  Interest income associated with securities purchased under resale agreements was $18,000 for 2012, $83,000 for 2011, and $14,000 for 2010.

F-15

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

4.     Investment Securities

Investment Securities.  The following table reflects the amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment securities as of December 31, 2012, and December 31, 2011:

	At December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Securities Held-to-Maturity
State and municipal securities	$	129,037	$	9,268	$	-	$	138,305
Mortgage-backed securities		634,757		40,801		-		675,558
Corporate debt securities		9,974		69		-		10,043
Total securities held-to-maturity	$	773,768	$	50,138	$	-	$	823,906
Securities Available-for-Sale
U.S. treasury securities	$	509,748	$	228	$	5	$	509,971
Mortgage-backed securities		404,505		12,194		5		416,694
Collateralized mortgage obligations		9,772		430		34		10,168
Asset-backed securities		145		-		4		141
Corporate debt securities		349,973		106		14,102		335,977
Mutual funds		6,000		79		-		6,079
Preferred stock of government sponsored entities		569		1,766		-		2,335
Trust preferred securities		9,964		151		-		10,115
Total securities available-for-sale	$	1,290,676	$	14,954	$	14,150	$	1,291,480
Total investment securities	$	2,064,444	$	65,092	$	14,150	$	2,115,386

	At December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held-to-Maturity	(In thousands)
U.S. government sponsored entities	$	99,966	$	1,406	$	-	$	101,372
State and municipal securities		129,577		7,053		-		136,630
Mortgage-backed securities		913,990		42,351		-		956,341
Corporate debt securities		9,971		-		337		9,634
Total securities held-to-maturity	$	1,153,504	$	50,810	$	337	$	1,203,977
Securities Available-for-Sale
U.S. government sponsored entities	$	500,007	$	1,226	$	7	$	501,226
State and municipal securities		1,869		59		-		1,928
Mortgage-backed securities		325,706		12,361		436		337,631
Collateralized mortgage obligations		16,184		540		238		16,486
Asset-backed securities		172		-		6		166
Corporate debt securities		412,045		113		31,729		380,429
Mutual funds		6,000		48		13		6,035
Preferred stock of government sponsored entities		569		1,085		-		1,654
Trust preferred securities		45,501		486		24		45,963
Other equity securities		1,468		1,492		-		2,960
Total securities available-for-sale	$	1,309,521	$	17,410	$	32,453	$	1,294,478
Total investment securities	$	2,463,025	$	68,220	$	32,790	$	2,498,455

The amortized cost and fair value of investment securities at December 31, 2012, by contractual maturities are shown below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties.   

F-16

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	Securities Available-for-Sale				Securities Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	349,899	$	349,940	$	-	$	-
Due after one year through five years		375,041		370,241		-		-
Due after five years through ten years		194,901		190,047		62,235		66,523
Due after ten years (1)		370,835		381,252		711,533		757,383
Total	$	1,290,676	$	1,291,480	$	773,768	$	823,906

(1) Equity securities are reported in this category

Proceeds from sales of mortgage-backed securities were $501.1 million and repayments, maturities and calls of mortgage-backed securities were $118.1 million during 2012 compared to proceeds from sales of $759.7 million and repayments, maturities and calls of $108.4 million during 2011, and proceeds from sales of $1.04 billion and repayments, maturities and calls of $308.2 million during 2010.  Proceeds from sales of other investment securities were $61.0 million during 2012 compared to $525.0 million during 2011 and $65.1 million during 2010.  Proceeds from maturity and calls of investment securities were $552.1 million during 2012 compared to $435.0 million during 2011 and $2.88 billion in 2010.  In 2012, gains of $18.6 million and losses of $607,000 were realized on sales and calls of investment securities compared with $21.1 million in gains and no losses realized in 2011, and $19.3 million in gains and $67,000 in losses realized in 2010.

The Company's unrealized loss on investments in corporate bonds relates to a number of investments in bonds of financial institutions, all of which were investment grade at the date of acquisition and as of December 31, 2012.  The unrealized losses were primarily caused by the widening of credit spreads since the dates of acquisition. The contractual terms of those investments do not permit the issuers to settle the security at a price less than the amortized cost of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that these bonds would not be settled at a price less than the amortized cost of the investment. Because the Company does not intend to sell and would not be required to sell these investments until a recovery of fair value, which may be maturity, it does not consider its investments in these corporate bonds to be other-than-temporarily impaired at December 31, 2012.

The temporarily impaired securities represent 16.9% of the fair value of investment securities as of December 31, 2012.  Unrealized losses for securities with unrealized losses for less than twelve months represent 2.4%, and securities with unrealized losses for twelve months or more represent 4.4%, of the historical cost of these securities.  Unrealized losses on these securities generally resulted from increases in interest rate spreads subsequent to the date that these securities were purchased.  At December 31, 2012, 34 issues of securities had unrealized losses for 12 months or longer and 7 issues of securities had unrealized losses of less than 12 months.

At December 31, 2012, management believed the impairment was temporary and, accordingly, no impairment loss has been recognized in our consolidated statements of operations.  We expect to recover the amortized cost basis of our debt securities, and have no intent to sell and will not be required to sell available-for-sale debt securities that have declined below their cost before their anticipated recovery.  The table below shows the fair value, unrealized losses, and number of issuances of the temporarily impaired securities in our investment securities portfolio as of December 31, 2012, and December 31, 2011:

F-17

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	As of December 31, 2012
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Total securities held-to-maturity	$	-	$	-		-	$	-	$	-		-	$	-	$	-		-
Securities Available-for-Sale
U.S. treasury securities	$	49,969	$	5		1	$	-	$	-		-	$	49,969	$	5		1
Mortgage-backed securities		231		1		2		170		1		6		401		2		8
Mortgage-backed securities-Non-agency		-		-		-		96		2		1		96		2		1
Collateralized mortgage obligations		-		-		-		439		35		4		439		35		4
Asset-backed securities		-		-		-		141		4		1		141		4		1
Corporate debt securities		52,468		2,532		4		253,430		11,570		22		305,898		14,102		26
Total securities available-for-sale	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41
Total investment securities	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41

	As of December 31, 2011
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Corporate debt securities	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Total securities held-to-maturity	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Securities Available-for-Sale
U.S. government sponsored entities	$	49,993	$	7		1	$	-	$	-		-	$	49,993	$	7		1
Mortgage-backed securities		564		4		8		35		1		2		599		5		10
Mortgage-backed securities-Non-agency		-		-		-		6,719		431		2		6,719		431		2
Collateralized mortgage obligations		-		-		-		570		238		4		570		238		4
Asset-backed securities		-		-		-		166		6		1		166		6		1
Corporate debt securities		185,577		14,201		17		172,857		17,528		19		358,434		31,729		36
Mutual funds		1,987		13		1		-		-		-		1,987		13		1
Trust preferred securities		5,674		24		2		-		-		-		5,674		24		2
Total securities available-for-sale	$	243,795	$	14,249		29	$	180,347	$	18,204		28	$	424,142	$	32,453		57
Total investment securities	$	253,430	$	14,586		30	$	180,347	$	18,204		28	$	433,777	$	32,790		58

Investment securities having a carrying value of $1.45 billion at December 31, 2012, and $1.68 billion at December 31, 2011, were pledged to secure public deposits, other borrowings, treasury tax and loan, Federal Home Loan Bank advances, securities sold under agreements to repurchase, and foreign exchange transactions.

F-18

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

5.      Loans

       Most of the Company’s business activity is predominately with Asian customers located in Southern and Northern California; New York City; Houston and Dallas, Texas; Seattle, Washington; Boston, Massachusetts; Chicago, Illinois; Edison, New Jersey; and Hong Kong.  The Company has no specific industry concentration, and generally its loans are collateralized with real property or other pledged collateral of the borrowers.  Loans are generally expected to be paid off from the operating profits of the borrowers, refinancing by another lender, or through sale by the borrowers of the secured collateral.

The components of loans in the Consolidated Balance Sheets as of December 31, 2012, and December 31, 2011, were as follows:

	2012			2011
	(In thousands)
Type of Loans:
Commercial loans	$	2,127,107		$	1,868,275
Real estate construction loans		180,950			237,372
Commercial mortgage loans		3,768,452			3,748,897
Residential mortgage loans		1,146,230			972,262
Equity lines		193,852			214,707
Installment and other loans		12,556			17,699
Gross loans		7,429,147			7,059,212
Less:
Allowance for loan losses		(183,322	)		(206,280	)
Unamortized deferred loan fees		(10,238	)		(8,449	)
Total loans and leases, net	$	7,235,587		$	6,844,483
Loans held for sale	$	-		$	760

No loans were held for sale at December 31, 2012, compared to $760,000 at December 31, 2011.  In 2012, we added three new loans of $16.0 million, sold four loans of $16.2 million for a net loss on sale of $26,000, and transferred a loan of $500,000 to held for investment. At December 31, 2011, non-accrual loans held for sale of $760,000 decreased $2.1 million from $2.9 million at December 31, 2010.  In 2011, we added six new loans of $4.4 million, transferred one loan of $2.9 million to OREO, and sold four loans of $3.6 million for a net gain on sale of $88,000.  At December 31, 2011, loans held for sale were comprised of a commercial construction loan of $500,000 and a residential mortgage loan of $260,000.

The Company pledged real estate loans of $1.6 billion at December 31, 2012, and $2.0 billion at December 31, 2011, to the Federal Home Loan Bank of San Francisco under its specific pledge program.  In addition, the Bank pledged $211.6 million at December 31, 2012, and $250.9 million at December 31, 2011, of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

Loans serviced for others as of December 31, 2012, totaled $201.4 million and were comprised of $42.1 million of commercial loans, $62.2 million of commercial real estate loans, $3.6 million in construction loans, and $93.5 million of residential mortgages.

      The Company has entered into transactions with its directors, executive officers, or principal holders of its equity securities, or the associates of such persons (“Related Parties”).  Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with customers who are not related parties.  In management’s opinion, these transactions did not involve more than normal credit risk or present other unfavorable features.  All loans to Related Parties were current as of December 31, 2012.  In July 2011, the Bank sold a participation in a substandard real estate loan to a Related Party for $24.5 million, which represented 98% of the contractual balance.  In March 2012, the Bank sold participations in two substandard real estate loans to the same Related Party for $7.9 million, which represented 92.5% of the contractual balance. An analysis of the activity with respect to loans to Related Parties for the years indicated is as follows:

F-19

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	December 31,
	2012			2011
	(In thousands)
Balance at beginning of year	$	160,069		$	134,161
Additional loans made		92,249			89,985
Payment received		(79,734	)		(64,077	)
Balance at end of year	$	172,584		$	160,069

At December 31, 2012, recorded investment in impaired loans totaled $248.6 million and was comprised of nonaccrual loans of $103.9 million and accruing TDR’s of $144.7 million.  At December 31, 2011, recorded investment in impaired loans totaled $322.0 million and was comprised of nonaccrual loans of $201.2 million, nonaccrual loans held for sale of $760,000, and accruing TDR’s of $120.0 million.   The average balance of impaired loans was $277.8 million in 2012 and $361.4 million in 2011.  We considered all non-accrual loans and troubled debt restructurings ("TDR") to be impaired.  Interest recognized on impaired loans totaled $9.3 million in 2012 and $5.3 million in 2011.  The Bank recognizes interest income on impaired loans based on its existing method of recognizing interest income on non-accrual loans except accruing TDRs.  For impaired loans, the amounts previously charged off represent 23.2% at December 31, 2012, and 25.6% at December 31, 2011, of the contractual balances for impaired loans.  The following table presents impaired loans and the related allowance and charge-off as of the dates indicated:

	Impaired Loans
	At December 31, 2012						At December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(Dollars in thousands)
With no allocated allowance
Commercial loans	$	29,359	$	18,963	$	-	$	46,671	$	38,194	$	-
Real estate construction loans		9,304		7,277		-		134,837		78,767		-
Commercial mortgage loans		189,871		152,957		-		187,580		149,034		-
Residential mortgage and equity lines		4,303		4,229		-		8,555		7,987		-
Subtotal	$	232,837	$	183,426	$	-	$	377,643	$	273,982	$	-
With allocated allowance
Commercial loans	$	7,804	$	4,959	$	1,467	$	11,795	$	7,587	$	3,336
Real estate construction loans		54,718		34,856		8,158		-		-		-
Commercial mortgage loans		14,163		12,928		1,336		29,722		28,023		2,969
Residential mortgage and equity lines		14,264		12,428		1,222		13,813		12,381		1,249
Subtotal	$	90,949	$	65,171	$	12,183	$	55,330	$	47,991	$	7,554
Total impaired loans	$	323,786	$	248,597	$	12,183	$	432,973	$	321,973	$	7,554

F-20

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table presents the average balance and interest income recognized related to impaired loans for the period indicated:

	For the year ended December 31,
	2012		2011		2012		2011
	Average Recorded Investment				Interest Income Recognized
	(In thousands)
Commercial loans	$	31,798	$	48,349	$	580	$	1,053
Real estate construction loans		49,094		82,529		265		940
Commercial mortgage loans		178,822		212,555		8,221		3,101
Residential mortgage and equity lines		18,062		17,920		239		236
Subtotal	$	277,776	$	361,353	$	9,305	$	5,330

The following is a summary of non-accrual loans as of December 31, 2012, 2011, and 2010 and the related net interest foregone for the years then ended:

	2012		2011		2010
	(In thousands)
Non-accrual portfolio loans	$	103,902	$	201,197	$	242,319
Non-accrual loans held-for-sale		-		760		2,873
Total non-accrual loans	$	103,902	$	201,957	$	245,192
Contractual interest due	$	6,621	$	13,049	$	17,304
Interest recognized		1,006		71		4,853
Net interest foregone	$	5,615	$	12,978	$	12,451

The following table presents the aging of the loan portfolio by type as of December 31, 2012, and as of December 31, 2011:

	As of December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	16,832	$	1,610	$	630	$	19,958	$	39,030	$	2,088,077	$	2,127,107
Real estate construction loans		-		1,471		-		36,299		37,770		143,180		180,950
Commercial mortgage loans		21,570		3,627		-		35,704		60,901		3,707,551		3,768,452
Residential mortgage loans		5,324		1,972		-		11,941		19,237		1,320,845		1,340,082
Installment and other loans		-		-		-		-		-		12,556		12,556
Total loans	$	43,726	$	8,680	$	630	$	103,902	$	156,938	$	7,272,209	$	7,429,147

	As of December 31, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	1,683	$	-	$	-	$	30,661	$	32,344	$	1,835,931	$	1,868,275
Real estate construction loans		20,326		-		-		46,012		66,338		171,034		237,372
Commercial mortgage loans		13,627		20,277		6,726		107,784		148,414		3,600,483		3,748,897
Residential mortgage loans		5,871		-		-		16,740		22,611		1,164,358		1,186,969
Installment and other loans		-		-		-		-		-		17,699		17,699
Total loans	$	41,507	$	20,277	$	6,726	$	201,197	$	269,707	$	6,789,505	$	7,059,212

The determination of the amount of the allowance for credit losses for problem loans is based on management’s current judgment about the credit quality of the loan portfolio and takes into consideration known relevant internal and external factors that affect collectibility when determining the appropriate level for the allowance for credit losses.   The nature of the process by which the Bank determines the appropriate allowance for credit losses requires the exercise of considerable judgment.   This allowance evaluation process is also applied to TDRs since TDRs are considered to be impaired loans.   As a result of adopting the amendments in ASU 2012-02, the Company reassessed all restructurings that occurred on or after January 1, 2011, for identification as TDRs.

F-21

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

At December 31, 2012, accruing TDRs were $144.7 million and non-accrual TDRs were $47.7 million compared to accruing TDRs of $120.0 million and non-accrual TDRs of $50.9 million at December 31, 2011.  The Company has allocated specific reserves of $1.1 million to accruing TDRs and $7.8 million to non-accrual TDRs at December 31, 2012, and $1.4 million to accruing TDRs and $1.6 million to non-accrual TDRs at December 31, 2011.  The following table presents TDRs that were modified during 2012, their specific reserve at December 31, 2012, and charge-off during 2012:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		9	$	3,646	$	3,646	$	1,213	$	-
Commercial mortgage loans		20		62,118		58,393		27		3,725
Residential mortgage and equity lines		14		4,305		4,223		162		82
Total		43	$	70,069	$	66,262	$	1,402	$	3,807

The following table presents TDRs that were modified during 2011, their specific reserve at December 31, 2011, and charge-off during 2011:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		7	$	15,025	$	15,025	$	104	$	-
Real estate construction loans		3		33,669		21,522		-		12,147
Commercial mortgage loans		6		17,343		14,294		1		3,049
Residential mortgage and equity lines		3		1,574		1,574		114		-
Total		19	$	67,611	$	52,415	$	219	$	15,196

F-22

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

A summary of TDRs by type of concession and by type of loans is shown below:

		December 31, 2012
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	531	$	3,020	$	-	$	413	$	3,964
Real estate construction loans			-		-		-		5,834		5,834
Commercial mortgage loans			27,003		16,656		739		85,783		130,181
Residential mortgage loans			1,461		1,024		-		2,231		4,716
Total accruing TDRs		$	28,995	$	20,700	$	739	$	94,261	$	144,695

	December 31, 2012
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	912	$	-	$	1,518	$	-	$	2,430
Real estate construction loans		-		16,767		9,579		-		-		26,346
Commercial mortgage loans		1,685		2,817		5,746		-		5,076		15,324
Residential mortgage loans		275		2,010		586		-		760		3,631
Total non-accrual TDRs	$	1,960	$	22,506	$	15,911	$	1,518	$	5,836	$	47,731

	As of December 31, 2011
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	12,933	$	1,756	$	-	$	431	$	15,120
Real estate construction loans			16,820		9,659		-		5,776		32,255
Commercial mortgage loans			471		37,796		2,071		28,935		69,273
Residential mortgage loans			1,294		587		-		1,487		3,368
Total accruing TDRs		$	31,518	$	49,798	$	2,071	$	36,629	$	120,016

	As of December 31, 2011
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	616	$	1,859	$	1,506	$	-	$	3,981
Real estate construction loans		-		13,579		12,376		-		-		25,955
Commercial mortgage loans		2,633		9,727		-		-		5,076		17,436
Residential mortgage loans		311		2,427		449		-		311		3,498
Total non-accrual TDRs	$	2,944	$	26,349	$	14,684	$	1,506	$	5,387	$	50,870

Troubled debt restructurings on accrual status totaled $144.7 million at December 31, 2012, and were comprised of 61 loans, an increase of $24.7 million, compared to 32 loans totaling $120.0 million at December 31, 2011.  TDRs at December 31, 2012, were comprised of sixteen retail shopping and commercial use building loans of $68.1 million, fifteen office and commercial use building loans of $40.4 million, two hotel loans of $12.4 million, seventeen single family residential loans of $19.1 million, two land loans of $2.3 million, six commercial loans of $1.3 million, and three multi-family residential loans of $1.1 million.  We expect that the troubled debt restructuring loans on accruing status as of December 31, 2012, which are all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans.  The comparable TDRs at December 31, 2011, were comprised of eleven retail shopping and commercial use building loans of $74.4 million, seven office and commercial use building loans of $23.8 million, one hotel loan of $7.9 million, ten single family residential loans of $13.3 million, one land loan of $635,000 and two commercial loans of $39,000.  The activity within our TDR loans for 2012 and 2011 are shown below:

F-23

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Accruing TDRs	2012			2011
	(In thousands)
Beginning balance	$	120,016		$	136,800
New restructurings		53,958			60,863
Restructured loans restored to accrual status		8,356			709
Charge-offs		(251	)		(2,341	)
Payments		(5,159	)		(46,313	)
Restructured loans placed on nonaccrual		(32,225	)		(28,969	)
Expiration of loan concession		-			(733	)
Ending balance	$	144,695		$	120,016

Non-accrual TDRs	2012			2011
	(In thousands)
Beginning balance	$	50,870		$	28,146
New restructurings		12,304			13,269
Restructured loans placed on non-accrual		32,225			28,969
Charge-offs		(4,182	)		(7,303	)
Payments		(33,931	)		(3,355	)
Foreclosures		(1,199	)		(8,147	)
Restructured loans restored to accrual status		(8,356	)		(709	)
Ending balance	$	47,731		$	50,870

A loan is considered to be in payment default once it is 60 to 90 days contractually past due under the modified terms.  Two commercial real estate construction TDRs of $26.3 million, four commercial real estate TDRs of $12.2 million, and two mortgage TDRs of $1.6 million had payments defaults within the previous twelve months ended December 31, 2012.  One of the TDRs that subsequently defaulted incurred a charge-off of $46,000 during 2012.

Under the Company’s internal underwriting policy, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification in order to determine whether a borrower is experiencing financial difficulty. As of December 31, 2012, there were no commitments to lend additional funds to those borrowers whose loans have been restructured, were considered impaired, or were on non-accrual status.

As part of the on-going monitoring of the credit quality of our loan portfolio, the Company utilizes a risk grading matrix to assign a risk grade to each loan.  Loans are risk rated based on analysis of the current state of the borrower’s credit quality.  The analysis of credit quality includes a review of all sources of repayment, the borrower’s current financial and liquidity status and all other relevant information. The risk rating categories can be generally described by the following grouping for non-homogeneous loans:

· Pass/Watch – These loans range from minimal credit risk to lower than average, but still acceptable, credit risk.

· Special Mention – Borrower is fundamentally sound and the loan is currently protected but adverse trends are apparent, that if not corrected, may affect ability to repay. Primary source of loan repayment remains viable but there is increasing reliance on collateral or guarantor support.

F-24

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

· Substandard – These loans are inadequately protected by current sound worth, paying capacity or pledged collateral. Well-defined weaknesses exist that could jeopardize repayment of debt. Loss may not be imminent, but if weaknesses are not corrected, there is a good possibility of some loss.

· Doubtful – The possibility of loss is extremely high, but due to identifiable and important pending events (which may strengthen the loan) a loss classification is deferred until the situation is better defined.

· Loss – These loans are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

The following table presents loan portfolio by risk rating as of December 31, 2012, and as of December 31, 2011:

	As of December 31, 2012
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	1,944,989	$	76,776	$	94,077	$	11,265	$	2,127,107
Real estate construction loans		109,269		18,000		45,171		8,510		180,950
Commercial mortgage loans		3,344,783		162,455		261,214		-		3,768,452
Residential mortgage and equity lines		1,322,768		816		16,084		414		1,340,082
Installment and other loans		12,556		-		-		-		12,556
Total gross loans	$	6,734,365	$	258,047	$	416,546	$	20,189	$	7,429,147

	As of December 31, 2011
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	1,689,842	$	64,290	$	108,858	$	5,285	$	1,868,275
Real estate construction loans		115,538		23,555		90,132		8,147		237,372
Commercial mortgage loans		3,275,431		69,925		403,541		-		3,748,897
Residential mortgage and equity lines		1,149,225		4,439		33,160		145		1,186,969
Installment and other loans		17,636		63		-		-		17,699
Total gross loans		6,247,672		162,272		635,691		13,577		7,059,212
Loans held for sale		-	$	-	$	260	$	500	$	760

The allowance for loan losses and the reserve for off-balance sheet credit commitments are significant estimates that can and do change based on management’s process in analyzing the loan portfolio and on management’s assumptions about specific borrowers, underlying collateral, and applicable economic and environmental conditions, among other factors.

F-25

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table presents the balance in the allowance for loan losses by portfolio segment and based on impairment method as of December 31, 2012, and as of December 31, 2011.

	Commercial Loans		Real Estate Construction Loans		Commercial Mortgage Loans		Residential mortgage and equity line		Consumer and Other		Total
	(In thousands)
December 31, 2012
Loans individually evaluated for impairment
Allowance	$	1,467	$	8,158	$	1,336	$	1,222	$	-	$	12,183
Balance	$	23,922	$	42,133	$	165,885	$	16,657	$	-	$	248,597
Loans collectively evaluated for impairment
Allowance	$	64,634	$	14,859	$	81,137	$	10,481	$	28	$	171,139
Balance	$	2,103,185	$	138,817	$	3,602,567	$	1,323,425	$	12,556	$	7,180,550
Total allowance	$	66,101	$	23,017	$	82,473	$	11,703	$	28	$	183,322
Total balance	$	2,127,107	$	180,950	$	3,768,452	$	1,340,082	$	12,556	$	7,429,147
December 31, 2011
Loans individually evaluated for impairment
Allowance	$	3,336	$	-	$	2,969	$	1,247	$	-	$	7,552
Balance	$	45,781	$	78,766	$	177,058	$	20,368	$	-	$	321,973
Loans collectively evaluated for impairment
Allowance	$	62,322	$	21,749	$	105,052	$	9,548	$	57	$	198,728
Balance	$	1,822,494	$	158,606	$	3,571,839	$	1,166,601	$	17,699	$	6,737,239
Total allowance	$	65,658	$	21,749	$	108,021	$	10,795	$	57	$	206,280
Total balance	$	1,868,275	$	237,372	$	3,748,897	$	1,186,969	$	17,699	$	7,059,212

F-26

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2012 and 2011.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial Loans			Real Estate Construction Loans			Commercial Mortgage Loans			Residential mortgage and equity line			Installment and Other Loans			Total
	(In thousands)
2011 Beginning Balance	$	63,918		$	43,262		$	128,348		$	9,668		$	35		$	245,231
Provision for possible loan losses		11,711			11,514			1,454			2,392			197			27,268
Charge-offs		(11,745	)		(37,500	)		(26,750	)		(1,456	)		(175	)		(77,626	)
Recoveries		1,774			4,473			4,969			191			-			11,407
Net Charge-offs		(9,971	)		(33,027	)		(21,781	)		(1,265	)		(175	)		(66,219	)
2011 Ending Balance	$	65,658		$	21,749		$	108,021		$	10,795		$	57		$	206,280
Reserve to impaired loans	$	3,336		$	-		$	2,969		$	1,247		$	-		$	7,552
Reserve to non-impaired loans	$	62,322		$	21,749		$	105,052		$	9,548		$	57		$	198,728
Reserve for off-balance sheet credit commitments	$	816		$	1,103		$	113		$	34		$	3		$	2,069
2012 Beginning Balance	$	65,658		$	21,749		$	108,021		$	10,795		$	57		$	206,280
Provision/(reversal) for possible loan losses		16,201			(3,720	)		(23,128	)		2,360			(7	)		(8,294	)
Charge-offs		(17,707	)		(1,165	)		(11,762	)		(2,132	)		(25	)		(32,791	)
Recoveries		1,949			6,153			9,342			680			3			18,127
Net Charge-offs		(15,758	)		4,988			(2,420	)		(1,452	)		(22	)		(14,664	)
2012 Ending Balance	$	66,101		$	23,017		$	82,473		$	11,703		$	28		$	183,322
Reserve to impaired loans	$	1,467		$	8,158		$	1,336		$	1,222		$	-		$	12,183
Reserve to non-impaired loans	$	64,634		$	14,859		$	81,137		$	10,481		$	28		$	171,139
Reserve for off-balance sheet credit commitments	$	837		$	390		$	98		$	34		$	3		$	1,362

An analysis of the activity in the allowance for credit losses for the year ended 2012, 2011, and 2010 is as follows:

	December 31,
	2012			2011			2010
Allowance for Loan Losses	(In thousands)
Balance at beginning of year	$	206,280		$	245,231		$	211,889
(Reversal)/provision for credit losses		(9,000	)		27,000			156,900
Transfers from reserve for off-balance sheet credit commitments		706			268			2,870
Loans charged off		(32,791	)		(77,626	)		(138,755	)
Recoveries of charged off loans		18,127			11,407			12,327
Balance at end of year	$	183,322		$	206,280		$	245,231
Reserve for Off-balance Sheet Credit Commitments
Balance at beginning of year	$	2,069		$	2,337		$	5,207
Provision for credit losses/transfers		(706	)		(268	)		(2,870	)
Balance at end of year	$	1,363		$	2,069		$	2,337

F-27

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

6.      Other Real Estate Owned

At December 31, 2012, the net carrying value of other real estate owned decreased $46.3 million, or 50.0%, to $46.4 million from $92.7 million at December 31, 2011. OREO located in California was $12.2 million and was comprised primarily of six parcels of land zoned for residential purpose of $9.1 million, three office and commercial use buildings of $1.7 million, one commercial building construction projects of $740,000, one residential construction project of $530,000, and one single family residential properties of $179,000.  OREO located in Texas was $29.6 million and was comprised of four office and commercial use buildings of $14.4 million, four parcels of land zoned for residential purposes of $12.6 million, two commercial building construction projects of $1.3 million, one parcel of land zoned for non-residential purposes of $1.1 million, and one single family residential properties of $169,000.  OREO located in the state of Washington was $1.6 million and was comprised one parcels of land zoned for residential purpose of $733,000 and one commercial construction project of $870,000.  OREO located in the state of New York was a retail store of $1.2 million.  OREO located in the state of Nevada was $1.1 million and was comprised of a commercial use building.  OREO in all other states was $752,000 and was comprised of a commercial use property and a retail store.

For 2011, OREO located in California was $32.3 million and was comprised primarily of five parcels of land zoned for residential purpose of $9.9 million, four parcels of land zoned for commercial purpose properties of $4.8 million, two commercial building construction projects of $3.5 million, one residential construction project of $588,000, twelve office and commercial use buildings of $13.2 million, two single family residential properties of $395,000.  OREO located in Texas was $48.6 million and was comprised of eight commercial use buildings of $33.5 million, three parcels of land zoned for residential purpose of $11.7 million, three commercial building construction projects of $2.4 million, and three single family residential properties of $959,000.  OREO located in the state of Washington was $3.9 million and was comprised of two retail stores $1.6 million, three parcels of land zoned for residential purpose of $1.2 million, one commercial construction project of $658,000, and three single family residential properties of $531,000.  OREO located in the state of Nevada was $4.8 million and was comprised of a parcel of land zoned for residential purpose of $3.5 million and one commercial use building of $1.3 million.  OREO in all other states was $3.0 million and was comprised of three commercial use properties of $2.1 million and four single family residential properties of $878,000.

An analysis of the activity in the valuation allowance for other real estate losses for the years ended on December 31, 2012, 2011, and 2010 is as follows:

	2012			2011			2010
	(In thousands)
Balance, beginning of year	$	26,422		$	25,310		$	22,743
Provision for losses		10,668			10,385			20,139
OREO disposal		(17,534	)		(9,273	)		(17,572	)
Balance, end of year	$	19,556		$	26,422		$	25,310

The following table presents the components of other real estate owned expense for the year ended:

	2012			2011			2010
	(In thousands)
Operating expense	$	4,817		$	5,441		$	5,849
Provision for losses		10,668			10,385			20,139
Net gain on transfer and disposal		(369	)		(5,243	)		(9,977	)
Total other real estate owned expense	$	15,116		$	10,583		$	16,011

F-28

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

7.      Investments in Affordable Housing

      The Company has invested in certain limited partnerships that were formed to develop and operate housing for lower-income tenants throughout the United States.  The Company’s investments in these partnerships were $85.0 million at December 31, 2012, and $78.4 million at December 31, 2011.  At December 31, 2012, and December 31, 2011, six of the limited partnerships in which the Company has an equity interest were determined to be variable interest entities for which the Company is the primary beneficiary.  The consolidation of these limited partnerships in the Company’s Consolidated Financial Statements increased total assets and liabilities by $22.9 million at December 31, 2012, and by $22.8 million at December 31, 2011.   Other borrowings for affordable housing limited partnerships were $18.7 million at December 31, 2012, and $18.9 million at December 31, 2011; recourse is limited to the assets of the limited partnerships.  Unfunded commitments for affordable housing limited partnerships of $10.6 million as of December 31, 2012, and $1.5 million as of December 31, 2011, were recorded under other liabilities.

       Each of the partnerships must meet regulatory requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits.  If the partnerships cease to qualify during the compliance period, the credits may be denied for any period in which the projects are not in compliance and a portion of the credits previously taken is subject to recapture with interest.  The remaining tax credits to be utilized over a multiple-year period are $45.3 million for Federal and $1.7 million for state at December 31, 2012.  The Company’s usage of tax credits approximated $9.2 million in 2012, $9.5 million in 2011, and $10.5 million in 2010.  For the year ended December 31, operations of investments in affordable housing resulted in pretax losses of $6.3 million for 2012, $8.2 million for 2011, and $7.6 million for 2010.  Losses in excess of the Bank’s investment in two limited partnerships have not been recorded in the Company’s Consolidated Financial Statements because the Company had fully satisfied all capital commitments required under the respective limited partnership agreements.

8.      Premises and Equipment

      Premises and equipment consisted of the following at December 31, 2012, and December 31, 2011:

	2012		2011
	(In thousands)
Land and land improvements	$	33,429	$	33,429
Building and building improvements		73,723		72,608
Furniture, fixtures and equipment		39,701		37,445
Leasehold improvement		12,391		12,494
Construction in process		38		1,314
		159,282		157,290
Less: Accumulated depreciation/amortization		56,669		51,329
Premises and equipment, net	$	102,613	$	105,961

The amount of depreciation/amortization included in operating expense was $5.9 million in 2012, $6.1 million in 2011, and $4.6 million in 2010.

F-29

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

9.     Deposits

The following table displays deposit balances as of December 31, 2012, and December 31, 2011:

	2012		2011
	(In thousands)
Demand	$	1,269,455	$	1,074,718
NOW accounts		593,133		451,541
Money market accounts		1,186,771		951,516
Saving accounts		473,805		420,030
Time deposits under $100,000		644,191		832,997
Time deposits of $100,000 or more		3,215,870		3,498,329
Total	$	7,383,225	$	7,229,131

Time deposits outstanding as of December 31, 2012, mature as follows.

	Expected Maturity Date at December 31,
	2013		2014		2015		2016		2017		Thereafter		Total
	(In thousands)
Time deposits, $100,000 and over	$	2,895,712	$	238,836	$	60,309	$	1,344	$	19,669	$	-	$	3,215,870
Other time deposits		610,364		25,011		7,426		155		1,232		3		644,191
	$	3,506,076	$	263,847	$	67,735	$	1,499	$	20,901	$	3	$	3,860,061

Accrued interest payable on customer deposits was $2.1 million at December 31, 2012, $4.2 million at December 31, 2011, and $5.2 million at December 31, 2010.  The following table summarizes the interest expense on deposits by account type for the years ended December 31, 2012, 2011, and 2010:

	Year Ended December 31,
	2012		2011		2010
	(In thousands)
Interest bearing demand	$	792	$	756	$	927
Money market accounts		5,938		7,351		8,733
Saving accounts		365		482		694
Time deposits		40,278		53,625		73,808
Total	$	47,373	$	62,214	$	84,162

10.   Borrowed Funds

Federal Funds Purchased.  There were no Federal funds purchased at any time during 2010 or 2012.  The average amount of Federal funds purchased  during 2011 was $27,000 with a weighted average interest rate of 1.29%.

F-30

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Securities Sold under Agreements to Repurchase.Securities sold under agreements to repurchase were $1.3 billion with a weighted average rate of 3.84% at December 31, 2012, compared to $1.4 billion with a weighted average rate of 4.14% at December 31, 2011.  In May 2011, the Company prepaid a security sold under an agreement to repurchase of $50 million with a rate of 4.83% and incurred a prepayment penalty of $1.7 million.  In 2012, the Company modified $200.0 million of securities sold under agreements to repurchase by extending the term by an additional four years on average, reducing the rate of these agreements by an average of 168 basis points and removing the callable feature of these borrowings.  In 2012, the Company prepaid three securities sold under an agreement to repurchase for the total of $150 million with a weighted average rate of 4.43% and incurred prepayment penalties of $9.4 million.   Seven floating-to-fixed rate agreements totaling $400.0 million have initial floating rates for a period of time ranging from six months to one year, with floating rates ranging from the three-month LIBOR minus 200 basis points to three-month LIBOR minus 340 basis points. Thereafter, the rates are fixed for the remainder of the term, with interest rates ranging from 4.52% to 5.07%.  After the initial floating rate term, the counter parties have the right to terminate the transaction at par at the fixed rate reset date and quarterly thereafter. Thirteen fixed-to-floating rate agreements totaling $650.0 million have initial fixed rates ranging from 1.00% to 3.50% with initial fixed rate terms ranging from six months to 18 months.  For the remainder of the seven year term, the rates float at 8% minus the three-month LIBOR rate with a maximum rate ranging from 3.25% to 3.79% and minimum rate of 0.0%.  After the initial fixed rate term, the counter parties have the right to terminate the transaction at par at the floating rate reset date and quarterly thereafter.  The table below provides summary data for the $1.05 billion of callable securities sold under agreements to repurchase as of December 31, 2012:

(Dollars in millions)	Fixed-to-floating																		Floating-to-fixed						Total
Rate type	Float Rate																		Fixed Rate
Rate index	8% minus 3 month LIBOR
Maximum rate		3.79	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%
Minimum rate		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
No. of agreements		3			1			4			3			1			1			3			4			20
Amount	$	150.0		$	50.0		$	200.0		$	150.0		$	50.0		$	50.0		$	200.0		$	200.0		$	1,050.0
Weighted average rate		3.78	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%		4.69	%		5.00	%		4.04	%
Final maturity		2014			2014			2014			2015			2015			2015			2014			2017

The table below provides summary data for non-callable fixed rate securities sold under agreements to repurchase as of December 31, 2012:

Maturity	No. of Agreements		Amount (In thousands)		Weighted Average Interest Rate
3 years to 5 years		2	$	100,000		2.71	%
Over 5 years		2		100,000		2.86	%
Total		4	$	200,000		2.78	%

These transactions are accounted for as collateralized financing transactions and recorded at the amount at which the securities were sold. We may have to provide additional collateral for the repurchase agreements, as necessary.  The underlying collateral pledged for the repurchase agreements consists of U.S. Treasury securities, U.S. government agency security debt, and mortgage-backed securities with a fair value of $1.4 billion as of December 31, 2012, and $1.6 billion as of December 31, 2011.

F-31

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The table below provides comparative data for securities sold under agreements to repurchase for the years indicated:

	2012			2011			2010
	(Dollars in thousands)
Average amount outstanding during the year (1)	$	1,361,475		$	1,448,363		$	1,560,215
Maximum amount outstanding at month-end (2)		1,400,000			1,559,000			1,566,000
Balance, December 31		1,250,000			1,400,000			1,561,000
Rate, December 31		3.84	%		4.14	%		4.18	%
Weighted average interest rate for the year		4.09	%		4.19	%		4.24	%

(1) Average balances were computed using daily averages.

(2) Highest month-end balances were January 2012, January 2011, and September 2010.

Advances from the Federal Home Loan Bank.  Total advances from the FHLB were $146.2 million with weighted average rate of 0.44% at December 31, 2012, compared to $225.0 million with weighted average rate of 2.08% at December 31, 2011.  The Company prepaid advances from the FHLB totaling $100.0 million at a rate of 4.60% and incurred prepayment penalties of $2.8 million in 2012 and prepaid advances totaling  $450.0 million with a weighted rate of 4.39% and incurred prepayment penalties of $18.5 million in 2011.

 The following relates to the outstanding advances at December 31, 2012, and 2011:

	2012					2011
Maturity	Amount (In thousands)		Weighted Average Interest Rate			Amount (In thousands)		Weighted Average Interest Rate
Within 90 days	$	125,000		0.28	%	$	-		0.00	%
91 days through 365 days		-		0.00	%		225,000		2.08	%
4 - 5 years		21,200		1.38	%		-		-
	$	146,200		0.44	%	$	225,000		2.08	%

Other borrowings from financial institutions.At December 31, 2012, there were no other borrowings from financial institutions.  At December 31, 2011, other borrowings from a financial institution were $880,000 with a weighted average rate of 0.55%.

Other Liabilities.  On November 23, 2004, the Company entered into an agreement with its Chief Executive Officer (“CEO”) pursuant to which the CEO agreed to defer any bonus amounts in excess of $225,000 for the year ended December 31, 2005, until January 1 of the first year following such time as the CEO separates from the Company.  Accordingly, an amount equal to $610,000 was deferred in 2004 and was accrued in other liabilities in the consolidated balance sheet.  The Company agreed to accrue interest on the deferred portion of the bonus at 7.0% per annum compounded quarterly.  The deferred amount will be increased each quarter by the amount of interest computed for that quarter.  Beginning on the tenth anniversary of the agreement, the interest rate will equal 275 basis points above the prevailing interest rate on the ten-year Treasury Note.  Interest of $71,000 during 2012, $67,000 during 2011, and $62,000 during 2010 was accrued on this deferred bonus.  The balance was $1.1 million at December 31, 2012, and $995,000 at December 31, 2011.

11.   Capital Resources

In 2010, the Company sold $132.3 million of new common stock consisting of 15,028,409 shares at an average price of $8.80 per share.  Net of issuance costs and fees, this issuance added $124.9 million to common stockholders’ equity.  The Company did not sell any common stock in 2012 and in 2011.

F-32

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company has participated in the U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program under the Emergency Economic Stabilization Act of 2008.  Upon the approval of participation, the U.S. Treasury purchased the Company’s senior preferred stock on December 5, 2008, in the amount of $258.0 million.  The senior preferred stock pays cumulative compounding dividends at a rate of 5% per year for the first five years, and thereafter at a rate of 9% per year.  The shares are non-voting, other than class voting rights on matters that could adversely affect the shares. They are callable at par after three years. Prior to the end of three years, the shares may only be redeemed with the proceeds from one or more qualified equity offerings.  In conjunction with the purchase of senior preferred shares, the U.S. Treasury received warrants to purchase 1,846,374 shares of common stock at the exercise price of $20.96 with an aggregate market price equal to $38.7 million, 15% of the senior preferred stock amount that U.S. Treasury invested.

On September 29, 2006, the Bank issued $50.0 million in subordinated debt in a private placement transaction.  The debt had an original maturity term of 10 years, was unsecured and bore interest at a rate of three-month LIBOR plus 110 basis points, payable on a quarterly basis.  In March 2011, the Company extended the debt for an additional year.  As part of the extension agreement, the rate was increased from LIBOR plus 110 basis points to LIBOR plus 330 basis points for 2012 and 2011, after which time it reverts back to LIBOR plus 110 basis points.  At December 31, 2012, the per annum interest rate on the subordinated debt was 3.61% compared to 3.88% at December 31, 2011.  The subordinated debt was issued through the Bank and qualifies as Tier 2 capital for regulatory reporting purposes and is included in long-term debt in the accompanying condensed Consolidated Balance Sheets.

The Bancorp established three special purpose trusts in 2003 and two in 2007 for the purpose of issuing trust preferred securities to outside investors (“Capital Securities”).  The trusts exist for the purpose of issuing the Capital Securities and investing the proceeds thereof, together with proceeds from the purchase of the common securities of the trusts by the Bancorp, in Junior Subordinated Notes issued by the Bancorp.  Subject to some limitations, payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts or the redemption of the Capital Securities are guaranteed by the Bancorp to the extent the trusts have funds on hand at such time.  The obligations of the Bancorp under the guarantees and the Junior Subordinated Notes are subordinate and junior in right of payment to all indebtedness of the Bancorp and will be structurally subordinated to all liabilities and obligations of the Bancorp’s subsidiaries.  The Bancorp has the right to defer payments of interest on the Junior Subordinated Notes at any time or from time to time for a period of up to twenty consecutive quarterly periods with respect to each deferral period.  Under the terms of the Junior Subordinated Notes, the Bancorp may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if the Bancorp has deferred payment of interest on the Junior Subordinated Notes.

The five special purpose trusts are considered variable interest entities under FIN 46R.  Because the Bancorp is not the primary beneficiary of the trusts, the financial statements of the trusts are not included in the Consolidated Financial Statements of the Company.

The Junior Subordinated Notes are currently included in the Tier 1 capital of the Bancorp for regulatory capital purposes. On March 1, 2005, the Federal Reserve adopted a final rule that retains trust preferred securities in the Tier I capital of bank holding companies, which after a five-year transition period, limited the aggregate amount of trust preferred securities and certain other capital elements to 25% of Tier 1 capital elements, net of goodwill, less any associated deferred tax liability. The amount of trust preferred securities and certain other elements in excess of the limit could be included in Tier 2 capital, subject to restrictions. This rule did not have a materially adverse effect on the Company’s capital positions.

Interest expense on the Junior Subordinated Notes was $3.2 million for 2012, $3.0 million for 2011, and $3.1 million for 2010.

F-33

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The table below summarizes the outstanding Junior Subordinated Notes issued by the Company to each trust as of December 31, 2012:

Trust Name	Issuance Date	Principal Balance of Notes		Not Redeemable Until	Stated Maturity	Annualized Coupon Rate	Current Interest Rate			Date of Rate Change	Payable/ Distribution Date
	(Dollars in thousands)
Cathay Capital Trust I	June 26, 2003	$	20,619	June 30, 2008	June 30, 2033	3-month LIBOR + 3.15%		3.46	%	December 30, 2012	March 30 June 30 September 30 December 30
Cathay Statutory Trust I	September 17, 2003		20,619	September 17, 2008	September 17, 2033	3-month LIBOR + 3.00%		3.31	%	December 17, 2012	March 17 June 17 September 17 December 17
Cathay Capital Trust II	December 30, 2003		12,887	March 30, 2009	March 30, 2034	3-month LIBOR + 2.90%		3.21	%	December 30, 2012	March 30 June 30 September 30 December 30
Cathay Capital Trust III	March 28, 2007		46,392	June 15, 2012	June 15, 2037	3-month LIBOR + 1.48%		1.79	%	December 17, 2012	March 15 June 15 September 15 December 15
Cathay Capital Trust IV	May 31, 2007		20,619	September 6, 2012	September 6, 2037	3-month LIBOR 1.40%		1.71	%	December 6, 2012	March 6 June 6 September 6 December 6
Total Junior Subordinated Notes		$	121,136

12.   Income Taxes

For the years ended December 31, 2012, 2011, and 2010, the current and deferred amounts of the income tax expense are summarized as follows:

F-34

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	2012		2011		2010
	(In thousands)
Current:
Federal	$	44,263	$	26,548	$	16,496
State		17,081		10,905		7,379
	$	61,344	$	37,453	$	23,875
Deferred:
Federal		3,755		10,133		(28,600	)
State		1,029		3,675		(9,904	)
	$	4,784	$	13,808	$	(38,504	)
Total income tax expense/(benefit	$	66,128	$	51,261	$	(14,629	)

Temporary differences between the amounts reported in the financial statements and the tax basis of assets and liabilities give rise to deferred taxes.  Net deferred tax assets at December 31, 2012, and at December 31, 2011, are included in other assets in the accompanying Consolidated Balance Sheets and are as follows:

Deferred Tax Assets
Loan loss allowance, due to differences in computation of bad debts	$	100,774		$	109,686
Write-down on equity securities		3,374			3,609
Stock option compensation expense		16,120			16,048
State tax		4,479			3,744
Non-accrual interest		3,208			2,048
Write-down on other real estate owned		10,302			14,148
Accrual for litigation		2,415			-
Unrealized loss on interest rate swaps		-			1,097
Unrealized loss on securities available-for-sale, net		-			6,311
Other, net		3,544			3,536
Gross deferred tax assets		144,216			160,227
Deferred Tax Liabilities
Core deposit intangibles		(1,632	)		(3,919	)
Investment in aircraft financing trust and venture capital partnerships		(19,684	)		(21,628	)
Unrealized gain on securities available-for-sale, net		(338	)		-
Dividends on Federal Home Loan Bank common stock		(3,071	)		(2,788	)
Other, net		(5,084	)		(5,646	)
Gross deferred tax liabilities		(29,809	)		(33,981	)
Valuation allowance		(2,125	)		(2,533	)
Net deferred tax assets	$	112,282		$	123,713

Amounts for the current year are based upon estimates and assumptions and could vary from amounts shown on the tax returns as filed.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the projected future taxable income and tax planning strategies in making this assessment.  Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize all benefits related to these deductible temporary differences except for $2.1 million of state deferred taxes for a portion of the capital losses related to the Company’s former investments in the preferred stock of Fannie Mae and Freddie Mac.

F-35

 CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

As of December 31, 2012, the Company had income tax refunds receivable of $12.4 million. As of December 31, 2011, the Company had income tax receivables of approximately $39.3 million, of which $11.2 million relates to the carryback of the Company’s net operating loss for 2009 to the 2007 tax year and $9.1 million relates to the carryback of the Company’s low income housing tax credits for 2009 to the 2008 tax year. These income tax receivables are included in other assets in the accompanying Consolidated Balance Sheets.

At December 31, 2012, the Company had Federal net operating loss carry forwards of approximately $1.6 million which expire through 2022.  The Federal net operating loss carry-forwards were acquired in connection with the Company’s acquisition of United Heritage Bank.

At December 31, 2012 and 2011, the amount of unrecognized tax benefits was none and $508,000, respectively. During 2012, the Company reversed its unrecognized tax benefits during the filing of the Company’s 2011 tax returns, During 2011, the Company paid $0.1 million of state taxes previously recorded in unrecognized tax benefits. The Company had accrued interest and penalties of less than $0.1 million at December 31, 2012 and 2011.

The Company’s tax returns are open for audits by the Internal Revenue Service back to 2010 and by the FTB of the State of California back to 2003.  The Company is under audit by the CaliforniaFranchise Tax Board for the years 2003 to 2007.  As the Company is presently under audit by a number of tax authorities, it is reasonably possible that unrecognized tax benefits could change significantly over the next twelve months. The Company does not expect that any such changes would have a material impact on its annual effective tax rate.

        Income tax expense results in effective tax rates that differ from the statutory Federal income tax rate for the years indicated as follows:

	2012					2011					2010
	(In thousands)
Tax provision at Federal statutory rate	$	64,248		35.0	%	$	52,994		35.0	%	$	(1,072	)	35.0	%
State income taxes, net of Federal income tax benefit		11,772		6.4			9,477		6.3			(1,641	)	53.5
Interest on obligations of state and political subdivisions, which are exempt from Federal taxation		(1,456	)	(0.8	)		(1,476	)	(1.0	)		(299	)	9.8
Low income housing and other tax credits		(9,353	)	(5.1	)		(10,087	)	(6.6	)		(11,220	)	366.2
Other, net		917		0.5			353		0.2			(397	)	13.0
Total income tax expense/(benefit)	$	66,128		36.0	%	$	51,261		33.9	%	$	(14,629	)	477.5	%

13.   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.

F-36

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

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, 2012, is restricted to approximately $80.8 million.

During 2003, the Bank formed Cathay Real Estate Investment Trust (“Trust”) to provide the Bank flexibility in raising capital.  In 2003 and 2004, the Trust sold to accredited investors $8.6 million of its 7.0% Series A Non-Cumulative preferred stock which pays dividends, if declared, at the end of each quarter.  This preferred stock qualifies as Tier 1 capital under current regulatory guidelines.  The Company paid dividends of $605,000 in 2012, $605,000 in 2011, and $611,000 in 2010.  For the years ended and as of December 31, 2012, December 31, 2011, and December 31, 2010, the net income and assets of the Trust were eliminated in consolidation.

       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.

        On November 16, 2000, the Bancorp’s Board of Directors adopted a Rights Agreement between the Bancorp and American Stock Transfer and Trust Company, as Rights Agent, and declared a dividend of one preferred share purchase right for each outstanding share of the Bancorp common stock.  The dividend was payable on January 19, 2001, to stockholders of record at the close of business on the record date, December 20, 2000.  Each preferred share purchase right entitles the registered holder to purchase from the Bancorp one one-thousandth of a share of the Bancorp’s Series A junior participating preferred stock at a price of $200, subject to adjustment.  In general, the rights become exercisable if, after December 20, 2000, a person or group acquires 15% or more of the Bancorp’s common stock or announces a tender offer for 15% or more of the common stock.  The Board of Directors is entitled to redeem the rights at one cent per right at any time before any such person acquires 15% or more of the outstanding common stock.  The Rights Agreement expired at the close of business on November 16, 2010, and was not renewed.

Pursuant to the U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program under the Emergency Economic Stabilization Act of 2008, on December 5, 2008, the U.S. Treasury purchased 258,000 shares of the Company’s Series B Preferred Stock in the amount of $258.0 million.  The Series B Preferred Stock pays cumulative compounding dividends at a rate of 5% per year for the first five years, and thereafter at a rate of 9% per year.  In conjunction with the purchase of senior preferred shares, the U.S. Treasury received warrants to purchase 1,846,374 shares of common stock at the exercise price of $20.96 per share with an aggregate market price equal to $38.7 million, or 15%, of the senior preferred stock amount that the U.S. Treasury invested.  The exercise price of $20.96 on warrants was calculated based on the average of closing prices of the Company’s common stock on the 20 trading days ending on the last trading day prior to November 17, 2008, the date that the Company received the preliminary approval of the purchase from the U.S. Treasury.

F-37

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

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,
	2012							2011							2010
	Income (Numerator)			Shares (Denominator)		Per Share Amount		Income (Numerator)			Shares (Denominator)		Per Share Amount		Income (Numerator)			Shares (Denominator)		Per Share Amount
	(In thousands, except shares and per share data)
Net income	$	117,438						$	100,150						$	11,565
Dividends on preferred stock		(16,488	)						(16,437	)						(16,388	)
Basic EPS, income/(loss)	$	100,950			78,719,133	$	1.28	$	83,713			78,633,317	$	1.06	$	(4,823	)		77,073,954	$	(0.06	)
Effect of dilutive stock options					4,164							7,335							-
Diluted EPS, income/(loss)	$	100,950			78,723,297	$	1.28	$	83,713			78,640,652	$	1.06	$	(4,823	)		77,073,954	$	(0.06	)

Options to purchase an additional 4.0 million shares, and warrants to purchase an additional 1.8 million shares at December 31, 2012, were not included in the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect.  Options to purchase an additional 4.4 million shares, restricted stock units for an additional 103,000 shares, and warrants to purchase an additional 1.8 million shares at December 31, 2011, were not included in the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect.

14.   Commitments and Contingencies

        Litigation.  The Company is involved in various litigation concerning transactions entered into during the normal course of business.  Management, after consultation with legal counsel, does not believe that the resolution of such litigation will have a material effect upon its consolidated financial condition, results of operations, or liquidity taken as a whole.

        Lending.  In the normal course of business, the Company becomes a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers.  These financial instruments include commitments to extend credit in the form of loans or through commercial or standby letters of credit and financial guarantees.  Those instruments represent varying degrees of exposure to risk in excess of the amounts included in the accompanying Consolidated Balance Sheets.  The contractual or notional amount of these instruments indicates a level of activity associated with a particular class of financial instrument and is not a reflection of the level of expected losses, if any.

        The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.  Unless noted otherwise, the Company does not require collateral or other security to support financial instruments with credit risk.

        Financial instruments whose contract amounts represent the amount of credit risk include the following:

	2012		2011
	(In thousands)
Commitments to extend credit	$	1,740,463	$	1,626,523
Standby letters of credit		44,672		62,076
Commercial letters of credit		71,073		64,233
Bill of lading guarantees		77		187
Total	$	1,856,285	$	1,753,019

F-38

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

        Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the commitment agreement.  These commitments generally have fixed expiration dates and are expected to expire without being drawn upon.  The total commitment amounts do not necessarily represent future cash requirements.  The Company evaluates each customer’s creditworthiness on a case-by-case basis.  The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the borrowers.

        As of December 31, 2012, the Company does not have fixed-rate or variable-rate commitments with characteristics similar to options, which provide the holder, for a premium paid at inception to the Company, the benefits of favorable movements in the price of an underlying asset or index with limited or no exposure to losses from unfavorable price movements.

As of December 31, 2012, commitments to extend credit of $1.7 billion include commitments to fund fixed rate loans of $115.4 million and adjustable rate loans of $1.6 billion.

Commercial letters of credit and bill of lading guarantees are issued to facilitate domestic and foreign trade transactions while standby letters of credit are issued to make payments on behalf of customers if certain specified future events occur.  The credit risk involved in issuing letters of credit and bill of lading guarantees is essentially the same as that involved in making loans to customers.

        Leases.  The Company is obligated under a number of operating leases for premises and equipment with terms ranging from one to 50 years, many of which provide for periodic adjustment of rentals based on changes in various economic indicators.  Rental expense was $7.4 million for 2012, $6.7 million for 2011, and $6.6 million for 2010.   The following table shows future minimum payments under operating leases with terms in excess of one year as of December 31, 2012.

Year Ending December 31,	Commitments
	(In thousands)
2013	$	6,084
2014		4,939
2015		3,009
2016		2,028
2017		617
Thereafter		661
Total minimum lease payments	$	17,338

      Rental income was $0.3 million for 2012, $0.2 million for 2011, and $0.3 million for 2010.  The following table shows future rental payments to be received under operating leases with terms in excess of one year as of December 31, 2012:

Year Ending December 31,	Commitments
	(In thousands)
2013	$	108
2014		60
2015		11
Thereafter		-
Total minimum lease payments to be received	$	179

F-39

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

15.   Financial Derivatives

It is the policy of the Company not to speculate on the future direction of interest rates.  However, the Company enters into financial derivatives in order to seek mitigation of exposure to interest rate risks related to its interest-earning assets and interest-bearing liabilities.  Management believes that these transactions, when properly structured and managed, may provide a hedge against inherent interest rate risk in the Company’s assets or liabilities and against risk in specific transactions.  In such instances, the Company may protect its position through the purchase or sale of interest rate futures contracts for a specific cash or interest rate risk position.  Other hedge transactions may be implemented using interest rate swaps, interest rate caps, floors, financial futures, forward rate agreements, and options on futures or bonds.  Prior to considering any hedging activities, we seek to analyze the costs and benefits of the hedge in comparison to other viable alternative strategies.  All hedges will require an assessment of basis risk and must be approved by the Bank’s Investment Committee.

The Company follows ASC Topic 815 which established accounting and reporting standards for financial derivatives, including certain financial derivatives embedded in other contracts, and hedging activities.  It requires the recognition of all financial derivatives as assets or liabilities in the Company’s Consolidated Balance Sheets and measurement of those financial derivatives at fair value.  The accounting treatment of changes in fair value is dependent upon whether or not a financial derivative is designated as a hedge and if so, the type of hedge.

As of December 31, 2011, we had five interest rate swap agreements with two major financial institutions in the notional amount of $300.0 million for a period of three years.  These interest rate swaps were not structured to hedge against inherent interest rate risks related to our interest-earning assets and interest-bearing liabilities.  These five interest rate swap agreements all matured in the third quarter of 2012.  The net amount accrued on these interest rate swaps and the changes in the market value of these interest rate swaps were recorded as a reduction to other non-interest income in the amount of $288,000 in 2012 compared to $4.9 million in the same period a year ago.

The Company enters into foreign exchange forward contracts and foreign currency option contracts with various counter parties to mitigate the risk of fluctuations in foreign currency exchange rates for foreign exchange certificates of deposit, foreign exchange contracts, or foreign currency option contracts entered into with our clients. These contracts are not designated as hedging instruments and are recorded at fair value in our condensed consolidated balance sheets. Changes in the fair value of these contracts as well as the related foreign exchange certificates of deposit, foreign exchange contracts or foreign currency option contracts are recognized immediately in net income as a component of non-interest income. Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.  At December 31, 2012, the notional amount of option contracts totaled $209,000 with a net negative fair value of $2,000. Spot and forward contracts in the total notional amount of $188.1 million had a positive fair value of $2.9 million at December 31, 2012.  Spot and forward contracts in the total notional amount of $133.7 million had a negative fair value of $1.6 million at December 31, 2012. At December 31, 2011, the notional amount of option contracts totaled $4.3 million with a net positive fair value of $29,000.  Spot and forward contracts in the total notional amount of $238.6 million had a positive fair value, in the amount of $2.2 million, at December 31, 2011.  Spot and forward contracts in the total notional amount of $128.2 million had a negative fair value, in the amount of $486,000, at December 31, 2011.

16.   Fair Value Measurements

The Company adopted ASC Topic 820 on January 1, 2008, and determined the fair values of our financial instruments based on the following:

· Level 1 – Quoted prices in active markets for identical assets or liabilities.

· Level 2 – Observable prices in active markets for similar assets or liabilities; prices for identical or similar assets or liabilities in markets that are not active; directly observable market inputs for substantially the full term of the asset and liability; market inputs that are not directly observable but are derived from or corroborated by observable market data.

F-40

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

· Level 3 – Unobservable inputs based on the Company’s own judgments about the assumptions that a market participant would use.

The Company uses the following methodologies to measure the fair value of its financial assets and liabilities on a recurring basis:

Securities Available for Sale. For certain actively traded agency preferred stocks, mutual funds, and U.S. Treasury securities, the Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement.  The Company also measures securities by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement.  This category generally includes U.S. Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, corporate bonds and trust preferred securities.

Trading Securities. The Company measures the fair value of trading securities based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement. The Company also measures the fair value for other trading securities based on quoted market prices for similar securities or dealer quotes, a Level 2 measurement.

Warrants. The Company measures the fair value of warrants based on unobservable inputs based on assumption and management judgment, a Level 3 measurement.

Currency Option Contracts and Foreign Exchange Contracts. The Company measures the fair value of currency option and foreign exchange contracts based on dealer quotes on a recurring basis, a Level 2 measurement.

Interest Rate Swaps. Fair value of interest rate swaps was derived from observable market prices for similar assets on a recurring basis, a Level 2 measurement.

The valuation techniques for the assets and liabilities valued on a nonrecurring basis are as follows:

Impaired Loans. The Company does not record loans at fair value on a recurring basis.  However, from time to time, nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on either the current appraised value of the collateral, a Level 2 measurement, or management’s judgment and estimation of value reported on old appraisals which are then adjusted based on recent market trends, a Level 3 measurement.   

Loans Held for sale.  The Company records loans held for sale at fair value based on quoted prices from third party sale analysis, existing sale agreements, or appraisal reports adjusted by sales commission assumption, a Level 3 measurement.

Goodwill.  The Company completes “step one” of the impairment test by comparing the fair value of each reporting unit (as determined based on the discussion below) with the recorded book value (or “carrying amount”) of its net assets, with goodwill included in the computation of the carrying amount.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired, and “step two” of the impairment test is not necessary.  If the carrying amount of a reporting unit exceeds its fair value, step two of the impairment test is performed to determine the amount of impairment.  Step two of the impairment test compares the carrying amount of the reporting unit’s goodwill to the “implied fair value” of that goodwill.  The implied fair value of goodwill is computed by assuming all assets and liabilities of the reporting unit would be adjusted to the current fair value, with the offset as an adjustment to goodwill.  This adjusted goodwill balance is the implied fair value used in step two.  An impairment charge is then recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value. In connection with the determination of fair value, certain data and information was utilized, including earnings forecast at the reporting unit level for the next four years.  Other key assumptions include terminal values based on future growth rates and discount rates for valuing the cash flows, which have inputs for the risk-free rate, market risk premium and adjustments to reflect inherent risk and required market returns.  Because of the significance of unobservable inputs in the valuation of goodwill impairment, goodwill subject to nonrecurring fair value adjustments is classified as Level 3 measurement.

F-41

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Core Deposit Intangibles. Core deposit intangibles is initially recorded at fair value based on a valuation of the core deposits acquired and is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.  The Company assesses the recoverability of this intangible asset on a nonrecurring basis using the core deposits remaining at the assessment date and the fair value of cash flows expected to be generated from the core deposits, a Level 3 measurement.

Other Real Estate Owned. Real estate acquired in the settlement of loans is initially recorded at fair value based on the appraised value of the property on the date of transfer, less estimated costs to sell, a Level 2 measurement.  From time to time, nonrecurring fair value adjustments are made to other real estate owned based on the current updated appraised value of the property, also a Level 2 measurement, or management’s judgment and estimation of value reported on old appraisals which are then adjusted based on recent market trends, a Level 3 measurement.

Investments in Venture Capital.  The Company periodically reviews for OTTI on a nonrecurring basis.  Investments in venture capital were written down to their fair value based on available financial reports from venture capital partnerships and management’s judgment and estimation, a Level 3 measurement.

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis at December 31, 2012, and at December 31, 2011:

F-42

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

As of December 31, 2012	Fair Value Measurements Using						Total at
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets
Securities available-for-sale
U.S. Treasury securities	$	509,971	$	-	$	-	$	509,971
Mortgage-backed securities		-		416,694		-		416,694
Collateralized mortgage obligations		-		10,168		-		10,168
Asset-backed securities		-		141		-		141
Corporate debt securities		-		335,977		-		335,977
Mutual funds		6,079		-		-		6,079
Preferred stock of government sponsored entities		-		2,335		-		2,335
Trust preferred securities		10,115		-		-		10,115
Total securities available-for-sale		526,165		765,315		-		1,291,480
Trading securities		-		4,703		-		4,703
Warrants		-		-		104		104
Option contracts		-		0		-		0
Foreign exchange contracts		-		2,924		-		2,924
Total assets	$	16,194	$	1,282,913	$	104	$	1,299,211
Liabilities
Option contracts	$	-	$	2	$	-	$	2
Foreign exchange contracts		-		1,586		-		1,586
Total liabilities	$	-	$	1,588	$	-	$	1,588

As of December 31, 2011	Fair Value Measurements Using						Total at
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets
Securities available-for-sale
U.S. government sponsored entities	$	-	$	501,226	$	-	$	501,226
State and municipal securities		-		1,928		-		1,928
Mortgage-backed securities		-		337,631		-		337,631
Collateralized mortgage obligations		-		16,486		-		16,486
Asset-backed securities		-		166		-		166
Corporate debt securities		-		380,429		-		380,429
Mutual funds		6,035		-		-		6,035
Preferred stock of government sponsored entities		-		1,654		-		1,654
Trust preferred securities		45,963		-		-		45,963
Other equity securities		2,960		-		-		2,960
Total securities available-for-sale		54,958		1,239,520		-		1,294,478
Trading securities		2		4,540		-		4,542
Warrants		-		-		218		218
Option contracts		-		34		-		34
Foreign exchange contracts		-		2,151		-		2,151
Total assets	$	54,960	$	1,246,245	$	218	$	1,301,423
Liabilities
Interest rate swaps	$	-	$	2,634	$	-	$	2,634
Option contracts		-		5		-		5
Foreign exchange contracts		-		486		-		486
Total liabilities	$	-	$	3,125	$	-	$	3,125

F-43

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The Company measured the fair value of its warrants on a recurring basis using significant unobservable inputs.  The fair value of warrants was $104,000 at December 31, 2012, compared to $218,000 at December 31, 2011.  The fair value adjustment of warrants was included in other operating income of 2012.

For financial assets measured at fair value on a nonrecurring basis that were still reflected in the balance sheet at December 31, 2012, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets at December 31, 2012, and at December 31, 2011, and the total losses for the periods indicated:

	As of December 31, 2012								Total Losses
	Fair Value Measurements Using						Total at		For the Twelve Months Ended
	Level 1		Level 2		Level 3		Fair Value		December 31, 2012		December 31, 2011
Assets	(In thousands)
Impaired loans by type:
Commercial loans	$	-	$	-	$	3,492	$	3,492	$	-	$	877
Commercial mortgage loans		-		-		11,295		11,295		440		-
Construction- residential		-		-		500		500		-		-
Construction- other		-		-		46,153		46,153		65		-
Residential mortgage and equity lines		-		-		11,206		11,206		605		820
Land loans		-		-		297		297		162		46
Total impaired loans		-		-		72,943		72,943		1,272		1,743
Other real estate owned (1		-		27,149		4,841		31,990		10,904		7,003
Investments in venture capital		-		-		9,001		9,001		309		379
Equity investments		142		-		-		142		181		200
Total assets	$	142	$	27,149	$	86,785	$	114,076	$	12,666	$	9,325

(1) Other real estate owned balance of $46.4 million in the consolidated balance sheet is net of estimated disposal costs.

	As of December 31, 2011								Total Losses
	Fair Value Measurements Using						Total at		For the Twelve Months Ended
	Level 1		Level 2		Level 3		Fair Value		December 31, 2011		December 31, 2010
Assets	(In thousands)
Impaired loans by type:
Commercial loans	$	-	$	-	$	4,251	$	4,251	$	877	$	3,411
Construction- residential		-		-		-		-		-		1,295
Real estate loans		-		-		35,576		35,576		820		1,407
Land loans		-		-		611		611		46		1,003
Total impaired loans		-		-		40,438		40,438		1,743		7,116
Loans held-for-sale		-		-		760		760		-		3,160
Other real estate owned (1		-		79,029		1,093		80,122		7,003		20,139
Investments in venture capital		-		-		8,693		8,693		379		760
Equity investments		323		-		-		323		200		304
Total assets	$	323	$	79,029	$	50,984	$	130,336	$	9,325	$	31,479

(1) Other real estate owned balance of $71.0 million in the consolidated balance sheet is net of estimated disposal costs.

F-44

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral-dependent impaired loans was primarily based on the appraised value of collateral adjusted by estimated sales cost and commissions.  The Company generally obtains new appraisal reports every six months.  As the Company’s primary objective in the event of default would be to monetize the collateral to settle the outstanding balance of the loan, less marketable collateral would receive a larger discount. During the reported periods, collateral discounts ranged from 45% in the case of accounts receivable collateral to 65% in the case of inventory collateral.

The significant unobservable inputs used in the fair value measurement of loans held for sale was primarily based on the quoted price or sale price adjusted by estimated sales cost and commissions.  The significant unobservable inputs used in the fair value measurement of other real estate owned (“OREO”) was primarily based on the appraised value of OREO adjusted by estimated sales cost and commissions.

The Company applies estimated sales cost and commission ranging from 3% to 6% to collateral value of impaired loans, quoted price or loan sale price of loans held for sale, and appraised value of OREOs.

The significant unobservable inputs in the Black-Scholes option pricing model for the fair value of warrants are the expected life of warrant ranging from 1 to 4 years, risk-free interest rate from 0.25% to 0.54%, and stock volatility of the Company from 13.7% to 18.6%.

17.   Fair Value of Financial Instruments

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

        Cash and Cash Equivalents.  For cash and cash equivalents, the carrying amount was assumed to be a reasonable estimate of fair value, a Level 1 measurement.

        Short-term Investments.  For short-term investments, the carrying amount was assumed to be a reasonable estimate of fair value, a Level 1 measurement.

Securities Purchased under Agreements to Resell. The fair value of securities purchased under agreements to resell is based on dealer quotes, a Level 2 measurement.

        Securities.  For securities, including securities held-to-maturity, available-for-sale and for trading, fair values were based on quoted market prices at the reporting date.  If a quoted market price was not available, fair value was estimated using quoted market prices for similar securities or dealer quotes.  For certain actively traded agency preferred stocks and U.S. Treasury securities, the Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement.  The Company also measures securities by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement.  This category generally includes U.S. Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, and corporate bonds.

Loans Held for Sale.  The Company records loans held for sale at fair value based on quoted prices from third party sources, or appraisal reports adjusted by sales commission assumptions, a Level 3 measurement.

       Loans.  Fair values were estimated for portfolios of loans with similar financial characteristics.  Each loan category was further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories.

F-45

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

        The fair value of performing loans was calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 3 measurement.

The fair value of impaired loans was calculated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale.  The Company does not record loans at fair value on a recurring basis.  Nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on the current appraised value of the collateral, a Level 2 measurement.

        Deposit Liabilities.  The fair value of demand deposits, savings accounts, and certain money market deposits was assumed to be the amount payable on demand at the reporting date.  The fair value of fixed-maturity certificates of deposit was estimated using the rates currently offered for deposits with similar remaining maturities, a Level 3 measurement.

        Securities Sold under Agreements to Repurchase.  The fair value of securities sold under agreements to repurchase is based on dealer quotes, a Level 2 measurement.

        Advances from Federal Home Loan Bank.  The fair value of the advances is based on quotes from the FHLB to settle the advances, a Level 2 measurement.

Other Borrowings.  This category includes borrowings from other financial institutions.  The fair value of other borrowings is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement. 

Long-term Debt.  The fair value of long-term debt is estimated based on the quoted market prices or dealer quotes, a Level 2 measurement.

Currency Option and Foreign Exchange Contracts. The Company measures the fair value of currency option and foreign exchange contracts based on dealer quotes, a Level 2 measurement.

Interest Rate Swaps. Fair value of interest rate swaps was derived from observable market prices for similar assets, a Level 2 measurement.

Off-Balance-Sheet Financial Instruments.  The fair value of commitments to extend credit, standby letters of credit, and financial guarantees written were estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counter parties.  The fair value of guarantees and letters of credit was based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counter parties at the reporting date.  Off-balance-sheet financial instruments were fair valued based on the assumptions that a market participant would use, a Level 3 measurement.

        Fair value was estimated in accordance with ASC Topic 825, formerly SFAS 107.  Fair value estimates were made at specific points in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates were based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates were subjective in nature and involved uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

F-46

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Fair Value of Financial Instruments

	As of December 31, 2012				As of December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Financial Assets
Cash and due from banks	$	144,909	$	144,909	$	117,888	$	117,888
Short-term investments		411,983		411,983		294,956		294,956
Securities held-to-maturity		773,768		823,906		1,153,504		1,203,977
Securities available-for-sale		1,291,480		1,291,480		1,294,478		1,294,478
Trading securities		4,703		4,703		4,542		4,542
Loans held-for-sale		-		-		760		760
Loans, net		7,235,587		7,169,732		6,844,483		6,825,571
Investment in Federal Home Loan Bank stock		41,272		41,272		52,989		52,989
Warrants		104		104		218		218

	Notional Amount		Fair Value		Notional Amount		Fair Value
Option contracts	$	105	$	-	$	3,026	$	34
Foreign exchange contracts		188,145		2,924		238,581		2,151

Financial Liabilities	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Deposits	$	7,383,225	$	7,389,015	$	7,229,131	$	7,240,857
Securities sold under agreement to repurchase		1,250,000		1,361,585		1,400,000		1,547,900
Advances from Federal Home Loan Bank		146,200		146,789		225,000		227,825
Other borrowings		18,713		14,573		19,800		19,801
Long-term debt		171,136		98,392		171,136		98,676

	Notional Amount		Fair Value		Notional Amount		Fair Value
Option contracts	$	104	$	2	$	1,282	$	5
Interest rate swaps		-		-		300,000		2,634
Foreign exchange contracts		133,669		1,586		128,215		486

	Notional Amount		Fair Value			Notional Amount		Fair Value
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	1,740,463	$	(1,875	)	$	1,626,523	$	(1,253	)
Standby letters of credit		44,672		(204	)		62,076		(367	)
Other letters of credit		71,073		(34	)		64,233		(38	)
Bill of lading guarantees		77		-			187		-

The following table presents the level in the fair value hierarchy for the estimated fair values of only financial instruments that are not already on the Consolidated balance sheets at fair value at December 31, 2012, and December 31, 2011.

F-47

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	As of December 31, 2012
	Estimated Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	144,909	$	144,909	$	-	$	-
Short-term investments		411,983		411,983		-		-
Securities held-to-maturity		823,906		-		823,906		-
Securities available-for-sale		1,291,480		526,165		765,315		-
Trading securities		4,703		-		4,703		-
Loans, net		7,169,732		-		-		7,169,732
Investment in Federal Home Loan Bank stock		41,272		-		41,272		-
Warrants		104		-		-		104
Financial Liabilities
Deposits		7,389,015		-		-		7,389,015
Securities sold under agreement to repurchase		1,361,585		-		1,361,585		-
Advances from Federal Home Loan Bank		146,789		-		146,789		-
Other borrowings		14,573		-		-		14,573
Long-term debt		98,392		-		98,392		-

	As of December 31, 2011
	Estimated Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	117,888	$	117,888	$	-	$	-
Short-term investments		294,956		294,956		-		-
Securities held-to-maturity		1,203,977		-		1,203,977		-
Securities available-for-sale		1,294,478		54,958		1,239,520		-
Trading securities		4,542		2		4,540		-
Loans held-for-sale		760		-		760		.
Loans, net		6,825,571		-		-		6,825,571
Investment in Federal Home Loan Bank stock		52,989		-		52,989		-
Warrants		218		-		-		218
Financial Liabilities
Deposits		7,240,857		-		-		7,240,857
Securities sold under agreement to repurchase		1,547,900		-		1,547,900		-
Advances from Federal Home Loan Bank		227,825		-		227,825		-
Other borrowings		19,801		-		-		19,801
Long-term debt		98,676		-		98,676		-

18.   Employee Benefit Plans

        Employee Stock Ownership Plan.  Under the Company’s Amended and Restated Cathay Bank Employee Stock Ownership Plan (“ESOP”), the Company can make annual contributions to a trust in the form of either cash or common stock of the Bancorp for the benefit of eligible employees.  Employees are eligible to participate in the ESOP after completing two years of service for salaried full-time employees or 1,000 hours for each of two consecutive years for salaried part-time employees.  The amount of the annual contribution is discretionary except that it must be sufficient to enable the trust to meet its current obligations.  The Company also pays for the administration of this plan and of the trust.  The Company has not made contributions to the trust since 2004 and does not expect to make any contributions in the future.  Effective June 17, 2004, the ESOP was amended to provide the participants the election either to reinvest the dividends on the Company stock allocated to their accounts or to have these dividends distributed to the participant.  The ESOP trust purchased 2,814 shares in 2012, 3,437 shares in 2011, and 4,881 shares in 2010, of the Bancorp’s common stock at an aggregate cost of $47,000 in 2012, $47,000 in 2011, and $51,000 in 2010.  All purchases after 2006 were through the Dividend Reinvestment Plan.  The distribution of benefits to participants totaled 116,124 shares in 2012, 83,020 shares in 2011, and 171,689 shares in 2010.  As of December 31, 2012, the ESOP owned 1,188,741 shares, or 1.5%, of the Company’s outstanding common stock.

F-48

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

401(k) Plan.  In 1997, the Board approved the Company’s 401(k) Profit Sharing Plan, which began on March 1, 1997.  Salaried employees who have completed three months of service and have attained the age of 21 are eligible to participate.  Enrollment dates are on January 1st, April 1st, July 1st, and October 1st of each year.  Participants may contribute up to 75% of their eligible compensation for the year but not to exceed the dollar limit set by the Internal Revenue Code.  Participants may change their contribution election on the enrollment dates.  Prior to April 1, 2010, the Company matched 100% on the first 5% of eligible compensation contributed per pay period by the participant, after one year of service.  The vesting schedule for the matching contribution is 0% for less than two years of service, 25% after two years of service and from then on, at an increment of 25% each year until 100% is vested after five years of service.  In February 2010, the Board revised and reduced the contribution match for the Company’s 401(k) Profit Sharing Plan.  Effective on April 1, 2010, the Company matches 100% on the first 2.5% of eligible compensation contributed per pay period by the participant, after one year of service.  The Company’s contribution amounted to $1.0 million in 2012, $0.9 million in 2011, and $0.9 million in 2010.  The Plan allows participants to withdraw all or part of their vested amount in the Plan due to certain financial hardship as set forth in the Internal Revenue Code and Treasury Regulations.  Participants may also borrow up to 50% of the vested amount, with a maximum of $50,000.  The minimum loan amount is $1,000.

19.   Equity Incentive Plans

In 1998, the Board adopted the Cathay Bancorp, Inc. Equity Incentive Plan.  Under the Equity Incentive Plan, as amended in September, 2003, directors and eligible employees may be granted incentive or non-statutory stock options and/or restricted stock units, or awarded non-vested stock, for up to 7,000,000 shares of the Company’s common stock on a split adjusted basis.  In May 2005, the stockholders of the Company approved the 2005 Incentive Plan which provides that 3,131,854 shares of the Company’s common stock may be granted as incentive or non-statutory stock options, or as restricted stock, or as restricted stock units.  In conjunction with the approval of the 2005 Incentive Plan, the Bancorp agreed to cease granting awards under the Equity Incentive Plan.  As of December 31, 2012, the only options granted by the Company under the 2005 Incentive Plan were non-statutory stock options to selected bank officers and non-employee directors at exercise prices equal to the fair market value of a share of the Company’s common stock on the date of grant.  Such options have a maximum ten-year term and vest in 20% annual increments (subject to early termination in certain events) except certain options granted to the Chief Executive Officer of the Company in 2005 and 2008.  If such options expire or terminate without having been exercised, any shares not purchased will again be available for future grants or awards.  Stock options are typically granted in the first quarter of the year.  There were no options granted in 2012, in 2011, or in 2010.  The Company expects to issue new shares to satisfy stock option exercises and the vesting of restricted stock units.

Cash received from exercises of stock options totaled $764,000 for 50,024 shares in 2012 compared to $1.3 million for 86,860 shares in 2011.  The fair value of stock options vested in 2012 was $745,000 compared to $2.6 million in 2011.  Aggregate intrinsic value for options exercised was $103,000 in 2012 compared to $172,000 in 2011.

A summary of stock option activity for 2012, 2011, and 2010 follows:

F-49

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2009		5,169,653		$	27.71		4.6	$	-
Forfeited		(222,305	)		23.23
Balance, December 31, 2010		4,947,348			27.93		3.7	$	334
Exercised		(86,860	)	$	15.05
Forfeited		(503,503	)		22.72
Balance, December 31, 2011		4,356,985			28.86		3.0	$	37
Exercised		(50,024	)	$	15.27
Forfeited		(310,331	)		23.75
Balance, December 31, 2012		3,996,630			29.45		2.2	$	-
Exercisable, December 31, 2012		3,889,514		$	29.61		2.2	$	-

At December 31, 2012, 2,364,947 shares were available under the 2005 Incentive Plan for future grants.  The following table shows stock options outstanding and exercisable as of December 31, 2012, the corresponding exercise prices, and the weighted-average contractual life remaining:

		Outstanding
Exercise Price		Shares		Weighted-Average Remaining Contractual Life (in Years)		Exercisable Shares
$	19.93		319,240		0.1		319,240
	23.37		637,680		5.1		530,564
	24.80		811,956		0.9		811,956
	28.70		453,000		1.1		453,000
	32.26		10,000		1.5		10,000
	32.47		245,060		2.2		245,060
	33.54		264,694		2.4		264,694
	37.00		582,650		2.1		582,650
	38.38		15,000		1.9		15,000
	36.90		231,120		3.1		231,120
	36.24		414,230		3.0		414,230
	38.26		12,000		3.3		12,000
			3,996,630		2.2		3,889,514

In addition to stock options, the Company also grants restricted stock units to eligible employees.  On February 21, 2008, restricted stock units for 82,291 shares were granted.  Upon vesting of restricted stock units, the Company issued 15,006 shares of common stock at the closing price of $9.64 per share on February 21, 2010, and 12,633 shares of common stock at the closing price of $18.79 per share on February 21, 2011.  Restricted stock units granted in 2008 have a maximum term of five years and vest in approximately 20% annual increments subject to continued employment with the Company.

The Company granted restricted stock units for 125,133 shares at an average closing price of $18.24 per share in 2012 and for 147,661 shares at an average closing price of $14.78 in 2011. The restricted stock units granted in 2012 and 2011 are scheduled to vest two years from grant date.

 The following table presents restricted stock unit activity for 2012, 2011, and 2010:

F-50

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	Units
Balance at December 31, 2009		60,021
Vested		(15,006	)
Cancelled or forfeited		(6,055	)
Balance at December 31, 2010		38,960
Granted		147,661
Vested		(12,633	)
Cancelled or forfeited		(2,578	)
Balance at December 31, 2011		171,410
Granted		125,133
Vested		(11,814	)
Cancelled or forfeited		(28,113	)
Balance at December 31, 2012		256,616

The compensation expense recorded related to the restricted stock units above was $1.3 million in 2012, $758,000 in 2011, and $327,000 in 2010.  Unrecognized stock-based compensation expense related to restricted stock units was $2.7 million at December 31, 2012, and is expected to be recognized over the next 1.5 years.

The following table summarizes the tax benefit from options exercised:

	2012			2011			2010
	(In thousands)
(Short-fall)/benefit of tax deductions in excess of grant-date fair value	$	(620	)	$	(290	)	$	(539	)
Benefit of tax deductions on grant-date fair value		747			362			539
Total benefit of tax deductions	$	127		$	72		$	-

In 2012, 45,937 shares of the Company’s common stock at the average price of $17.16 per share were issued to six executive officers and recorded as compensation expense.

F-51

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

20.      Condensed Financial Information of Cathay General Bancorp

The condensed financial information of the Bancorp as of December 31, 2012, and December 31, 2011, and for the years ended December 31, 2012, 2011, and 2010 is as follows:

Balance Sheets

	Year Ended December 31,
	2012			2011
	(In thousands, except share and per share data)
Assets
Cash	$	639		$	809
Short-term certificates of deposit		161,300			19,000
Investment in bank subsidiaries		1,569,902			1,593,831
Investment in non-bank subsidiaries		2,598			2,615
Other assets		9,936			14,189
Total assets	$	1,744,375		$	1,630,444
Liabilities
Junior subordinated debt	$	121,136		$	121,136
Other liabilities		2,182			2,122
Total liabilities		123,318			123,258
Commitments and contingencies		-			-
Stockholders' equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding at December 31, 2012, and December 31, 2011		254,580			250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding    at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011		830			829
Additional paid-in-capital		768,925			765,641
Accumulated other comprehensive loss, net		465			(8,732	)
Retained earnings		721,993			624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011)		(125,736	)		(125,736	)
Total stockholders' equity		1,621,057			1,507,186
Total liabilities and stockholders' equity	$	1,744,375		$	1,630,444

Statements of Operations

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash dividends from Cathay Bank	$	154,700		$	-		$	-
Interest income		196			259			227
Interest expense		3,228			3,038			3,075
Non-interest income/(loss)		3,718			286			(782	)
Non-interest expense		2,064			1,548			1,308
Income/(loss) before income tax benefit		153,322			(4,041	)		(4,938	)
Income tax benefit		(579	)		(1,699	)		(2,076	)
Loss before undistributed earnings of subsidiaries		153,901			(2,342	)		(2,862	)
Undistributed (loss)/earnings of subsidiaries		(36,463	)		102,492			14,427
Net income	$	117,438		$	100,150		$	11,565

F-52

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Statements of Cash Flows

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash flows from Operating Activities
Net income/(loss)	$	117,438		$	100,150		$	11,565
Adjustments to reconcile net income to net cash provided by operating activities:
Dividends in excess of earnings of subsidiaries		36,463			-			-
Equity in undistributed earnings of subsidiaries		-			(102,492	)		(14,427	)
Gains on sale of securities		(3,380	)		-			-
Increase in accrued expense		12			24			3
Write-downs on venture capital and other investments		262			321			521
Write-downs on impaired securities		181			200			492
Loss/(gains) in fair value of warrants		114			(215	)		29
Excess tax short-fall from stock options		620			290			539
(Decrease)/increase in other assets		1,820			(121	)		1,040
Increase/(decrease) in other liabilities		59			(221	)		(607	)
Net cash used in operating activities		153,589			(2,064	)		(845	)
Cash flows from Investment Activities
Additional investment in subsidiary		-			-			(94,000	)
Decrease/(increase) in short-term investment		(142,300	)		17,500			(12,000	)
Proceeds from sale/(purchase) of available-for-sale securities		4,849			-			(418	)
Venture capital investments		(694	)		(671	)		(1,056	)
Net cash provided by/(used in) investment activities		(138,145	)		16,829			(107,474	)
Cash flows from Financing Activities
Cash dividends		(16,049	)		(16,046	)		(16,041	)
Issuance of common stock		-			-			124,928
Proceeds from shares issued under the Dividend Reinvestment Plan		291			287			310
Proceeds from exercise of stock options		764			1,306			-
Excess tax short-fall from share-based payment arrangements		(620	)		(290	)		(539	)
Net cash (used in)/provided by financing activities		(15,614	)		(14,743	)		108,658
Increase in cash and cash equivalents		(170	)		22			339
Cash and cash equivalents, beginning of year		809			787			448
Cash and cash equivalents, end of year	$	639		$	809		$	787

21.   Dividend Reinvestment Plan

        The Company has a Dividend Reinvestment Plan which allows for participants’ reinvestment of cash dividends and certain optional additional investments in the Company’s common stock.  Shares issued under the plan and the consideration received were 17,956 shares for $291,000 in 2012, 21,281 shares for $287,000 in 2011, and 28,778 shares for $310,000 in 2010.

F-53

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

22.   Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  See Note 11 for discussion of possible future disallowance of Capital Securities as Tier 1 capital.

        The Federal Deposit Insurance Corporation has established five capital ratio categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” A well capitalized institution must have a Tier 1 capital ratio of at least 6%, a total risk-based capital ratio of at least 10%, and a leverage ratio of at least 5%.  At December 31, 2011 and 2009, the Bank qualified as well capitalized under the regulatory framework for prompt corrective action.

        The Bancorp’s and the Bank’s capital and leverage ratios as of December 31, 2012, and December 31, 2011, are presented in the tables below:

	As of December 31, 2012										As of December 31, 2011
	Company					Bank					Company					Bank
	Balance		Percentage			Balance		Percentage			Balance		Percentage			Balance		Percentage
	(Dollars in thousands)
Tier I Capital (to risk-weighted assets)	$	1,426,566		17.36	%	$	1,259,005		15.33	%	$	1,318,948		15.97	%	$	1,289,747		15.64	%
Tier I Capital minimum requirement		328,713		4.00			328,440		4.00			330,355		4.00			329,928		4.00
Excess	$	1,097,853		13.36	%	$	930,565		11.33	%	$	988,593		11.97	%	$	959,819		11.64	%
Total Capital (to risk-weighted assets)	$	1,571,060		19.12	%	$	1,402,691		17.08	%	$	1,474,496		17.85	%	$	1,444,165		17.51	%
Total Capital minimum requirement		657,426		8.00			656,880		8.00			660,710		8.00			659,855		8.00
Excess	$	913,634		11.12	%	$	745,811		9.08	%	$	813,786		9.85	%	$	784,310		9.51	%
Tier I Capital (to average assets)Leverage ratio	$	1,426,566		13.82	%	$	1,259,005		12.22	%	$	1,318,948		12.93	%	$	1,289,747		12.66	%
Minimum leverage requirement		412,844		4.00			412,272		4.00			408,146		4.00			407,643		4.00
Excess	$	1,013,722		9.82	%	$	846,733		8.22	%	$	910,802		8.93	%	$	882,104		8.66	%
Total average assets (1)	$	10,321,104				$	10,306,790				$	10,203,647				$	10,191,078
Risk-weighted assets	$	8,217,821				$	8,211,004				$	8,258,878				$	8,248,190

(1) Average assets represent average balances for the fourth quarter of each year presented.

 On December 17, 2009, the Bancorp entered into a memorandum of understanding with Federal Reserve Bank of San Francisco (the “FRB SF”) under which it agreed that it will not, without the FRB SF’s prior written approval, (i) receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank, or (ii) declare or pay any dividends, make any payments on trust preferred securities, or make any other capital distributions.  Under the memorandum, the Bancorp agreed to submit to the FRB SF for review and approval a plan to maintain sufficient capital at the Bancorp on a consolidated basis and at the Bank, a dividend policy for the Bancorp, a plan to improve management of its liquidity position and funds management practices, and a liquidity policy and contingency funding plan for the Bancorp.  As part of its compliance with the memorandum, on January 22, 2010, the Bancorp submitted to the FRB SF a Three-Year Capital and Strategic Plan that updates a previously submitted plan and establishes, among other things, targets for its Tier 1 risk-based capital ratio, total risk-based capital ratio, Tier 1 leverage capital ratio and tangible common risk-based ratio, each of which, where applicable, are above the minimum requirements for a well-capitalized institution.  In addition, the Bancorp agreed to notify the FRB SF prior to effecting certain changes to its senior executive officers and board of directors and it is limited and/or prohibited, in certain circumstances, in its ability to enter into contracts to pay and to make golden parachute severance and indemnification payments.  The Bancorp also agreed in the memorandum that we will not, without the prior written approval of the FRB SF, directly or indirectly, (i) incur, renew, increase or guaranty any debt, (ii) issue any additional trust preferred securities, or (iii) purchase, redeem, or otherwise acquire any stock.

F-54

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

Until it was terminated as of November 7, 2012, the Bank was subject to a memorandum of understanding with the California Department of Financial Institutions (“DFI”) and the Federal Deposit Insurance Corporation (“FDIC’) that was entered into on March 1, 2010, by which the Bank agreed to undertake certain steps to strengthen its operations. The Bank was required to develop and implement, within specified time periods, plans satisfactory to the DFI and the FDIC to reduce commercial real estate concentrations, to enhance and to improve the quality of our stress testing of the Bank’s loan portfolio, and to revise our loan policy in connection therewith; to develop and adopt a strategic plan addressing improved profitability and capital ratios and to reduce the Bank’s overall risk profile; to develop and adopt a capital plan; to develop and implement a plan to improve asset quality, including the methodology for calculating the loss reserve allocation and evaluating its adequacy; and to develop and implement a plan to reduce dependence on wholesale funding. In addition, we were required to report our progress to the DFI and FDIC on a quarterly basis. As part of our compliance with the Bank memorandum, on April 30, 2010, we submitted to the DFI and the FDIC a Three-Year Capital Plan that updated the Three-Year Capital and Strategic Plan previously submitted to the FRB SF on January 22, 2010, and established, among other things, targets for our Tier 1 risk-based capital ratio and total risk-based capital ratio, each of which are above the minimum requirements for a well-capitalized institution and effective June 30, 2010, a target Tier 1 to total tangible assets ratio.  We were in compliance with the applicable target ratios through the date of termination of the memorandum.

23.   Quarterly Results of Operations (Unaudited)

        The following table sets forth selected unaudited quarterly financial data:

F-55

CATHAY GENERAL BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS–(Continued)

	Summary of Operations
	2012												2011
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
	(In thousands, except per share data)
Interest income	$	105,281		$	106,747		$	107,581		$	110,135		$	111,076		$	114,379		$	114,339		$	113,777
Interest expense		24,216			26,330			28,461			29,484			31,759			33,426			36,024			38,672
Net interest income		81,065			80,417			79,120			80,651			79,317			80,953			78,315			75,105
(Reversal)/provision for credit losses		-			-			(5,000	)		(4,000	)		2,000			9,000			10,000			6,000
Net-interest income after provision for loan losses		81,065			80,417			84,120			84,651			77,317			71,953			68,315			69,105
Non-interest income		12,202			15,622			9,852			8,831			8,986			16,827			12,453			12,626
Non-interest expense		49,532			47,844			47,342			47,871			43,990			48,383			45,410			47,783
Income before income tax expense		43,735			48,195			46,630			45,611			42,313			40,397			35,358			33,948
Income tax expense		15,276			17,686			16,619			16,547			14,459			14,162			10,906			11,734
Net income		28,459			30,509			30,011			29,064			27,854			26,235			24,452			22,214
Less: net income attributable to noncontrolling interest		153			151			150			151			153			151			150			151
Net income attributable to Cathay General Bancorp		28,306			30,358			29,861			28,913			27,701			26,084			24,302			22,063
Dividends on preferred stock		(4,127	)		(4,123	)		(4,121	)		(4,117	)		(4,114	)		(4,111	)		(4,107	)		(4,105	)
Net income available to common stockholders	$	24,179		$	26,235		$	25,740		$	24,796		$	23,587		$	21,973		$	20,195		$	17,958
Basic net income attributable to common stockholders per common share	$	0.31		$	0.33		$	0.33		$	0.32		$	0.30		$	0.28		$	0.26		$	0.23
Diluted net income attributable to commonstockholders per common share	$	0.31		$	0.33		$	0.33		$	0.32		$	0.30		$	0.28		$	0.26		$	0.23

F-56

EX-3.2.2

EXHIBIT 3.2.2

Amendment to the

Restated Bylaws of Cathay General Bancorp

1.        Article VI is hereby amended and restated to read as follows:

“ARTICLE VI

SHARES OF STOCK

SECTION 1. Form of Certificate. Every holder of stock in the Corporation represented by certificates shall be entitled to have a certificate in form approved by the Board of Directors signed by, or in the name of the Corporation by the President or a Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares in the Corporation registered in certificate form in the holder’s name. Any or all signatures on the certificate may be a facsimile. The corporate seal may, but need not, be placed upon the certificates representing the Corporation’s shares. In case any officer, transfer agent or registrar who has signed or countersigned, or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.

SECTION 2. Transfer Agents and Registrars. The Corporation may have one or more transfer agents and one or more registrars of its shares, whose respective duties shall be defined by the Board of Directors. Unless the Board of Directors specifically directs otherwise with respect to shares represented by a particular certificate, if the Board of Directors has appointed one or more transfer agents and registrars, such certificate for shares shall be countersigned by a transfer agent and registered by a registrar.

SECTION 3. Transfers of Stock. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue or direct the issuance of a new certificate, or evidence the issuance of uncertificated shares, to the person entitled thereto, cancel the old certificate, if any, and record the transaction upon its books. Upon the execution by the transferor and transferee of all transfer documents in such form as the Corporation shall reasonably require with respect to uncertificated shares, it shall be the duty of the Corporation to evidence the issuance of uncertificated shares to the person entitled thereto.

SECTION 4. Lost, Stolen or Destroyed Certificates. The Board of Directors may issue or direct the issuance of a new certificate or uncertificated share in place of any certificate issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or uncertificated shares, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of any such certificate or the issuance of a new certificate or uncertificated shares.

SECTION 5. Uncertificated Shares. Subject to any conditions imposed by Delaware Law, the Board may provide by resolution or resolutions that some or all of any or all classes or series of stock of the Corporation shall be represented by uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the Corporation shall send to the registered owner thereof any written notice prescribed by Delaware Law.

SECTION 6. Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the owner in fact to receive dividends, to vote, if entitled and for all other purposes and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by applicable law.”

EX-4.1

EXHIBIT 4.1

CATHAY GENERAL BANCORP

as Company

INDENTURE

Dated as of March 30, 2007

LASALLE BANK NATIONAL ASSOCIATION

As Trustee

JUNIOR SUBORDINATED DEBT SECURITIES

Due June 15, 2037

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS
SECTION 1.01.	Definitions	1
ARTICLE II DEBT SECURITIES
SECTION 2.01.	Authentication and Dating	9
SECTION 2.02.	Form of Trustee's Certificate of Authentication	9
SECTION 2.03.	Form and Denomination of Debt Securities	10
SECTION 2.04.	Execution of Debt Securities	10
SECTION 2.05.	Exchange and Registration of Transfer of Debt Securities	10
SECTION 2.06.	Mutilated, Destroyed, Lost or Stolen Debt Securities	13
SECTION 2.07.	Temporary Debt Securities	14
SECTION 2.08.	Payment of Interest	15
SECTION 2.09.	Cancellation of Debt Securities Paid, etc	16
SECTION 2.10.	Computation of Interest	16
SECTION 2.11.	Extension of Interest Payment Period	18
SECTION 2.12.	CUSIP Numbers	19
SECTION 2.13.	Income Tax Certification	19
SECTION 2.14.	Global Debentures	19
ARTICLE III PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01.	Payment of Principal, Premium and Interest; Agreed Treatment of the Debt Securities	21
SECTION 3.02.	Offices for Notices and Payments, etc	22
SECTION 3.03.	Appointments to Fill Vacancies in Trustee's Office	23
SECTION 3.04.	Provision as to Paying Agent	23
SECTION 3.05.	Certificate to Trustee	24
SECTION 3.06.	Additional Interest	24
SECTION 3.07.	Compliance with Consolidation Provisions	25
SECTION 3.08.	Limitation on Dividends	25
SECTION 3.09.	Covenants as to the Trust	25

-i-

TABLE OF CONTENTS

(CONTINUED)

Page

ARTICLE IV LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 4.01.	Securityholders' Lists	26
SECTION 4.02.	Preservation and Disclosure of Lists	26
SECTION 4.03.	Financial and Other Information	27
ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT
SECTION 5.01.	Events of Default	28
SECTION 5.02.	Payment of Debt Securities on Default; Suit Therefor	30
SECTION 5.03.	Application of Moneys Collected by Trustee	31
SECTION 5.04.	Proceedings by Securityholders	32
SECTION 5.05.	Proceedings by Trustee	32
SECTION 5.06.	Remedies Cumulative and Continuing	33
SECTION 5.07.	Direction of Proceedings and Waiver of Defaults by Majority of Securityholders	33
SECTION 5.08.	Notice of Defaults	34
SECTION 5.09.	Undertaking to Pay Costs	34
ARTICLE VI CONCERNING THE TRUSTEE
SECTION 6.01.	Duties and Responsibilities of Trustee	35
SECTION 6.02.	Reliance on Documents, Opinions, etc	36
SECTION 6.03.	No Responsibility for Recitals, etc	37
SECTION 6.04.	Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own Debt Securities	37
SECTION 6.05.	Moneys to be Held in Trust	37
SECTION 6.06.	Compensation and Expenses of Trustee	38
SECTION 6.07.	Officers' Certificate as Evidence	39
SECTION 6.08.	Eligibility of Trustee	39
SECTION 6.09.	Resignation or Removal of Trustee, Calculation Agent, Paying Agent or Debt Security Registrar	39
SECTION 6.10.	Acceptance by Successor	41

-ii-

TABLE OF CONTENTS

(CONTINUED)

Page

SECTION 6.11.	Succession by Merger, etc	42
SECTION 6.12.	Authenticating Agents	42
ARTICLE VII CONCERNING THE SECURITYHOLDERS
SECTION 7.01.	Action by Securityholders	43
SECTION 7.02.	Proof of Execution by Securityholders	44
SECTION 7.03.	Who Are Deemed Absolute Owners	44
SECTION 7.04.	Debt Securities Owned by Company Deemed Not Outstanding	45
SECTION 7.05.	Revocation of Consents; Future Securityholders Bound	45
ARTICLE VIII SECURITYHOLDERS' MEETINGS
SECTION 8.01.	Purposes of Meetings	45
SECTION 8.02.	Call of Meetings by Trustee	46
SECTION 8.03.	Call of Meetings by Company or Securityholders	46
SECTION 8.04.	Qualifications for Voting	46
SECTION 8.05.	Regulations	47
SECTION 8.06.	Voting	47
SECTION 8.07.	Quorum; Actions	48
SECTION 8.08.	Written Consent Without a Meeting	48
ARTICLE IX SUPPLEMENTAL INDENTURES
SECTION 9.01.	Supplemental Indentures without Consent of Securityholders	49
SECTION 9.02.	Supplemental Indentures with Consent of Securityholders	50
SECTION 9.03.	Effect of Supplemental Indentures	51
SECTION 9.04.	Notation on Debt Securities	51
SECTION 9.05.	Evidence of Compliance of Supplemental Indenture to be furnished to Trustee	52
ARTICLE X REDEMPTION OF SECURITIES
SECTION 10.01.	Optional Redemption	52
SECTION 10.02.	Special Event Redemption	52

-iii-

SECTION 10.03.	Notice of Redemption; Selection of Debt Securities	52
SECTION 10.04.	Payment of Debt Securities Called for Redemption	53
ARTICLE XI CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01.	Company May Consolidate, etc., on Certain Terms	54
SECTION 11.02.	Successor Entity to be Substituted	54
SECTION 11.03.	Opinion of Counsel to be Given to Trustee	55
ARTICLE XII SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01.	Discharge of Indenture	55
SECTION 12.02.	Deposited Moneys to be Held in Trust by Trustee	56
SECTION 12.03.	Paying Agent to Repay Moneys Held	56
SECTION 12.04.	Return of Unclaimed Moneys	56
ARTICLE XIII IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01.	Indenture and Debt Securities Solely Corporate Obligations	57
ARTICLE XIV MISCELLANEOUS PROVISIONS
SECTION 14.01.	Successors	57
SECTION 14.02.	Official Acts by Successor Entity	57
SECTION 14.03.	Surrender of Company Powers	57
SECTION 14.04.	Addresses for Notices, etc	57
SECTION 14.05.	Governing Law	58
SECTION 14.06.	Evidence of Compliance with Conditions Precedent	58
SECTION 14.07.	Non-Business Days	58
SECTION 14.08.	Table of Contents, Headings, etc	59
SECTION 14.09.	Execution in Counterparts	59
SECTION 14.10.	Severability	59
SECTION 14.11.	Assignment	59
SECTION 14.12.	Acknowledgment of Rights	59

-iv-

TABLE OF CONTENTS

(CONTINUED)

Page

ARTICLE XV SUBORDINATION OF DEBT SECURITIES
SECTION 15.01.	Agreement to Subordinate	60
SECTION 15.02.	Default on Senior Indebtedness	60
SECTION 15.03.	Liquidation; Dissolution; Bankruptcy	61
SECTION 15.04.	Subrogation	62
SECTION 15.05.	Trustee to Effectuate Subordination	63
SECTION 15.06.	Notice by the Company	63
SECTION 15.07.	Rights of the Trustee, Holders of Senior Indebtedness	64
SECTION 15.08.	Subordination May Not Be Impaired	64
EXHIBITS
EXHIBIT A	FORM OF DEBT SECURITY

-v-

THIS INDENTURE, dated as of March 30, 2007, between Cathay General Bancorp, a bank holding company incorporated in Delaware (hereinafter sometimes called the "Company"), and LaSalle Bank National Association as trustee (hereinafter sometimes called the "Trustee").

W I T N E S S E T H:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its Junior Subordinated Debt Securities due June 15, 2037 (the "Debt Securities") under this Indenture and to provide, among other things, for the execution and authentication, delivery and administration thereof, the Company has duly authorized the execution of this Indenture.

NOW, THEREFORE, in consideration of the premises, and the purchase of the Debt Securities by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Debt Securities as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.   Definitions.

The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles and the term "generally accepted accounting principles" means such accounting principles as are generally accepted in the United States at the time of any computation. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

  "Additional Interest" shall have the meaning set forth in Section 3.06.

  "Additional Provisions" shall have the meaning set forth in Section 15.01.

  "Authenticating Agent" means any agent or agents of the Trustee which at the time shall be appointed and acting pursuant to Section 6.12.

  "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors.

  "Board of Directors" means the board of directors or the executive committee or any other duly authorized designated officers of the Company.

  "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee.

  "Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in Wilmington, Delaware, New York City or the city of the Principal Office of the Trustee or the Company are permitted or required by any applicable law or executive order to close.

  "Calculation Agent" means the Person identified as "Trustee" in the first paragraph hereof with respect to the Debt Securities and the Institutional Trustee with respect to the Trust Securities.

  "Capital Securities" means undivided beneficial interests in the assets of the Trust which are designated as "TP Securities" and rank pari passu with Common Securities issued by the Trust; provided, however, that if an Event of Default (as defined in the Declaration) has occurred and is continuing, the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities. The Capital Securities sold by the Trust to the initial purchaser(s) pursuant to the Placement Agreement and the Capital Securities Purchase Agreement(s) shall be issued in book entry form, registered in the name of Cede & Co., as nominee on behalf of the Depository Trust Company, without coupons, and held by the Institutional Trustee as custodian for the Depository Trust Company.

  "Capital Securities Guarantee" means the guarantee agreement that the Company will enter into with LaSalle Bank National Association or other Persons that operates directly or indirectly for the benefit of holders of Capital Securities of the Trust.

  "Capital Treatment Event" means, if the Company is organized and existing under the laws of the United States or any state thereof or the District of Columbia, the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change in, the laws, rules or regulations of the United States or any political subdivision thereof or therein, or any rules, guidelines or policies of any applicable regulatory authority for the Company or (b) any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of original issuance of the Debt Securities, there is more than an insubstantial risk that, within 90 days of the receipt of such opinion, the aggregate Liquidation Amount of the Capital Securities will not be eligible to be treated by the Company as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve (or any successor regulatory authority with jurisdiction over bank or financial holding companies), as then in effect and applicable to the Company (or if the Company is not a bank holding company, such guidelines applied to the Company as if the Company were subject to such guidelines); provided, however, that the inability of the Company to treat all or any portion of the aggregate Liquidation Amount of the Capital Securities as Tier 1 Capital shall not constitute the basis for a Capital Treatment Event, if such inability results from the Company having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1 Capital treatment in excess of the amount which may now or hereafter qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines; provided further, however, that the distribution of the Debt Securities in connection with the liquidation of the Trust by the Company shall not in and of itself constitute a Capital Treatment Event unless such liquidation shall have occurred in connection with a Tax Event or an Investment Company Event.

-2-

  "Certificate" means a certificate signed by any one of the principal executive officer, the principal financial officer or the principal accounting officer of the Company.

  "Common Securities" means undivided beneficial interests in the assets of the Trust which are designated as "Common Securities" and rank pari passu with Capital Securities issued by the Trust; provided, however, that if an Event of Default (as defined in the Declaration) has occurred and is continuing, the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities.

  "Company" means Cathay General Bancorp, a bank holding company incorporated in Delaware, and, subject to the provisions of Article XI, shall include its successors and assigns.

  "Debt Security" or "Debt Securities" has the meaning stated in the first recital of this Indenture.

  "Debt Security Register" has the meaning specified in Section 2.05.

  "Debt Security Registrar" has the meaning specified in Section 2.05.

  "Declaration" means the Amended and Restated Declaration of Trust of the Trust dated as of March 30, 2007, as amended or supplemented from time to time.

  "Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

  "Defaulted Interest" has the meaning set forth in Section 2.08.

  "Deferred Interest" has the meaning set forth in Section 2.11.

  "Depositary" means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto. DTC will be the initial Depositary.

  "Depositary Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

  "DTC" means The Depository Trust Company, a New York corporation.

-3-

  "Event of Default" means any event specified in Section 5.01, which has continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

  "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation.

  "Extension Period" has the meaning set forth in Section 2.11.

  "Federal Reserve" means the Board of Governors of the Federal Reserve System.

  "Global Debenture" means a security that evidences all or part of the Debt Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

  "Indenture" means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, or both.

  "Initial Purchaser" means the initial purchaser of the Capital Securities.

  "Institutional Trustee" has the meaning set forth in the Declaration.

  "Interest Payment Date" means March 15, June 15, September 15 and December 15 of each year, commencing on June 15, 2007, during the term of this Indenture.

  "Interest Payment Period" means the period from and including an Interest Payment Date, or in the case of the first Interest Payment Period, the original date of issuance of the Debt Securities, to, but excluding, the next succeeding Interest Payment Date or, in the case of the last Interest Payment Period, the Redemption Date, Special Redemption Date or Maturity Date, as the case may be.

  "Interest Rate" means, with respect to any Interest Payment Period, a per annum rate of interest, equal to LIBOR, as determined on the LIBOR Determination Date for such Interest Payment Date, plus 1.48%; provided, however, that the Interest Rate for any Interest Payment Period may not exceed the highest rate permitted by New York law, as the same may be modified by United States law of general applicability.

  "Investment Company Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of a change in law or regulation or written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within 90 days of the date of such opinion will be, considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the original issuance of the Debt Securities.

-4-

  "LIBOR" means the London Interbank Offered Rate for U.S. Dollar deposits in Europe as determined by the Calculation Agent according to Section 2.10(b).

  "LIBOR Banking Day" has the meaning set forth in Section 2.10(b)(1).

  "LIBOR Business Day" has the meaning set forth in Section 2.10(b)(1).

  "LIBOR Determination Date" has the meaning set forth in Section 2.10(b).

  "Liquidation Amount" means the liquidation amount of $1,000 per Trust Security.

  "Maturity Date" means June 15, 2037.

  "Notice" has the meaning set forth in Section 2.11.

  "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Vice Chairman, the President or any Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 14.06 if and to the extent required by the provisions of such Section.

  "Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or may be other counsel reasonably satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 14.06 if and to the extent required by the provisions of such Section.

  "OTS" means the Office of Thrift Supervision and any successor federal agency that is primarily responsible for regulating the activities of savings and loan holding companies.

  "Outstanding" means, when used with reference to Debt Securities, subject to the provisions of Section 7.04, as of any particular time, all Debt Securities authenticated and delivered by the Trustee or the Authenticating Agent under this Indenture, except

(a)  Debt Securities theretofore canceled by the Trustee or the Authenticating Agent or delivered to the Trustee for cancellation;

(b)  Debt Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent); provided, that, if such Debt Securities, or portions thereof, are to be redeemed prior to maturity thereof, notice of such redemption shall have been given as provided in Articles X and XIV or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c)  Debt Securities paid pursuant to Section 2.06 or in lieu of or in substitution for which other Debt Securities shall have been authenticated and delivered pursuant to the terms of Section 2.06 unless proof satisfactory to the Company and the Trustee is presented that any such Debt Securities are held by bona fide holders in due course.

-5-

  "Paying Agent" has the meaning set forth in Section 3.04(e).

  "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

  "Placement Agent" means Cohen & Company.

  "Predecessor Security" of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt as that evidenced by such particular Debt Security; and, for the purposes of this definition, any Debt Security authenticated and delivered under Section 2.06 in lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Debt Security.

  "Principal Office of the Trustee" means the office of the Trustee, at which at any particular time its corporate trust business shall be principally administered, which at all times shall be located within the United States and at the time of the execution of this Indenture shall be 135 S. LaSalle Street, Suite 1511, Chicago, Illinois 60603, Attn: CDO Trust Services Group - Cathay Capital Trust III.

  "Redemption Date" has the meaning set forth in Section 10.01.

  "Redemption Price" means 100% of the principal amount of the Debt Securities being redeemed plus accrued and unpaid interest on such Debt Securities to the Redemption Date.

  "Responsible Officer" means, with respect to the Trustee, any officer within the CDO Trust Services Group in the Principal Office of the Trustee with direct responsibility for the administration of the Indenture, including any vice-president, any assistant vice-president, any secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Principal Office of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

  "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation.

  "Securityholder," "holder of Debt Securities" or other similar terms, means any Person in whose name at the time a particular Debt Security is registered on the Debt Security Register.

-6-

  "Senior Indebtedness" means, with respect to the Company, (i) the principal, premium, if any, and interest in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by securities, debentures, notes, bonds or other similar instruments issued by the Company; (ii) all capital lease obligations of the Company; (iii) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of the Company for the reimbursement of any letter of credit, any banker's acceptance, any security purchase facility, any repurchase agreement or similar arrangement, any interest rate swap, any other hedging arrangement, any obligation under options or any similar credit or other transaction; (v) all obligations of the type referred to in clauses (i) through (iv) above of other Persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) above of other Persons secured by any lien on any property or asset of the Company (whether or not such obligation is assumed by the Company), whether incurred on or prior to the date of this Indenture or thereafter incurred, unless, with the prior approval of the Federal Reserve if not otherwise generally approved, it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior or are pari passu in right of payment to the Debt Securities; provided, however, that Senior Indebtedness shall not include (A) any debt securities issued to any trust other than the Trust (or a trustee of such trust) that is a financing vehicle of the Company (a "financing entity"), in connection with the issuance by such financing entity of equity or other securities in transactions substantially similar in structure to the transactions contemplated hereunder and in the Declaration including, without limitation, debt securities issued pursuant to that certain Indenture, dated June 26, 2003, in connection with Cathay Capital Trust I, debt securities issued pursuant to that certain Indenture, dated September 17, 2003, with respect to Cathay Statutory Trust I, and the debt securities issued pursuant to that certain Indenture, dated December 30, 2003, with respect to Cathay Capital Securities II, in each case which shall rank pari passu with the Debt Securities, (B) any guarantees of the Company in respect of the equity or other securities of any financing entity referred to in clause (A) above or (C) any other instruments classified as subordinated or pari passu to the Debt Securities by the Federal Reserve from time to time hereafter.

  "Special Event" means any of a Tax Event, an Investment Company Event or a Capital Treatment Event.

  "Special Redemption Date" has the meaning set forth in Section 10.02.

  "Special Redemption Price" means, with respect to the redemption of any Debt Security following a Special Event, an amount in cash equal to 103.525% of the principal amount of Debt Securities to be redeemed prior to June 15, 2008 and thereafter equal to the percentage of the principal amount of the Debt Securities that is specified below for the Special Redemption Date plus, in each case, unpaid interest accrued thereon to the Special Redemption Date:

-7-

Special Redemption During the 12-Month Period Beginning June 15	Percentage of Principal Amount
2008	103.140%
2009	102.355%
2010	101.570%
2011	100.785%
2012 and thereafter	100.000%

  "Subsidiary" means, with respect to any Person, (i) any corporation, at least a majority of the outstanding voting stock of which is owned, directly or indirectly, by such Person or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any general partnership, joint venture or similar entity, at least a majority of the outstanding partnership or similar interests of which shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, and (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner. For the purposes of this definition, "voting stock" means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

  "Tax Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement (including any private letter ruling, technical advice memorandum, regulatory procedure, notice or announcement (an "Administrative Action")) or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of original issuance of the Debt Securities, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debt Securities; (ii) if the Company is organized and existing under the laws of the United States or any state thereof or the District of Columbia, interest payable by the Company on the Debt Securities is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to or otherwise required to pay, or required to withhold from distributions to holders of Trust Securities, more than a de minimis amount of other taxes (including withholding taxes), duties, assessments or other governmental charges.

-8-

  "Trust" means Cathay Capital Trust III, the Delaware statutory trust, or any other similar trust created for the purpose of issuing Capital Securities in connection with the issuance of Debt Securities under this Indenture, of which the Company is the sponsor.

  "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time-to-time, or any successor legislation.

  "Trust Securities" means Common Securities and Capital Securities of Cathay Capital Trust III.

  "Trustee" means the Person identified as "Trustee" in the first paragraph hereof, and, subject to the provisions of Article VI hereof, shall also include its successors and assigns as Trustee hereunder.

  "United States" means the United States of America and the District of Columbia.

  "U.S. Person" has the meaning given to United States Person as set forth in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended.

ARTICLE II

DEBT SECURITIES

SECTION 2.01.   Authentication and Dating.

Upon the execution and delivery of this Indenture, or from time to time thereafter, Debt Securities in an aggregate principal amount not in excess of $46,392,000 may be executed and delivered by the Company to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Debt Securities to or upon the written order of the Company, signed by its Chairman of the Board of Directors, Vice Chairman, President or Chief Financial Officer or one of its Vice Presidents, without any further action by the Company hereunder. In authenticating such Debt Securities, and accepting the additional responsibilities under this Indenture in relation to such Debt Securities, the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in relying upon a copy of any Board Resolution or Board Resolutions relating thereto and, if applicable, an appropriate record of any action taken pursuant to such resolution, in each case certified by the Secretary or an Assistant Secretary or other officers with appropriate delegated authority of the Company as the case may be.

The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if a Responsible Officer of the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing Securityholders. The Trustee shall also be entitled to receive an opinion of counsel to the effect that (1) all conditions precedent to the execution, delivery and authentication of the Securities have been complied with; (2) the Securities are not required to be registered under the Securities Act; and (3) the Indenture is not required to be qualified under the Trust Indenture Act.

-9-

The definitive Debt Securities shall be typed, printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by their execution of such Debt Securities.

SECTION 2.02.   Form of Trustee's Certificate of Authentication.

The Trustee's certificate of authentication on all Debt Securities shall be in substantially the following form:

This represents Debt Securities referred to in the within-mentioned Indenture.

LaSalle Bank National Association, not in its individual capacity but solely as Trustee

By____________________________________

Authorized Signatory

SECTION 2.03.   Form and Denomination of Debt Securities.

The Debt Securities shall be substantially in the form of Exhibit A hereto. The Debt Securities shall be in registered, certificated form without coupons and in minimum denominations of $100,000 and any multiple of $1,000 in excess thereof. The Debt Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the officers executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof.

SECTION 2.04.   Execution of Debt Securities.

The Debt Securities shall be signed in the name and on behalf of the Company by the manual or facsimile signature of any of its Chairman of the Board of Directors, Vice Chairman, President or Chief Financial Officer or one of its Executive Vice Presidents, Senior Vice Presidents or Vice Presidents, under its corporate seal (if legally required), which may be affixed thereto or printed, engraved or otherwise reproduced thereon, by facsimile or otherwise, and which need not be attested. Only such Debt Securities as shall bear thereon a certificate of authentication substantially in the form herein before recited, executed by the Trustee or the Authenticating Agent by the manual signature of an authorized officer, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee or the Authenticating Agent upon any Debt Security executed by the Company shall be conclusive evidence that the Debt Security so authenticated has been duly authenticated and delivered hereunder and that the Securityholder is entitled to the benefits of this Indenture.

In case any officer of the Company who shall have signed any of the Debt Securities shall cease to be such officer before the Debt Securities so signed shall have been authenticated and delivered by the Trustee or the Authenticating Agent, or disposed of by the Company, such Debt Securities nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Debt Securities had not ceased to be such officer of the Company; and any Debt Security may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Debt Security, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer.

-10-

Every Debt Security shall be dated the date of its authentication.

SECTION 2.05.   Exchange and Registration of Transfer of Debt Securities.

The Trustee, in its capacity as "Debt Security Registrar", shall cause to be kept, at the office or agency maintained for the purpose of registration of transfer and for exchange as provided in Section 3.02, a register (the "Debt Security Register") for the Debt Securities issued hereunder in which, subject to such reasonable regulations as it may prescribe, the Debt Security Registrar shall provide for the registration and transfer of all Debt Securities as provided in this Article II. Such register shall be in written form or in any other form capable of being converted into written form within a reasonable time.

Debt Securities to be exchanged may be surrendered at the Principal Office of the Trustee or at any office or agency to be maintained by the Company for such purpose as provided in Section 3.02, and the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange therefor the Debt Security or Debt Securities which the Securityholder making the exchange shall be entitled to receive. Upon due presentment for registration of transfer of any Debt Security at the Principal Office of the Trustee or at any office or agency of the Company maintained for such purpose as provided in Section 3.02, the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in the name of the transferee or transferees a new Debt Security for a like aggregate principal amount. Registration or registration of transfer of any Debt Security by the Trustee or by any agent of the Company appointed pursuant to Section 3.02, and delivery of such Debt Security, shall be deemed to complete the registration or registration of transfer of such Debt Security.

All Debt Securities presented for registration of transfer or for exchange or payment shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by, a written instrument or instruments of transfer in form satisfactory to the Company and either the Trustee or the Authenticating Agent duly executed by, the Securityholder or such Securityholder's attorney duly authorized in writing.

Neither the Trustee nor the Debt Security Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act (under and as defined in the Declaration), applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment Company Act (under and as defined in the Declaration).

No service charge shall be made for any exchange or registration of transfer of Debt Securities, but the Company or the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection therewith.

-11-

The Company or the Trustee shall not be required to exchange or register a transfer of any Debt Security for a period of 15 days immediately preceding the date of selection of Debt Securities for redemption.

Notwithstanding the foregoing, Debt Securities may not be transferred except in compliance with the restricted securities legend set forth below, unless otherwise determined by the Company in accordance with applicable law, which legend shall be placed on each Debt Security:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO A "NON U.S. PERSON" IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT OR AN APPLICABLE EXEMPTION THEREFROM.

-12-

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL DELIVER TO THE COMPANY AND TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION. THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF DEPOSITORS AND THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE COMPANY, IS INELIGIBLE AS COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS NOT SECURED.

-13-

SECTION 2.06.   Mutilated, Destroyed, Lost or Stolen Debt Securities.

In case any Debt Security shall become mutilated or be destroyed, lost or stolen, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, a new Debt Security bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debt Security, or in lieu of and in substitution for the Debt Security so destroyed, lost or stolen. In every case the applicant for a substituted Debt Security shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of such Debt Security and of the ownership thereof.

The Trustee may authenticate any such substituted Debt Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Debt Security, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Debt Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debt Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debt Security) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and to the Trustee of the destruction, loss or theft of such Security and of the ownership thereof.

Every substituted Debt Security issued pursuant to the provisions of this Section 2.06 by virtue of the fact that any such Debt Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities duly issued hereunder. All Debt Securities shall be held and owned upon the express condition that, to the extent permitted by applicable law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

SECTION 2.07.   Temporary Debt Securities.

Pending the preparation of definitive Debt Securities, the Company may execute and the Trustee shall authenticate and make available for delivery temporary Debt Securities that are typed, printed or lithographed. Temporary Debt Securities shall be issuable in any authorized denomination, and substantially in the form of the definitive Debt Securities but with such omissions, insertions and variations as may be appropriate for temporary Debt Securities, all as may be determined by the Company. Every such temporary Debt Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Debt Securities. Without unreasonable delay, the Company will execute and deliver to the Trustee or the Authenticating Agent definitive Debt Securities and thereupon any or all temporary Debt Securities may be surrendered in exchange therefor, at the Principal Office of the Trustee or at any office or agency maintained by the Company for such purpose as provided in Section 3.02, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange for such temporary Debt Securities a like aggregate principal amount of such definitive Debt Securities. Such exchange shall be made by the Company at its own expense and without any charge therefor except that in case of any such exchange involving a registration of transfer the Company may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. Until so exchanged, the temporary Debt Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities authenticated and delivered hereunder.

-14-

SECTION 2.08.   Payment of Interest.

Each Debt Security will bear interest at the then applicable Interest Rate from and including each Interest Payment Date or, in the case of the first Interest Payment Period, the original date of issuance of such Debt Security to, but excluding, the next succeeding Interest Payment Date or, in the case of the last Interest Payment Period, the Redemption Date, Special Redemption Date or Maturity Date, as applicable, on the principal thereof, on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on Deferred Interest and on any overdue installment of interest (including Defaulted Interest), payable on each Interest Payment Date commencing on June 15, 2007. Interest and any Deferred Interest on any Debt Security that is payable, and is punctually paid or duly provided for by the Company, on any Interest Payment Date shall be paid to the Person in whose name said Debt Security (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, except that interest and any Deferred Interest payable on the Maturity Date, the Redemption Date (to the extent redeemed) or the Special Redemption Date shall be paid to the Person to whom principal is paid. In the event that any Debt Security or portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date and either on or prior to such Interest Payment Date, interest on such Debt Security will be paid upon presentation and surrender of such Debt Security.

Any interest on any Debt Security, other than Deferred Interest, that is payable, but is not punctually paid or duly provided for by the Company, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered Securityholder on the relevant regular record date by virtue of having been such Securityholder, and such Defaulted Interest shall be paid by the Company to the Persons in whose names such Debt Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Debt Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements reasonably satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than fifteen nor less than ten days prior to the date of the proposed payment and not less than ten days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at his or her address as it appears in the Debt Security Register, not less than ten days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Debt Securities (or their respective Predecessor Securities) are registered on such special record date and thereafter the Company shall have no further payment obligation in respect of the Defaulted Interest.

-15-

Any interest scheduled to become payable on an Interest Payment Date occurring during an Extension Period shall not be Defaulted Interest and shall be payable on such other date as may be specified in the terms of such Debt Securities.

The term "regular record date" as used in this Indenture shall mean the fifteenth day prior to the applicable Interest Payment Date whether or not such date is a Business Day.

Subject to the foregoing provisions of this Section, each Debt Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Debt Security.

SECTION 2.09.   Cancellation of Debt Securities Paid, etc.

All Debt Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer, shall, if surrendered to the Company or any Paying Agent, be surrendered to the Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by it, and no Debt Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Trustee shall dispose of all canceled Debt Securities in accordance with its customary practices, unless the Company otherwise directs the Trustee in writing, in which case the Trustee shall dispose of such Debt Securities as directed by the Company. If the Company shall acquire any of the Debt Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debt Securities unless and until the same are surrendered to the Trustee for cancellation.

SECTION 2.10.   Computation of Interest.

(a)  The amount of interest payable for any Interest Payment Period will be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period; provided, however, that upon the occurrence of a Special Event Redemption pursuant to Section 10.02 the amounts payable pursuant to this Indenture shall be calculated as set forth in the definition of Special Redemption Price.

-16-

(b)  LIBOR, for any Interest Payment Period, shall be determined by the Calculation Agent in accordance with the following provisions:

(1)  On the second LIBOR Business Day (provided, that on such day commercial banks are open for business (including dealings in foreign currency deposits) in London (a "LIBOR Banking Day"), and otherwise the next preceding LIBOR Business Day that is also a LIBOR Banking Day) prior to March 15, June 15, September 15 and December 15 (or, with respect to the first Interest Payment Period, on March 28, 2007) (each such day, a "LIBOR Determination Date" for the following Interest Payment Period), the Calculation Agent shall obtain the rate for three-month U.S. Dollar deposits in Europe, which appears on Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) or such other page as may replace such Telerate Page 3750 on the Moneyline Telerate, Inc. service (or such other service or services as may be nominated by the British Banker's Association as the information vendor for the purpose of displaying London Interbank offered rates for U.S. dollar deposits), as of 11:00 a.m. (London time) on such LIBOR Determination Date, and the rate so obtained shall be LIBOR for such Interest Payment Period. "LIBOR Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banking institutions in The City of New York or Chicago, Illinois are authorized or obligated by law or executive order to be closed. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on the same LIBOR Determination Date, the corrected rate as so substituted will be LIBOR for that Interest Payment Period.

(2)  If, on any LIBOR Determination Date, such rate does not appear on Telerate Page 3750 or such other page as may replace such Telerate Page 3750 on the Moneyline Telerate, Inc. service (or such other service or services as may be nominated by the British Banker's Association as the information vendor for the purpose of displaying London Interbank offered rates for U.S. dollar deposits), the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London Interbank market for three-month U.S. Dollar deposits in Europe (in an amount determined by the Calculation Agent) by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that at least two leading banks in the City of New York (as selected by the Calculation Agent) are quoting on the relevant LIBOR Determination Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an amount determined by the Calculation Agent). As used herein, "Reference Banks" means four major banks in the London Interbank market selected by the Calculation Agent.

-17-

(3)  If the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR for the applicable Interest Payment Period shall be LIBOR in effect for the immediately preceding Interest Payment Period.

(c)  All percentages resulting from any calculations on the Debt Securities will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward).

(d)  As soon as practicable following each LIBOR Determination Date, but in no event later than the 30th day following such LIBOR Determination Date, the Calculation Agent shall notify, in writing, the Company, the Institutional Trustee and the Paying Agent of the applicable Interest Rate in effect for the related Interest Payment Period. The Calculation Agent shall, upon the request of any Securityholder, provide the Interest Rate then in effect. All calculations made by the Calculation Agent in the absence of manifest error shall be conclusive for all purposes and binding on the Company and the Securityholders. Any error in a calculation of the Interest Rate by the Calculation Agent may be corrected at any time by the delivery of notice of such corrected Interest Rate as provided above. The Paying Agent shall be entitled to rely on information received from the Calculation Agent or the Company as to the Interest Rate. The Company shall, from time to time, provide any necessary information to the Paying Agent relating to any original issue discount and interest on the Debt Securities that is included in any payment and reportable for taxable income calculation purposes. Failure to notify the Company, the Institutional Trustee or the Paying Agent of the applicable Interest Rate shall not affect the obligation of the Company to make payment on Debentures at such Interest Rate.

SECTION 2.11.   Extension of Interest Payment Period.

So long as no Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture has occurred and is continuing, the Company shall have the right under the Indenture, from time to time and without causing an Event of Default, to defer payments of interest on the Debt Securities by extending the interest distribution period on the Debt Securities at any time and from time to time during the term of the Debt Securities, for up to twenty consecutive quarterly periods (each such extended interest distribution period, an "Extension Period"), during which Extension Period no interest shall be due and payable (except any Additional Interest that may be due and payable). No Extension Period may end on a date other than an Interest Payment Date. During any Extension Period, interest will continue to accrue on the Debt Securities, and interest on such accrued interest (such accrued interest and interest thereon referred to herein as "Deferred Interest") will accrue at an annual rate equal to the Interest Rate applicable during such Extension Period, compounded quarterly from the date such Deferred Interest would have been payable were it not for the Extension Period, to the extent permitted by law. No interest or Deferred Interest shall be due and payable during an Extension Period, except at the end thereof. At the end of any such Extension Period the Company shall pay all Deferred Interest then accrued and unpaid on the Debt Securities; provided, however, that no Extension Period may extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date; and providedfurther, however, that during any such Extension Period, the Company shall be subject to the restrictions set forth in Section 3.08 of this Indenture. Prior to the termination of any Extension Period, the Company may further extend such period, provided, that such period together with all such previous and further consecutive extensions thereof shall not exceed twenty consecutive quarterly periods, or extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Upon the termination of any Extension Period and upon the payment of all Deferred Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Deferred Interest shall be due and payable during an Extension Period, except at the end thereof, but Deferred Interest shall accrue upon each installment of interest that would otherwise have been due and payable during such Extension Period until such installment is paid. The Company must give the Trustee notice of its election to begin any Extension Period or extend an Extension Period ("Notice")not later than the related regularrecord date for the relevant Interest Payment Date. The Notice shall describe, in reasonable detail, why the Company has elected to begin an Extension Period. The Notice shall acknowledge and affirm the Company's understanding that it is prohibited from issuing dividends and other distributions during the Extension Period. Upon receipt of the Notice, the Placement Agent shall have the right, at its sole discretion, to disclose the name of the Company, the fact that the Company has elected to begin an Extension Period and other information that such Placement Agent, at its sole discretion, deems relevant to the Company's election to begin an Extension Period. The Trustee shall give notice of the Company's election to begin a new Extension Period to the Securityholders.

-18-

SECTION 2.12.   CUSIP Numbers.

The Company in issuing the Debt Securities may use a "CUSIP" number (if then generally in use), and, if so, the Trustee shall use a "CUSIP" number in notices of redemption as a convenience to Securityholders; provided, that any such notice may state that no representation is made as to the correctness of such number either as printed on the Debt Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debt Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP number.

SECTION 2.13.   Income Tax Certification.

As a condition to the payment of any principal of or interest on the Debt Securities without the imposition of withholding tax, the Trustee shall require the previous delivery of properly completed and signed applicable U.S. federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or applicable successor form) in the case of a person that is a "United States person" within the meaning of Section 7701 (a)(30) of the Code (under and as defined in the Declaration) or an Internal Revenue Service Form W-8 (or applicable successor form) in the case of a person that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code, and any other certification acceptable to it to enable the Trustee or any Paying Agent to determine their respective duties and liabilities with respect to any taxes or other charges that they may be required to pay, deduct or withhold in respect of such Debt Securities.

-19-

SECTION 2.14.   Global Debentures.

(a)  Upon the election of the holder of Outstanding Debt Securities, which election need not be in writing, the Debt Securities owned by such holder shall be issued in the form of one or more Global Debentures registered in the name of the Depositary or its nominee. Each Global Debenture issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Debenture or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Debenture shall constitute a single Debt Security for all purposes of this Indenture.

(b)  Notwithstanding any other provision in this Indenture, no Global Debenture may be exchanged in whole or in part for Debt Securities registered, and no transfer of a Global Debenture in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Debenture or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Debenture, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a company order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Debenture of the occurrence of such event and of the availability of Debt Securities to such owners of beneficial interests requesting the same. Upon the issuance of such Debt Securities and the registration in the Debt Security Register of such Debt Securities in the names of such owners of the beneficial interests therein, the Trustee shall recognize such owners of beneficial interests as holders hereof.

(c)  If any Global Debenture is to be exchanged for other Debt Securities or canceled in part, or if another Debt Security is to be exchanged in whole or in part for a beneficial interest in any Global Debenture, then either (i) such Global Debenture shall be so surrendered for exchange or cancellation as provided in this Article II or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Debt Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Debt Security Registrar, whereupon the Trustee, in accordance with the applicable depository procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Debenture by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Debt Securities issuable in exchange for such Global Debenture (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

-20-

(d)  Every Debt Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Debenture or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Debenture, unless such Debt Security is registered in the name of a Person other than the Depositary for such Global Debenture or a nominee thereof.

(e)  Debt Securities distributed to holders of Book-Entry Capital Securities (as defined in the Trust Agreement) upon the dissolution of the Trust shall be distributed in the form of one or more Global Debentures registered in the name of a Depositary or its nominee, and deposited with the Debt Security Registrar, as custodian for such Depositary, or with such Depositary, for credit by the Depositary to the respective accounts of the beneficial owners of the Debt Securities represented thereby (or such other accounts as they may direct). Debt Securities distributed to holders of Capital Securities other than Book-Entry Capital Securities upon the dissolution of the Trust shall not be issued in the form of a Global Debenture or any other form intended to facilitate book-entry trading in beneficial interests in such Debt Securities.

(f)  The Depositary or its nominee, as the registered owner of a Global Debenture, shall be the holder of such Global Debenture for all purposes under this Indenture and the Debt Securities, and owners of beneficial interests in a Global Debenture shall hold such interests pursuant to the Applicable Depository Procedures. Accordingly, any such owner's beneficial interest in a Global Debenture shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Debt Security Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Debenture (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole holder of the Debt Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Debt Security Registrar shall have any liability in respect of any transfers affected by the Depositary.

(g)  The rights of owners of beneficial interests in a Global Debenture shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

(h)  No holder of any beneficial interest in any Global Debenture held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Debenture, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Debenture for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Debenture or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as holder of any Debt Security.

-21-

ARTICLE III

PARTICULAR COVENANTS OF THE COMPANY

SECTION 3.01.   Payment of Principal, Premium and Interest; Agreed Treatment of the Debt Securities.

(a)  The Company covenants and agrees that it will duly and punctually pay or cause to be paid all payments due on the Debt Securities at the place, at the respective times and in the manner provided in this Indenture and the Debt Securities. At the option of the Company, each installment of interest on the Debt Securities may be paid (i) by mailing checks for such interest payable to the order of the Securityholders entitled thereto as they appear on the Debt Security Register or (ii) by wire transfer to any account with a banking institution located in the United States designated by such Securityholders to the Paying Agent no later than the related record date. Notwithstanding anything to the contrary contained in this Indenture or any Debt Security, if the Trust or the Trustee of the Trust is the holder of any Debt Security, then all payments in respect of such Debt Security shall be made by the Company in immediately available funds when due.

(b)  The Company and each of the Securityholders will treat the Debt Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Debt Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Debt Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided (i) an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S. status for U.S. federal income tax purposes, and establishing a complete exemption from U.S. withholding tax, or (ii) any other applicable form establishing a complete exemption from U.S. withholding tax.

(c)  As of the date of this Indenture, the Company represents that it has no intention to exercise its right under Section 2.11 to defer payments of interest on the Debt Securities by commencing an Extension Period.

(d)  As of the date of this Indenture, the Company represents that the likelihood that it would exercise its right under this Indenture to defer payments of interest on the Debt Securities by commencing an Extension Period at any time during which the Debt Securities are outstanding is remote because of the restrictions that would be imposed on the Company’s ability to declare or pay dividends or distributions on, or to redeem, purchase or make a liquidation payment with respect to, any of its outstanding equity and on the Company’s ability to make any payments of principal of or premium, if any, or interest on, or repurchase or redeem, any of its debt securities that rank pari passu in all respects with or junior in interest to the Debt Securities.

-22-

SECTION 3.02.   Offices for Notices and Payments, etc.

So long as any of the Debt Securities remain outstanding, the Company will maintain an office or agency where the Debt Securities may be presented for payment, an office or agency where the Debt Securities may be presented for registration of transfer and for exchange as provided in this Indenture and an office or agency where notices and demands to or upon the Company in respect of the Debt Securities or of this Indenture may be served. The Company hereby appoints the Trustee at LaSalle Bank National Association, CDO Trust Services Group, Attn: Greg Myers, 135 South LaSalle Street, Suite 1511, Chicago, Illinois 60603 - Cathay Capital Trust IIIas such office or agency. In case the Company shall fail to maintain any such office or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Principal Office of the Trustee.

In addition to any such office or agency, the Company may from time to time designate one or more other offices or agencies where the Debt Securities may be presented for registration of transfer and for exchange in the manner provided in this Indenture, and the Company may from time to time rescind such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any such office or agency for the purposes above mentioned. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof.

SECTION 3.03.   Appointments to Fill Vacancies in Trustee's Office.

The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.09, a Trustee, so that there shall at all times be a Trustee hereunder.

SECTION 3.04.   Provision as to Paying Agent.

(a)  If the Company shall appoint a Paying Agent other than the Trustee, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provision of this Section 3.04:

(1)  that it will hold all sums held by it as such agent for the payment of all payments due on the Debt Securities (whether such sums have been paid to it by the Company or by any other obligor on the Debt Securities) in trust for the benefit of the Securityholders;

(2)  that it will give the Trustee prompt written notice of any failure by the Company (or by any other obligor on the Debt Securities) to make any payment on the Debt Securities when the same shall be due and payable; and

-23-

(3)  that it will, at any time during the continuance of any Event of Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

(b)  If the Company shall act as its own Paying Agent, it will, on or before each due date of the payments due on the Debt Securities, set aside, segregate and hold in trust for the benefit of the Securityholders a sum sufficient to pay such payments so becoming due and will notify the Trustee in writing of any failure to take such action and of any failure by the Company (or by any other obligor under the Debt Securities) to make any payment on the Debt Securities when the same shall become due and payable.

Whenever the Company shall have one or more Paying Agents for the Debt Securities, it will, on or prior to each due date of the payments on the Debt Securities, deposit with a Paying Agent a sum sufficient to pay all payments so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee in writing of its action or failure to act.

(c)  Anything in this Section 3.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge with respect to the Debt Securities, or for any other reason, pay, or direct any Paying Agent to pay to the Trustee all sums held in trust by the Company or any such Paying Agent, such sums to be held by the Trustee upon the same terms and conditions herein contained.

(d)  Anything in this Section 3.04 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 3.04 is subject to Sections 12.03 and 12.04.

(e)  The Company hereby initially appoints the Trustee to act as Paying Agent (the "Paying Agent").

SECTION 3.05.   Certificate to Trustee.

The Company will deliver to the Trustee on or before 120 days after the end of each fiscal year, so long as Debt Securities are outstanding hereunder, a Certificate stating that in the course of the performance by the signers of their duties as officers of the Company they would normally have knowledge of any default by the Company in the performance of any covenants of the Company contained herein, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature thereof.

SECTION 3.06.   Additional Interest.

If and for so long as the Trust is the holder of all Debt Securities and is subject to or otherwise required to pay, or is required to withhold from distributions to holders of Trust Securities, any additional taxes (including withholding taxes), duties, assessments or other governmental charges as a result of a Tax Event, the Company will pay such additional amounts (the "Additional Interest") on the Debt Securities as shall be required so that the net amounts received and retained by the Trust for distribution to holders of Trust Securities after paying all taxes (including withholding taxes), duties, assessments or other governmental charges will be equal to the amounts the Trust would have received and retained for distribution to holders of Trust Securities after paying all taxes (including withholding taxes on distributions to holders of Trust Securities), duties, assessments or other governmental charges if no such additional taxes, duties, assessments or other governmental charges had been imposed. Whenever in this Indenture or the Debt Securities there is a reference in any context to the payment of principal of or premium, if any, or interest on the Debt Securities, such mention shall be deemed to include mention of payments of the Additional Interest provided for in this paragraph to the extent that, in such context, Additional Interest is, was or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Interest (if applicable) in any provisions hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made; provided, however, that, notwithstanding anything to the contrary contained in this Indenture or any Debt Security, the deferral of the payment of interest during an Extension Period pursuant to Section 2.11 shall not defer the payment of any Additional Interest that may be due and payable.

-24-

SECTION 3.07.   Compliance with Consolidation Provisions.

The Company will not, while any of the Debt Securities remain outstanding, consolidate with, or merge into any other Person, or merge into itself, or sell, convey, transfer or otherwise dispose of all or substantially all of its property or capital stock to any other Person unless the provisions of Article XI hereof are complied with.

SECTION 3.08.   Limitation on Dividends.

If Debt Securities are initially issued to the Trust or a trustee of such Trust in connection with the issuance of Trust Securities by the Trust (regardless of whether Debt Securities continue to be held by such Trust) and (i) there shall have occurred and be continuing an Event of Default, (ii) the Company shall be in default with respect to its payment of any obligations under the Capital Securities Guarantee or (iii) the Company shall have given notice of its election to defer payments of interest on the Debt Securities by extending the interest distribution period as provided herein and such period, or any extension thereof, shall have commenced and be continuing, then the Company may not (A) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock or (B) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Debt Securities or (C) make any payment under any guarantees of the Company that rank pari passu in all respects with or junior in interest to the Capital Securities Guarantee (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company (I) in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, (II) in connection with a dividend reinvestment or stockholder stock purchase plan or (III) in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock), as consideration in an acquisition transaction entered into prior to the occurrence of (i), (ii) or (iii) above, (b) as a result of any exchange, reclassification, combination or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (c) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock).

-25-

SECTION 3.09.   Covenants as to the Trust.

For so long as such Trust Securities remain outstanding, the Company shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Company under this Indenture that is a U.S. Person may succeed to the Company's ownership of such Common Securities. The Company, as owner of the Common Securities, shall use commercially reasonable efforts to cause the Trust (a) to remain a statutory trust, except in connection with a distribution of Debt Securities to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes and (c) to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Debt Securities.

ARTICLE IV

LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

SECTION 4.01.   Securityholders' Lists.

The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee:

(a)  on each regular record date for an Interest Payment Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Securityholders as of such record date; and

(b)  at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

except that no such lists need be furnished under this Section 4.01 so long as the Trustee is in possession thereof by reason of its acting as Debt Security Registrar.

SECTION 4.02.   Preservation and Disclosure of Lists.

(a)  The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Securityholders (1) contained in the most recent list furnished to it as provided in Section 4.01 or (2) received by it in the capacity of Debt Security Registrar (if so acting) hereunder. The Trustee may destroy any list furnished to it as provided in Section 4.01 upon receipt of a new list so furnished.

-26-

(b)  In case three or more Securityholders (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Debt Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Securityholders with respect to their rights under this Indenture or under such Debt Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall within five Business Days after the receipt of such application, at the election of the Company, either:

(1)  afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.02, or

(2)  inform such applicants as to the approximate number of Securityholders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.02, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application.

If the Company shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder whose name and address appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.02 a copy of the form of proxy or other communication which is specified in such request with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants, and file with the Securities and Exchange Commission, if permitted or required by applicable law, together with a copy of the material to be mailed, a written statement of the Company to the effect that such mailing would be contrary to the best interests of the holders of all Debt Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If said Commission, as permitted or required by applicable law, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, said Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

-27-

(c)  Each and every Securityholder, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Securityholders in accordance with the provisions of subsection (b) of this Section 4.02, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b).

SECTION 4.03.   Financial and Other Information.

  The Company shall deliver to each Securityholder (1) each Report on Form 10-K and Form 10-Q prepared by the Company and filed with the Securities and Exchange Commission in accordance with the Exchange Act within 7 days after the filing thereof, (2) if the Company is not then (y) subject to Section 13 or 15(d) of the Exchange Act or (z) exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the Company shall be required to provide within 45 days of the end of each calendar quarterly period and 90 days after the end of each calendar year, the information required to be provided by Rule 144A(d)(4) under the Securities Act and (3) within 30 days after the end of the fiscal year of the Company, Form 1099 or such other annual U.S. federal income tax information statement required by the Code containing such information with regard to the Debt Securities held by such Securityholder as is required by the Code and the income tax regulations of the U.S. Treasury thereunder.

  The Company will cause copies of its regulatory reports to be delivered to the Securityholder promptly following their filing with the Federal Reserve.

ARTICLE V

REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

SECTION 5.01.   Events of Default.

The following events shall be "Events of Default" with respect to Debt Securities:

(a)  the Company defaults in the payment of any interest upon any Debt Security when it becomes due and payable (unless the Company has elected and may defer interest payments pursuant to Section 2.11), and continuance of such default for a period of 30 days; for the avoidance of doubt, an extension of any interest distribution period by the Company in accordance with Section 2.11 of this Indenture shall not constitute a default under this clause 5.01(a); or

(b)  the Company defaults in the payment of all or any part of the principal of (or premium, if any, on) any Debt Securities as and when the same shall become due and payable either at maturity, upon redemption, by declaration of acceleration pursuant to Section 5.01 of this Indenture or otherwise; or

(c)  the Company defaults in the payment of any interest upon any Debt Security when it becomes due and payable following the nonpayment of any such interest for 20 or more consecutive quarterly periods; or

-28-

(d)  the Company defaults in the performance of, or breaches, any of its covenants or agreements in Sections 3.06, 3.07, 3.08 or 3.09 of this Indenture (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of not less than 25% in aggregate principal amount of the outstanding Debt Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

(e)  a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or for any substantial part of its property, or orders the winding-up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(f)  the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or of any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or

(g)  the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence except in connection with (1) the distribution of the Debt Securities to holders of the Trust Securities in liquidation of their interests in the Trust, (2) the redemption of all of the outstanding Trust Securities or (3) certain mergers, consolidations or amalgamations, each as permitted by the Declaration.

If an Event of Default specified under clause (c) of this Section 5.01 occurs and is continuing with respect to the Debt Securities, then, and in each and every such case, unless the principal of the Debt Securities shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debt Securities then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the entire principal of the Debt Securities and any premium and interest accrued, but unpaid, thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable. If an Event of Default specified under clause (e), (f) or (g) of this Section 5.01 occurs, then, in each and every such case, the entire principal amount of the Debt Securities and any premium and interest accrued, but unpaid, thereon shall ipso facto become immediately due and payable without further action. Notwithstanding anything to the contrary in this Section 5.01, if at any time during the period in which this Indenture remains in force and effect, the Company ceases or elects to cease to be subject to the supervision and regulations of the Federal Reserve, OTS, OCC or similar regulatory authority overseeing bank, thrift, savings and loan or financial holding companies or similar institutions requiring specifications for the treatment of capital similar in nature to the capital adequacy guidelines under the Federal Reserve rules and regulations, then the first sentence of this paragraph shall be deemed to include clauses (a), (b) and (d) under this Section 5.01 as an Event of Default resulting in an acceleration of payment of the Debt Securities to the same extent as provided herein for clause (c).

-29-

With respect to clause (d) of this Section 5.01, the Company agrees that in the event of a breach by the Company of its covenants or agreements mentioned therein, any remedy at law or in damages may prove inadequate and therefore the Company agrees that the Trustee shall be entitled to injunctive relief against the Company in the event of any breach or threatened breach by the Company, in addition to any other relief (including damages) available to the Trustee under this Indenture or under law.

The foregoing provisions, however, are subject to the condition that if, at any time after the principal of the Debt Securities shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, (i) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debt Securities and all payments on the Debt Securities which shall have become due otherwise than by acceleration (with interest upon all such payments and Deferred Interest, to the extent permitted by law) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other amounts due to the Trustee pursuant to Section 6.06, if any, and (ii) all Events of Default under this Indenture, other than the non-payment of the payments on Debt Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, and in each and every such case the holders of a majority in aggregate principal amount of the Debt Securities then outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon; provided, however, that if the Debt Securities are held by the Trust or a trustee of the Trust, such waiver or rescission and annulment shall not be effective until the holders of a majority in aggregate liquidation amount of the outstanding Capital Securities of the Trust shall have consented to such waiver or rescission and annulment.

In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Trustee and the Securityholders shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Securityholders shall continue as though no such proceeding had been taken.

SECTION 5.02.   Payment of Debt Securities on Default; Suit Therefor.

The Company covenants that upon the occurrence of an Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01, and upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the Securityholders, the whole amount that then shall have become due and payable on all Debt Securities including Deferred Interest accrued on the Debt Securities; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and any other amounts due to the Trustee under Section 6.06. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or any other obligor on such Debt Securities and collect in the manner provided by law out of the property of the Company or any other obligor on such Debt Securities wherever situated the moneys adjudged or decreed to be payable.

-30-

In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Debt Securities under Bankruptcy Law, or in case a receiver or trustee shall have been appointed for the property of the Company or such other obligor, or in the case of any other similar judicial proceedings relative to the Company or other obligor upon the Debt Securities, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Debt Securities shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.02, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Debt Securities and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all other amounts due to the Trustee under Section 6.06) and of the Securityholders allowed in such judicial proceedings relative to the Company or any other obligor on the Debt Securities, or to the creditors or property of the Company or such other obligor, unless prohibited by applicable law and regulations, to vote on behalf of the Securityholders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other amounts due to the Trustee under Section 6.06.

Nothing herein contained shall be construed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Debt Securities or the rights of any holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.

-31-

All rights of action and of asserting claims under this Indenture, or under any of the Debt Securities, may be enforced by the Trustee without the possession of any of the Debt Securities, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the Securityholders.

In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Securityholders, and it shall not be necessary to make any Securityholders parties to any such proceedings.

SECTION 5.03.   Application of Moneys Collected by Trustee.

Any moneys collected by the Trustee shall be applied in the following order, at the date or dates specified pursuant hereto for the distribution of such moneys, upon presentation of the several Debt Securities in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

First: To the payment of costs and expenses incurred by, and reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all other amounts due to the Trustee under Section 6.06;

Second: To the payment of all Senior Indebtedness of the Company if and to the extent required by Article XV;

Third: To the payment of the amounts then due and unpaid upon Debt Securities, in respect of which or for the benefit of which money has been collected, ratably, without preference or priority of any kind, according to the amounts due on such Debt Securities; and

Fourth: The balance, if any, to the Company.

SECTION 5.04.   Proceedings by Securityholders.

No Securityholder shall have any right to institute any suit, action or proceeding for any remedy hereunder, unless such Securityholder previously shall have given to the Trustee written notice of an Event of Default with respect to the Debt Securities and unless the holders of not less than 25% in aggregate principal amount of the Debt Securities then outstanding shall have given the Trustee a written request to institute such action, suit or proceeding and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action, suit or proceeding; provided, that no Securityholder shall have any right to prejudice the rights of any other Securityholder, obtain priority or preference over any other such Securityholder or enforce any right under this Indenture except in the manner herein provided and for the equal, ratable and common benefit of all Securityholders.

-32-

Notwithstanding any other provisions in this Indenture, however, the right of any Securityholder to receive payment of the principal of, premium, if any, and interest on such Debt Security when due, or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such Securityholder. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

SECTION 5.05.   Proceedings by Trustee.

In case of an Event of Default hereunder the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

SECTION 5.06.   Remedies Cumulative and Continuing.

Except as otherwise provided in Section 2.06, all powers and remedies given by this Article V to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the Securityholders, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to the Debt Securities, and no delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.04, every power and remedy given by this Article V or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.

SECTION 5.07.   Direction of Proceedings and Waiver of Defaults by Majority of Securityholders.

The holders of a majority in aggregate principal amount of the Debt Securities affected (voting as one class) at the time outstanding and, if the Debt Securities are held by the Trust or a trustee of the Trust, the holders of a majority in aggregate liquidation amount of the outstanding Capital Securities of the Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to such Debt Securities; provided, however, that if the Debt Securities are held by the Trust or a trustee of the Trust, such time, method and place or such exercise, as the case may be, may not be so directed until the holders of a majority in aggregate liquidation amount of the outstanding Capital Securities of the Trust shall have directed such time, method and place or such exercise, as the case may be; provided, further, that (subject to the provisions of Section 6.01) the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel shall determine that the action so directed would be unjustly prejudicial to the holders not taking part in such direction or if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if a Responsible Officer of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability. Prior to any declaration of acceleration, or ipso facto acceleration, of the maturity of the Debt Securities, the holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding may on behalf of the holders of all of the Debt Securities waive (or modify any previously granted waiver of) any past default or Event of Default and its consequences, except a default (a) in the payment of principal of, premium, if any, or interest on any of the Debt Securities, (b) in respect of covenants or provisions hereof which cannot be modified or amended without the consent of the holder of each Debt Security affected, or (c) in respect of the covenants contained in Section 3.09; provided, however, that if the Debt Securities are held by the Trust or a trustee of the Trust, such waiver or modification to such waiver shall not be effective until the holders of a majority in Liquidation Amount of the Trust Securities of the Trust shall have consented to such waiver or modification to such waiver; provided, further, that if the consent of the holder of each outstanding Debt Security is required, such waiver or modification to such waiver shall not be effective until each holder of the outstanding Capital Securities of the Trust shall have consented to such waiver or modification to such waiver. Upon any such waiver or modification to such waiver, the Default or Event of Default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the Securityholders shall be restored to their former positions and rights hereunder, respectively; but no such waiver or modification to such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 5.07, said Default or Event of Default shall for all purposes of the Debt Securities and this Indenture be deemed to have been cured and to be not continuing.

-33-

SECTION 5.08.   Notice of Defaults.

The Trustee shall, within 90 days after a Responsible Officer of the Trustee shall have actual knowledge or received written notice of the occurrence of a Default with respect to the Debt Securities, mail to all Securityholders, as the names and addresses of such Securityholders appear upon the Debt Security Register, notice of all Defaults with respect to the Debt Securities actually known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section 5.08 being hereby defined to be the events specified in subsections (a), (b), (c), (d), (e), (f) and (g) of Section 5.01, not including periods of grace, if any, provided for therein); provided, that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Debt Securities, the Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders.

SECTION 5.09.   Undertaking to Pay Costs.

All parties to this Indenture agree, and each Securityholder by such Securityholder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Debt Securities (or, if such Debt Securities are held by the Trust or a trustee of the Trust, more than 10% in liquidation amount of the outstanding Capital Securities), to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debt Security against the Company on or after the same shall have become due and payable, or to any suit instituted in accordance with Section 14.12.

-34-

ARTICLE VI

CONCERNING THE TRUSTEE

SECTION 6.01.   Duties and Responsibilities of Trustee.

With respect to the holders of Debt Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Debt Securities and after the curing or waiving of all Events of Default which may have occurred, with respect to the Debt Securities, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default with respect to the Debt Securities has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.

No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(a)  prior to the occurrence of an Event of Default with respect to the Debt Securities and after the curing or waiving of all Events of Default which may have occurred

(1)  the duties and obligations of the Trustee with respect to the Debt Securities shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations with respect to the Debt Securities as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2)  in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform on their face to the requirements of this Indenture;

-35-

(b)  the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(c)  the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith, in accordance with the direction of the Securityholders pursuant to Section 5.07, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;

(d)  the Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Debt Securities unless either (1) a Responsible Officer shall have actual knowledge of such Default or Event of Default or (2) written notice of such Default or Event of Default shall have been given to the Trustee by the Company or any other obligor on the Debt Securities or by any Securityholder, except with respect to an Event of Default pursuant to Sections 5.01(a), 5.01(b) or 5.01(c) hereof (other than an Event of Default resulting from the default in the payment of Additional Interest or premium, if any, if the Trustee does not have actual knowledge or written notice that such payment is due and payable), of which the Trustee shall be deemed to have knowledge; and

(e)in the absence of bad faith on the part of the Trustee, the Trustee may seek and rely on reasonable instructions from the Company.

None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.

SECTION 6.02.   Reliance on Documents, Opinions, etc.

Except as otherwise provided in Section 6.01:

(a)  the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;

(b)  any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;

(c)  the Trustee may consult with counsel of its selection and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;

-36-

(d)  the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby;

(e)  the Trustee shall not be liable for any action taken or omitted by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to the Debt Securities (that has not been cured or waived) to exercise with respect to the Debt Securities such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs;

(f)  the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of not less than a majority in aggregate principal amount of the outstanding Debt Securities affected thereby; provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding; and

(g)  the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents (including any Authenticating Agent) or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care.

SECTION 6.03.   No Responsibility for Recitals, etc.

The recitals contained herein and in the Debt Securities (except in the certificate of authentication of the Trustee or the Authenticating Agent) shall be taken as the statements of the Company and the Trustee and the Authenticating Agent assume no responsibility for the correctness of the same. The Trustee and the Authenticating Agent make no representations as to the validity or sufficiency of this Indenture or of the Debt Securities. The Trustee and the Authenticating Agent shall not be accountable for the use or application by the Company of any Debt Securities or the proceeds of any Debt Securities authenticated and delivered by the Trustee or the Authenticating Agent in conformity with the provisions of this Indenture.

-37-

SECTION 6.04.   Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar May Own Debt Securities.

The Trustee or any Authenticating Agent or any Paying Agent or any transfer agent or any Debt Security Registrar, in its individual or any other capacity, may become the owner or pledgee of Debt Securities with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, transfer agent or Debt Security Registrar.

SECTION 6.05.   Moneys to be Held in Trust.

Subject to the provisions of Section 12.04, all moneys received by the Trustee or any Paying Agent shall, until used or applied as herein provided, be held in trust for the purpose for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee and any Paying Agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys, if any, shall be paid from time to time to the Company upon the written order of the Company, signed by the Chairman of the Board of Directors, the President, the Chief Operating Officer, a Vice President, the Treasurer or an Assistant Treasurer of the Company.

SECTION 6.06.   Compensation and Expenses of Trustee.

Other than as provided in the Fee Agreement of even date herewith between Cohen & Company, the Trustee and the Company, the Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as shall be agreed to in writing between the Company and the Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and the Company will pay or reimburse the Trustee upon its written request for all documented reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the reasonable expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance that arises from its negligence, willful misconduct or bad faith. The Company also covenants to indemnify each of the Trustee (including in its individual capacity) and any predecessor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee), except to the extent such loss, damage, claim, liability or expense results from the negligence, willful misconduct or bad faith of such indemnitee, arising out of or in connection with the acceptance or administration of this Trust, including the costs and expenses of defending itself against any claim or liability in the premises. The obligations of the Company under this Section 6.06 to compensate and indemnify the Trustee and to pay or reimburse the Trustee for documented expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by (and the Company hereby grants and pledges to the Trustee) a lien prior to that of the Debt Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the holders of particular Debt Securities.

-38-

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in subsections (e), (f) or (g) of Section 5.01, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.

The provisions of this Section shall survive the resignation or removal of the Trustee and the defeasance or other termination of this Indenture.

Notwithstanding anything in this Indenture or any Debt Security to the contrary, the Trustee shall have no obligation whatsoever to advance funds to pay any principal of or interest on or other amounts with respect to the Debt Securities or otherwise advance funds to or on behalf of the Company.

SECTION 6.07.   Officers' Certificate as Evidence.

Except as otherwise provided in Sections 6.01 and 6.02, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence, willful misconduct or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee, and such certificate, in the absence of negligence, willful misconduct or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.

SECTION 6.08.   Eligibility of Trustee.

The Trustee hereunder shall at all times be a U.S. Person that is a banking corporation or national banking association organized and doing business under the laws of the United States of America or any state thereof or of the District of Columbia and authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least fifty million U.S. dollars ($50,000,000) and subject to supervision or examination by federal, state, or District of Columbia authority. If such corporation or national banking association publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 6.08 the combined capital and surplus of such corporation or national banking association shall be deemed to be its combined capital and surplus as set forth in its most recent records of condition so published.

The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee, notwithstanding that such corporation or national banking association shall be otherwise eligible and qualified under this Article.

-39-

In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.08, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.09.

If the Trustee has or shall acquire any "conflicting interest" within the meaning of § 310(b) of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to this Indenture.

SECTION 6.09.   Resignation or Removal of Trustee, Calculation Agent, Paying Agent or Debt Security Registrar.

(a)  The Trustee, or any trustee or trustees hereafter appointed, the Calculation Agent, the Paying Agent and any Debt Security Registrar may at any time resign by giving written notice of such resignation to the Company and by mailing notice thereof, at the Company's expense, to the Securityholders at their addresses as they shall appear on the Debt Security Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor or successors by written instrument, in duplicate, executed by order of its Board of Directors, one copy of which instrument shall be delivered to the resigning party and one copy to the successor. If no successor shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation to the affected Securityholders, the resigning party may petition any court of competent jurisdiction for the appointment of a successor, or any Securityholder who has been a bona fide holder of a Debt Security or Debt Securities for at least six months may, subject to the provisions of Section 5.09, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor.

(b)  In case at any time any of the following shall occur:

(1)  the Trustee shall fail to comply with the provisions of the last paragraph of Section 6.08 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Debt Security or Debt Securities for at least six months,

(2)  the Trustee shall cease to be eligible in accordance with the provisions of Section 6.08 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or

(3)  the Trustee shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, the Company may remove the Trustee and appoint a successor Trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee, or, subject to the provisions of Section 5.09, if no successor Trustee shall have been so appointed and have accepted appointment within 30 days of the occurrence of any of (1), (2) or (3) above, any Securityholder who has been a bona fide holder of a Debt Security or Debt Securities for at least six months may, on behalf of himself or herself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor Trustee.

-40-

(c)  Upon prior written notice to the Company and the Trustee, the holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding may at any time remove the Trustee and nominate a successor Trustee, which shall be deemed appointed as successor Trustee unless within ten Business Days after such nomination the Company objects thereto, in which case or in the case of a failure by such Securityholders to nominate a successor Trustee, the Trustee so removed or any Securityholder, upon the terms and conditions and otherwise as in subsection (a) of this Section 6.09 provided, may petition any court of competent jurisdiction for an appointment of a successor.

(d)  Any resignation or removal of the Trustee, the Calculation Agent, the Paying Agent and any Debt Security Registrar and appointment of a successor pursuant to any of the provisions of this Section 6.09 shall become effective upon acceptance of appointment by the successor as provided in Section 6.10.

SECTION 6.10.   Acceptance by Successor.

Any successor Trustee, Calculation Agent, Paying Agent or Debt Security Registrar appointed as provided in Section 6.09 shall execute, acknowledge and deliver to the Company and to its predecessor an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the retiring party shall become effective and such successor, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations with respect to the Debt Securities of its predecessor hereunder, with like effect as if originally named herein; but, nevertheless, on the written request of the Company or of the successor, the party ceasing to act shall, upon payment of the amounts then due it pursuant to the provisions of Section 6.06, execute and deliver an instrument transferring to such successor all the rights and powers of the party so ceasing to act and shall duly assign, transfer and deliver to such successor all property and money held by such retiring party hereunder. Upon reasonable request of any such successor, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor all such rights and powers. Any party ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected to secure any amounts then due it pursuant to the provisions of Section 6.06.

If a successor Trustee is appointed, the Company, the retiring Trustee and the successor Trustee shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee.

-41-

No successor Trustee shall accept appointment as provided in this Section 6.10 unless at the time of such acceptance such successor Trustee shall be eligible and qualified under the provisions of Section 6.08.

In no event shall a retiring Trustee, Calculation Agent, Paying Agent or Debt Security Registrar be liable for the acts or omissions of any successor hereunder.

Upon acceptance of appointment by a successor Trustee, Calculation Agent, Paying Agent or Debt Security Registrar as provided in this Section 6.10, the Company shall mail notice of the succession to the Securityholders at their addresses as they shall appear on the Debt Security Register. If the Company fails to mail such notice within ten Business Days after the acceptance of appointment by the successor, the successor shall cause such notice to be mailed at the expense of the Company.

SECTION 6.11.   Succession by Merger, etc.

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, that such Person shall be otherwise eligible and qualified under this Article.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Debt Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Debt Securities so authenticated; and in case at that time any of the Debt Securities shall not have been authenticated, any successor to the Trustee may authenticate such Debt Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Debt Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Debt Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

SECTION 6.12.   Authenticating Agents.

There may be one or more Authenticating Agents appointed by the Trustee upon the request of the Company with power to act on its behalf and subject to its direction in the authentication and delivery of Debt Securities issued upon exchange or registration of transfer thereof as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Debt Securities; provided, that the Trustee shall have no liability to the Company for any acts or omissions of the Authenticating Agent with respect to the authentication and delivery of Debt Securities. Any such Authenticating Agent shall at all times be a Person organized and doing business under the laws of the United States or of any state or territory thereof or of the District of Columbia authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of at least $50,000,000 and being subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such Person publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 6.12 the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect herein specified in this Section.

-42-

Any Person into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor Person is otherwise eligible under this Section 6.12 without the execution or filing of any paper or any further act on the part of the parties hereto or such Authenticating Agent.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent with respect to the Debt Securities by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 6.12, the Trustee may, and upon the request of the Company shall, promptly appoint a successor Authenticating Agent eligible under this Section 6.12, shall give written notice of such appointment to the Company and shall mail notice of such appointment to all Securityholders as the names and addresses of such Securityholders appear on the Debt Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities with respect to the Debt Securities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.

Other than as provided in the Fee Agreement of even date herewith between Cohen & Company, the Company and the Trustee, the Company agrees to pay to any Authenticating Agent from time to time reasonable compensation for its services. Any Authenticating Agent shall have no responsibility or liability for any action taken by it as such in accordance with the directions of the Trustee and shall receive such reasonable indemnity as it may require against the costs, expenses and liabilities incurred in furtherance of its duties under this Section 6.12.

-43-

ARTICLE VII

CONCERNING THE SECURITYHOLDERS

SECTION 7.01.   Action by Securityholders.

Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Debt Securities or aggregate Liquidation Amount of the Capital Securities may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Securityholders or holders of Capital Securities, as the case may be, in person or by agent or proxy appointed in writing, or (b) by the record of such Securityholders voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article VIII or of such holders of Capital Securities duly called and held in accordance with the provisions of the Declaration, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Securityholders or holders of Capital Securities, as the case may be, or (d) by any other method the Trustee deems satisfactory.

If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for such Debt Securities for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether holders of the requisite proportion of outstanding Debt Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, and for that purpose the outstanding Debt Securities shall be computed as of the record date; provided, however, that no such authorization, agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

SECTION 7.02.   Proof of Execution by Securityholders.

Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof of the execution of any instrument by a Securityholder or such Securityholder's agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Debt Securities shall be proved by the Debt Security Register or by a certificate of the Debt Security Registrar. The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.

-44-

The record of any Securityholders' meeting shall be proved in the manner provided in Section 8.06.

SECTION 7.03.   Who Are Deemed Absolute Owners.

Prior to due presentment for registration of transfer of any Debt Security, the Company, the Trustee, any Authenticating Agent, any Paying Agent, any transfer agent and any Debt Security Registrar may deem the Person in whose name such Debt Security shall be registered upon the Debt Security Register to be, and may treat such Person as, the absolute owner of such Debt Security (whether or not such Debt Security shall be overdue) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Debt Security and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor any transfer agent nor any Debt Security Registrar shall be affected by any notice to the contrary. All such payments so made to any Securityholder for the time being or upon such Securityholder's order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debt Security.

SECTION 7.04.   Debt Securities Owned by Company Deemed Not Outstanding.

In determining whether the holders of the requisite aggregate principal amount of Debt Securities have concurred in any direction, consent or waiver under this Indenture, Debt Securities which are owned by the Company or any other obligor on the Debt Securities or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company (other than the Trust) or any other obligor on the Debt Securities shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Debt Securities which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 7.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Debt Securities and that the pledgee is not the Company or any such other obligor or Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee.

SECTION 7.05.   Revocation of Consents; Future Securityholders Bound.

At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.01, of the taking of any action by the holders of the percentage in aggregate principal amount of the Debt Securities specified in this Indenture in connection with such action, any Securityholder (in cases where no record date has been set pursuant to Section 7.01) or any holder as of an applicable record date (in cases where a record date has been set pursuant to Section 7.01) of a Debt Security (or any Debt Security issued in whole or in part in exchange or substitution therefor) the serial number of which is shown by the evidence to be included in the Debt Securities the holders of which have consented to such action may, by filing written notice with the Trustee at the Principal Office of the Trustee and upon proof of holding as provided in Section 7.02, revoke such action so far as concerns such Debt Security (or so far as concerns the principal amount represented by any exchanged or substituted Debt Security). Except as aforesaid any such action taken by the holder of any Debt Security shall be conclusive and binding upon such Securityholder and upon all future holders and owners of such Debt Security, and of any Debt Security issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon such Debt Security or any Debt Security issued in exchange or substitution therefor.

-45-

ARTICLE VIII

SECURITYHOLDERS' MEETINGS

SECTION 8.01.   Purposes of Meetings.

A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article VIII for any of the following purposes:

(a)  to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article V;

(b)  to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article VI;

(c)  to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.02; or

(d)  to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of such Debt Securities under any other provision of this Indenture or under applicable law.

SECTION 8.02.   Call of Meetings by Trustee.

The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 8.01, to be held at such time and at such place in Chicago, Illinois as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to Securityholders affected at their addresses as they shall appear on the Debt Securities Register. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting.

SECTION 8.03.   Call of Meetings by Company or Securityholders.

In case at any time the Company pursuant to a Board Resolution, or the holders of at least 10% in aggregate principal amount of the Debt Securities, as the case may be, then outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place in for such meeting and may call such meeting to take any action authorized in Section 8.01, by mailing notice thereof as provided in Section 8.02.

-46-

SECTION 8.04.   Qualifications for Voting.

To be entitled to vote at any meeting of Securityholders a Person shall be (a) a holder of one or more Debt Securities with respect to which the meeting is being held or (b) a Person appointed by an instrument in writing as proxy by a holder of one or more such Debt Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

SECTION 8.05.   Regulations.

Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Debt Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate.

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 8.03, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by majority vote at the meeting.

Subject to the provisions of Section 7.04, at any meeting each Securityholder with respect to which such meeting is being held or proxy therefor shall be entitled to one vote for each $1,000 principal amount of Debt Securities held or represented by such Securityholder; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debt Security challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Debt Securities held by such chairman or instruments in writing as aforesaid duly designating such chairman as the Person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

SECTION 8.06.   Voting.

The vote upon any resolution submitted to any meeting of Securityholders with respect to which such meeting is being held shall be by written ballots on which shall be subscribed the signatures of such Securityholders or of their representatives by proxy and the serial number or numbers of the Debt Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 8.02. The record shall show the serial numbers of the Debt Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated.

-47-

SECTION 8.07.   Quorum; Actions.

The Persons entitled to vote a majority in outstanding principal amount of the Debt Securities shall constitute a quorum for a meeting of Securityholders; provided, however, that if any action is to be taken at such meeting with respect to a consent, waiver, request, demand, notice, authorization, direction or other action which may be given by the holders of not less than a specified percentage in outstanding principal amount of the Debt Securities, the Persons holding or representing such specified percentage in outstanding principal amount of the Debt Securities will constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Securityholders, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.02, except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the outstanding principal amount of the Debt Securities which shall constitute a quorum.

Except as limited by the proviso in the first paragraph of Section 9.02, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the holders of not less than a majority in outstanding principal amount of the Debt Securities; provided, however, that, except as limited by the proviso in the first paragraph of Section 9.02, any resolution with respect to any consent, waiver, request, demand, notice, authorization, direction or other action that this Indenture expressly provides may be given by the holders of not less than a specified percentage in outstanding principal amount of the Debt Securities may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the holders of not less than such specified percentage in outstanding principal amount of the Debt Securities.

-48-

Any resolution passed or decision taken at any meeting of Securityholders duly held in accordance with this Section shall be binding on all the Securityholders, whether or not present or represented at the meeting.

SECTION 8.08.   Written Consent Without a Meeting.

Whenever under this Indenture, Securityholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by the Securityholders of all outstanding Debt Securities entitled to vote thereon. No consent shall be effective to take the action referred to therein unless, within sixty days of the earliest dated consent delivered in the manner required by this paragraph to the Trustee, written consents signed by a sufficient number of Securityholders to take action are delivered to the Trustee at its Principal Office. Delivery made to the Trustee at its Principal Office, shall be by hand or by certificated or registered mail, return receipt requested. Written consent thus given by the Securityholders of such number of Debt Securities as is required hereunder, shall have the same effect as a valid vote of Securityholders of such number of Debt Securities.

ARTICLE IX

SUPPLEMENTAL INDENTURES

SECTION 9.01.   Supplemental Indentures without Consent of Securityholders.

The Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto, without the consent of the Securityholders, for one or more of the following purposes:

(a)  to evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company, pursuant to Article XI hereof;

(b)  to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the Securityholders as the Board of Directors shall consider to be for the protection of such Securityholders, and to make the occurrence, or the occurrence and continuance, of a Default in any of such additional covenants, restrictions or conditions a Default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default;

(c)  to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make or amend such other provisions in regard to matters or questions arising under this Indenture; provided, that any such action shall not adversely affect the interests of the Securityholders;

-49-

(d)  to add to, delete from, or revise the terms of Debt Securities, including, without limitation, any terms relating to the issuance, exchange, registration or transfer of Debt Securities, including to provide for transfer procedures and restrictions substantially similar to those applicable to the Capital Securities, as required by Section 2.05 (for purposes of assuring that no registration of Debt Securities is required under the Securities Act of 1933, as amended); provided, that any such action shall not adversely affect the interests of the holders of the Debt Securities then outstanding (it being understood, for purposes of this proviso, that transfer restrictions on Debt Securities substantially similar to those applicable to Capital Securities shall not be deemed to adversely affect the Securityholders);

(e)  to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debt Securities and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.10;

(f)  to make any change (other than as elsewhere provided in this paragraph) that does not adversely affect the rights of any Securityholder in any material respect; or

(g)  to provide for the issuance of and establish the form and terms and conditions of the Debt Securities, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or the Debt Securities, or to add to the rights of the Securityholders.

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section 9.01 may be executed by the Company and the Trustee without the consent of the Securityholders at the time outstanding, notwithstanding any of the provisions of Section 9.02.

SECTION 9.02.   Supplemental Indentures with Consent of Securityholders.

With the consent (evidenced as provided in Section 7.01) of the holders of not less than a majority in aggregate principal amount of the Debt Securities at the time outstanding affected by such supplemental indenture, the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act, then in effect, applicable to indentures qualified thereunder) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Securityholders; provided, however, that no such supplemental indenture shall without such consent of the holders of each Debt Security then outstanding and affected thereby (i) change the Maturity Date of any Debt Security, or reduce the principal amount thereof or any premium thereon, or reduce the rate (or manner of calculation of the rate) or extend the time of payment of interest thereon, or reduce (other than as a result of the maturity or earlier redemption of any such Debt Security in accordance with the terms of this Indenture and such Debt Security) or increase the aggregate principal amount of Debt Securities then outstanding, or change any of the redemption provisions, or make the principal thereof or any interest or premium thereon payable in any coin or currency other than United States Dollars, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the Securityholder, or (ii) reduce the aforesaid percentage of Debt Securities the holders of which are required to consent to any such supplemental indenture; and provided, further, that if the Debt Securities are held by the Trust or a trustee of such trust, such supplemental indenture shall not be effective until the holders of a majority in Liquidation Amount of the outstanding Capital Securities shall have consented to such supplemental indenture; provided, further, that if the consent of the Securityholder of each outstanding Debt Security is required, such supplemental indenture shall not be effective until each holder of the outstanding Capital Securities shall have consented to such supplemental indenture.

-50-

Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders (and holders of Capital Securities, if required) as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, prepared by the Company, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Debt Security Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

It shall not be necessary for the consent of the Securityholders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

SECTION 9.03.   Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Securityholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

-51-

SECTION 9.04.   Notation on Debt Securities.

Debt Securities authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Debt Securities so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee or the Authenticating Agent and delivered in exchange for the Debt Securities then outstanding.

SECTION 9.05.   Evidence of Compliance of Supplemental Indenture to be furnished to Trustee.

The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall, in addition to the documents required by Section 14.06, receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article IX. The Trustee shall receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article IX is authorized or permitted by, and conforms to, the terms of this Article IX and that it is proper for the Trustee under the provisions of this Article IX to join in the execution thereof.

ARTICLE X

REDEMPTION OF SECURITIES

SECTION 10.01.   Optional Redemption.

At any time the Company shall have the right, subject to the receipt by the Company of prior approval from any regulatory authority with jurisdiction over the Company if such approval is then required under applicable capital guidelines or policies of such regulatory authority, to redeem the Debt Securities, in whole or (provided that all accrued and unpaid interest has been paid on all Debt Securities for all Interest Payment Periods terminating on or prior to such date) from time to time in part, on any March 15, June 15, September 15 or December 15 on or after June 15, 2012 (the "Redemption Date"), at the Redemption Price.

SECTION 10.02.   Special Event Redemption.

If a Special Event shall occur and be continuing, the Company shall have the right, subject to the receipt by the Company of prior approval from any regulatory authority with jurisdiction over the Company if such approval is then required under applicable capital guidelines or policies of such regulatory authority, to redeem the Debt Securities, in whole or in part, at any time within 90 days following the occurrence of such Special Event (the "Special Redemption Date"), at the Special Redemption Price.

-52-

SECTION 10.03.   Notice of Redemption; Selection of Debt Securities.

In case the Company shall desire to exercise the right to redeem all, or, as the case may be, any part of the Debt Securities, it shall fix a date for redemption and shall mail, or cause the Trustee to mail (at the expense of the Company) a notice of such redemption at least 30 and not more than 60 days prior to the date fixed for redemption to the Securityholders so to be redeemed as a whole or in part at their last addresses as the same appear on the Debt Security Register. Such mailing shall be by first class mail. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Securityholder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Debt Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debt Security.

Each such notice of redemption shall specify the CUSIP number, if any, of the Debt Securities to be redeemed, the date fixed for redemption, the redemption price (or manner of calculation of the price) at which Debt Securities are to be redeemed, the place or places of payment, that payment will be made upon presentation and surrender of such Debt Securities, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. If less than all the Debt Securities are to be redeemed the notice of redemption shall specify the numbers of the Debt Securities to be redeemed. In case the Debt Securities are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Debt Security, a new Debt Security or Debt Securities in principal amount equal to the unredeemed portion thereof will be issued.

On the Business Day prior to the Redemption Date or the Special Redemption Date specified in the notice of redemption given as provided in this Section, the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to redeem on the redemption date all the Debt Securities so called for redemption at the appropriate redemption price, together with unpaid interest accrued to such date.

The Company will give the Trustee notice not less than 45 nor more than 60 days prior to the Redemption Date as to the Redemption Price at which the Debt Securities are to be redeemed and the aggregate principal amount of Debt Securities to be redeemed and the Trustee shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Debt Securities or portions thereof (in integral multiples of $1,000) to be redeemed.

SECTION 10.04.   Payment of Debt Securities Called for Redemption.

If notice of redemption has been given as provided in Section 10.03, the Debt Securities or portions of Debt Securities with respect to which such notice has been given shall become due and payable on the Redemption Date or the Special Redemption Date (as the case may be) and at the place or places stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said Redemption Date or the Special Redemption Date (unless the Company shall default in the payment of such Debt Securities at the redemption price, together with unpaid interest accrued thereon to said date) interest on the Debt Securities or portions of Debt Securities so called for redemption shall cease to accrue. On presentation and surrender of such Debt Securities at a place of payment specified in said notice, such Debt Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with unpaid interest accrued thereon to the Redemption Date or the Special Redemption Date (as the case may be).

-53-

Upon presentation of any Debt Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Debt Security or Debt Securities of authorized denominations in principal amount equal to the unredeemed portion of the Debt Security so presented.

ARTICLE XI

CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

SECTION 11.01.   Company May Consolidate, etc., on Certain Terms.

Nothing contained in this Indenture or in the Debt Securities shall prevent any consolidation or merger of the Company with or into any other corporation or corporations (whether or not affiliated with the Company) or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of all or substantially all of the property or capital stock of the Company or its successor or successors to any other corporation (whether or not affiliated with the Company, or its successor or successors) authorized to acquire and operate the same; provided, however, that the Company hereby covenants and agrees that, (i) upon any such consolidation, merger (where the Company is not the surviving corporation), sale, conveyance, transfer or other disposition, the successor entity shall be a corporation organized and existing under the laws of the United States or any state thereof or the District of Columbia (unless such corporation has (1) agreed to make all payments due in respect of the Debt Securities or, if outstanding, the Capital Securities and Capital Securities Guarantee without withholding or deduction for, or on account of, any taxes, duties, assessments or other governmental charges under the laws or regulations of the jurisdiction of organization or residence (for tax purposes) of such corporation or any political subdivision or taxing authority thereof or therein unless required by applicable law, in which case such corporation shall have agreed to pay such additional amounts as shall be required so that the net amounts received and retained by the Securityholders or holders of Capital Securities, as the case may be, after payment of all taxes (including withholding taxes), duties, assessments or other governmental charges, will be equal to the amounts that such Securityholders or holders of Capital Securities would have received and retained had no such taxes (including withholding taxes), duties, assessments or other governmental charges been imposed, (2) irrevocably and unconditionally consented and submitted to the jurisdiction of any United States federal court or New York state court, in each case located in The City of New York, Borough of Manhattan, in respect of any action, suit or proceeding against it arising out of or in connection with this Indenture, the Debt Securities, the Capital Securities Guarantee or the Declaration and irrevocably and unconditionally waived, to the fullest extent permitted by law, any objection to the laying of venue in any such court or that any such action, suit or proceeding has been brought in an inconvenient forum and (3) irrevocably appointed an agent in The City of New York for service of process in any action, suit or proceeding referred to in clause (2) above) and such corporation expressly assumes all of the obligations of the Company under the Debt Securities, this Indenture, the Capital Securities Guarantee and the Declaration and (ii) after giving effect to any such consolidation, merger, sale, conveyance, transfer or other disposition, no Default or Event of Default shall have occurred and be continuing.

-54-

SECTION 11.02.   Successor Entity to be Substituted.

In case of any such consolidation, merger, sale, conveyance, transfer or other disposition contemplated in Section 11.01 and upon the assumption by the successor entity, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form to the Trustee, of the due and punctual payment of the principal of and premium, if any, and interest on all of the Debt Securities and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company, such successor entity shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the Company, and thereupon the predecessor entity shall be relieved of any further liability or obligation hereunder or upon the Debt Securities. Such successor entity thereupon may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Debt Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee or the Authenticating Agent; and, upon the order of such successor entity instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate and deliver any Debt Securities which previously shall have been signed and delivered by the officers of the Company, to the Trustee or the Authenticating Agent for authentication, and any Debt Securities which such successor entity thereafter shall cause to be signed and delivered to the Trustee or the Authenticating Agent for that purpose. All the Debt Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debt Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debt Securities had been issued at the date of the execution hereof.

SECTION 11.03.   Opinion of Counsel to be Given to Trustee.

The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall receive, in addition to the Opinion of Counsel required by Section 9.05, an Opinion of Counsel as conclusive evidence that any consolidation, merger, sale, conveyance, transfer or other disposition, and any assumption, permitted or required by the terms of this Article XI complies with the provisions of this Article XI.

-55-

ARTICLE XII

SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 12.01.   Discharge of Indenture.

When (a) the Company shall deliver to the Trustee for cancellation all Debt Securities theretofore authenticated (other than any Debt Securities which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.06) and not theretofore canceled, or (b) all the Debt Securities not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee, in trust, funds, which shall be immediately due and payable, sufficient to pay at maturity or upon redemption all of the Debt Securities (other than any Debt Securities which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.06) not theretofore canceled or delivered to the Trustee for cancellation, including principal and premium, if any, and interest due or to become due to such date of maturity or redemption date, as the case may be, but excluding, however, the amount of any moneys for the payment of principal of, and premium, if any, or interest on the Debt Securities (1) theretofore repaid to the Company in accordance with the provisions of Section 12.04, or (2) paid to any state or to the District of Columbia pursuant to its unclaimed property or similar laws, and if in the case of either clause (a) or clause (b) the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect except for the provisions of Sections 2.05, 2.06, 3.01, 3.02, 3.04, 6.06, 6.09 and 12.04 hereof, which shall survive until such Debt Securities shall mature or are redeemed, as the case may be, and are paid in full. Thereafter, Sections 6.06, 6.09 and 12.04 shall survive, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture, the Company, however, hereby agreeing to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Debt Securities.

SECTION 12.02.   Deposited Moneys to be Held in Trust by Trustee.

Subject to the provisions of Section 12.04, all moneys deposited with the Trustee pursuant to Section 12.01 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including the Company if acting as its own Paying Agent), to the holders of the particular Debt Securities for the payment of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal, and premium, if any, and interest.

-56-

SECTION 12.03.   Paying Agent to Repay Moneys Held.

Upon the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent of the Debt Securities (other than the Trustee) shall, upon demand of the Company, be repaid to the Company or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

SECTION 12.04.   Return of Unclaimed Moneys.

Any moneys deposited with or paid to the Trustee or any Paying Agent for payment of the principal of, and premium, if any, or interest on Debt Securities and not applied but remaining unclaimed by the Securityholders for two years after the date upon which the principal of, and premium, if any, or interest on such Debt Securities, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee or such Paying Agent on written demand; and the holder of any of the Debt Securities shall thereafter look only to the Company for any payment which such Securityholder may be entitled to collect and all liability of the Trustee or such Paying Agent with respect to such moneys shall thereupon cease.

ARTICLE XIII

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

SECTION 13.01.   Indenture and Debt Securities Solely Corporate Obligations.

No recourse for the payment of the principal of or premium, if any, or interest on any Debt Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture, or in any such Debt Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer, director, employee or agent, as such, past, present or future, of the Company or of any predecessor or successor corporation of the Company, either directly or through the Company or any successor corporation of the Company, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Debt Securities.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

SECTION 14.01.   Successors.

All the covenants, stipulations, promises and agreements of the Company contained in this Indenture shall bind its successors and assigns whether so expressed or not.

-57-

SECTION 14.02.   Official Acts by Successor Entity.

Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee, officer or other authorized Person of any entity that shall at the time be the lawful successor of the Company.

SECTION 14.03.   Surrender of Company Powers.

The Company by instrument in writing executed by authority of 2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company and thereupon such power so surrendered shall terminate both as to the Company and as to any permitted successor.

SECTION 14.04.   Addresses for Notices, etc.

Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Securityholders on the Company may be given or served in writing, duly signed by the party giving such notice, and shall be delivered by facsimile (which shall be followed by notice delivered or mailed by first class mail) or mailed by first class mail to the Company at:

Cathay General Bancorp

777 North Broadway

Los Angeles, California 90012

Attention: Heng Chen

Any notice, direction, request or demand by any Securityholder or the Company to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the office of LaSalle Bank National Association at:

135 South LaSalle Street, Suite 1511

Chicago, Illinois 60603

Attn: CDO Trust Services Group - Cathay Capital Trust III

SECTION 14.05.   Governing Law.

This Indenture and the Debt Securities shall each be governed by, and construed in accordance with, the laws of the State of New York, without regard to conflict of laws principles of said State other than Section 5-1401 of the New York General Obligations Law.

SECTION 14.06.   Evidence of Compliance with Conditions Precedent.

Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that in the opinion of the signers all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with (except that no such Opinion of Counsel is required to be furnished to the Trustee in connection with the authentication and issuance of Debt Securities issued on the date of this Indenture).

-58-

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (except certificates delivered pursuant to Section 3.05) shall include (a) a statement that the person making such certificate or opinion has read such covenant or condition and the definitions relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

SECTION 14.07.   Non-Business Days.

Notwithstanding anything to the contrary contained herein, if any Interest Payment Date, other than on the Maturity Date, any Redemption Date or the Special Redemption Date, falls on a day that is not a Business Day, then any interest payable will be paid on, and such Interest Payment Date will be moved to, the next succeeding Business Day, and additional interest will accrue for each day that such payment is delayed as a result thereof. If the Maturity Date, Redemption Date or Special Redemption Date falls on a day that is not a Business Day, then the principal, premium, if any, and/or interest payable on such date will be paid on the next succeeding Business Day, and no additional interest will accrue (except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day).

SECTION 14.08.   Table of Contents, Headings, etc.

The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 14.09.   Execution in Counterparts.

This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

SECTION 14.10.   Severability.

In case any one or more of the provisions contained in this Indenture or in the Debt Securities shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of such Debt Securities, but this Indenture and such Debt Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

-59-

SECTION 14.11.   Assignment.

Subject to Article XI, the Company will have the right at all times to assign any of its rights or obligations under this Indenture and the Debt Securities to a direct or indirect wholly owned Subsidiary of the Company; provided, however, that, in the event of any such assignment, the Company will remain liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties hereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties thereto.

SECTION 14.12.   Acknowledgment of Rights.

The Company acknowledges that, with respect to any Debt Securities held by the Trust or the Institutional Trustee of the Trust, if the Institutional Trustee of the Trust fails to enforce its rights under this Indenture as the Securityholder held as the assets of the Trust after the holders of a majority in Liquidation Amount of the Capital Securities of the Trust have so directed in writing such Institutional Trustee, a holder of record of such Capital Securities may to the fullest extent permitted by law institute legal proceedings directly against the Company to enforce such Institutional Trustee's rights under this Indenture without first instituting any legal proceedings against such Institutional Trustee or any other Person. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest (or premium, if any) or principal on the Debt Securities on the date such interest (or premium, if any) or principal is otherwise due and payable (or in the case of redemption, on the redemption date), the Company acknowledges that a holder of record of Capital Securities of the Trust may directly institute a proceeding against the Company for enforcement of payment to such holder directly of the principal of (or premium, if any) or interest on the Debt Securities having an aggregate principal amount equal to the aggregate Liquidation Amount of the Capital Securities of such holder on or after the respective due date specified in the Debt Securities.

ARTICLE XV

SUBORDINATION OF DEBT SECURITIES

SECTION 15.01.   Agreement to Subordinate.

The Company covenants and agrees, and each holder of Debt Securities issued hereunder and under any supplemental indenture (the "Additional Provisions") by such Securityholder's acceptance thereof likewise covenants and agrees, that all Debt Securities shall be issued subject to the provisions of this Article XV; and each Securityholder, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions.

The payment by the Company of the payments due on all Debt Securities issued hereunder and under any Additional Provisions shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness of the Company, whether outstanding at the date of this Indenture or thereafter incurred.

-60-

No provision of this Article XV shall prevent the occurrence of any Default or Event of Default hereunder.

SECTION 15.02.   Default on Senior Indebtedness.

In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due on any Senior Indebtedness of the Company following any applicable grace period, or in the event that the maturity of any Senior Indebtedness of the Company has been accelerated because of a default, and such acceleration has not been rescinded or canceled and such Senior Indebtedness has not been paid in full, then, in either case, no payment shall be made by the Company with respect to the payments due on the Debt Securities.

In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 15.02, such payment shall, subject to Section 15.06, be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (or their representative or representatives or a trustee) notify the Trustee in writing within 90 days of such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness.

SECTION 15.03.   Liquidation; Dissolution; Bankruptcy.

Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Company on the Debt Securities; and upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Securityholders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XV, shall be paid by the Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Securityholders or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness of the Company (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness, before any payment or distribution is made to the Securityholders.

-61-

In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior Indebtedness of the Company is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness of the Company remaining unpaid to the extent necessary to pay such Senior Indebtedness in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior Indebtedness.

For purposes of this Article XV, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XV with respect to the Debt Securities to the payment of all Senior Indebtedness of the Company, that may at the time be outstanding, provided, that (a) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (b) the rights of the holders of such Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance, transfer or other disposition of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article XI of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 15.03 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article XI of this Indenture. Nothing in Section 15.02 or in this Section 15.03 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.06 of this Indenture.

SECTION 15.04.   Subrogation.

Subject to the payment in full of all Senior Indebtedness of the Company, the Securityholders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to such Senior Indebtedness until all payments due on the Debt Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Securityholders or the Trustee would be entitled except for the provisions of this Article XV, and no payment over pursuant to the provisions of this Article XV to or for the benefit of the holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness of the Company, and the Securityholders be deemed to be a payment or distribution by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XV are and are intended solely for the purposes of defining the relative rights of the Securityholders, on the one hand, and the holders of such Senior Indebtedness, on the other hand.

-62-

Nothing contained in this Article XV or elsewhere in this Indenture, any Additional Provisions or in the Debt Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness of the Company, and the Securityholders, the obligation of the Company, which is absolute and unconditional, to pay to the Securityholders all payments on the Debt Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Securityholders and creditors of the Company, other than the holders of Senior Indebtedness of the Company, nor shall anything herein or therein prevent the Trustee or the holder of any Debt Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XV of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy.

Upon any payment or distribution of assets of the Company referred to in this Article XV, the Trustee, subject to the provisions of Article VI of this Indenture, and the Securityholders shall be entitled to conclusively rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Securityholders, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XV.

SECTION 15.05.   Trustee to Effectuate Subordination.

Each Securityholder by such Securityholder's acceptance thereof authorizes and directs the Trustee on such Securityholder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XV and appoints the Trustee such Securityholder's attorney-in-fact for any and all such purposes.

SECTION 15.06.   Notice by the Company.

The Company shall give prompt written notice to a Responsible Officer of the Trustee at the Principal Office of the Trustee of any fact known to the Company that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Debt Securities pursuant to the provisions of this Article XV. Notwithstanding the provisions of this Article XV or any other provision of this Indenture or any Additional Provisions, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Debt Securities pursuant to the provisions of this Article XV, unless and until a Responsible Officer of the Trustee at the Principal Office of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Article VI of this Indenture, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 15.06 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Debt Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.

-63-

The Trustee, subject to the provisions of Article VI of this Indenture, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Indebtedness of the Company (or a trustee or representative on behalf of such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior Indebtedness to participate in any payment or distribution pursuant to this Article XV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XV, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 15.07.   Rights of the Trustee, Holders of Senior Indebtedness.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XV in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture or any Additional Provisions shall deprive the Trustee of any of its rights as such holder.

With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XV, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness shall be read into this Indenture or any Additional Provisions against the Trustee. The Trustee shall not owe or be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the provisions of Article VI of this Indenture, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Securityholders, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise.

Nothing in this Article XV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.06.

SECTION 15.08.   Subordination May Not Be Impaired.

No right of any present or future holder of any Senior Indebtedness of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company, or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company, with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with.

-64-

Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness of the Company may, at any time and from time to time, without the consent of or notice to the Trustee or the Securityholders, without incurring responsibility to the Securityholders and without impairing or releasing the subordination provided in this Article XV or the obligations hereunder of the Securityholders to the holders of such Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (c) release any Person liable in any manner for the collection of such Senior Indebtedness; and (d) exercise or refrain from exercising any rights against the Company, and any other Person.

LaSalle Bank National Association, in its capacity as Trustee, hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions herein above set forth.

-65-

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written.

Cathay General Bancorp

By: /s/ Heng. W. Chen                                                          

Name: Heng W. Chen

Title: Executive Vice President and

Chief Financial Officer

LaSalle Bank National Association, as Trustee

By: /s/ Mike Oliver                                                                 

Name:Mike Oliver                                                                 

Title: Assistant Vice President                                               

EXHIBIT A

FORM OF JUNIOR SUBORDINATED DEBT SECURITY

DUE 2037

[FORM OF FACE OF SECURITY]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO A "NON U.S. PERSON" IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT OR AN APPLICABLE EXEMPTION THEREFROM.

A-1

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SECURITY WILL DELIVER TO THE COMPANY AND TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION. THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF DEPOSITORS AND THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE COMPANY, IS INELIGIBLE AS COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AND IS NOT SECURED.

A-2

Form of Junior Subordinated Debt Security due 2037

of

Cathay General Bancorp

Cathay General Bancorp, a bank holding company incorporated in Delaware (the "Company"), for value received promises to pay to LaSalle Bank National Association, not in its individual capacity but solely as Institutional Trustee for Cathay Capital Trust III, a Delaware statutory trust (the "Securityholder"), or registered assigns, the principal sum of Forty Six Million Three Hundred Ninety Two Thousand Dollars on June 15, 2037 and to pay interest on said principal sum from March 30, 2007, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 15, June 15, September 15 and December 15 of each year commencing June 15, 2007, at a variable per annum rate equal to LIBOR (as defined in the Indenture) plus 1.48% (the "Interest Rate") (provided, however, that the Interest Rate for any Interest Payment Period may not exceed the highest rate permitted by New York law, as the same may be modified by United States law of general applicability) until the principal hereof shall have become due and payable, and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at an annual rate equal to the Interest Rate in effect for each such Extension Period compounded quarterly. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period. Notwithstanding anything to the contrary contained herein, if any Interest Payment Date, other than on the Maturity Date, any Redemption Date (to the extent redeemed) or the Special Redemption Date, falls on a day that is not a Business Day, then any interest payable will be paid on, and such Interest Payment Date will be moved to, the next succeeding Business Day, and additional interest will accrue for each day that such payment is delayed as a result thereof. If the Maturity Date, Redemption Date or Special Redemption Date falls on a day that is not a Business Day, then the principal, premium, if any, and/or interest payable on such date will be paid on the next succeeding Business Day, and no additional interest will accrue (except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Debt Security (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the regular record date for such interest installment, except that interest and any Deferred Interest payable on the Maturity Date shall be paid to the Person to whom principal is paid. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Securityholders on such regular record date and may be paid to the Person in whose name this Debt Security (or one or more Predecessor Debt Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered Securityholders not less than 10 days prior to such special record date, all as more fully provided in the Indenture. The principal of and interest on this Debt Security shall be payable at the office or agency of the Trustee (or other Paying Agent appointed by the Company) maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered Securityholder at such address as shall appear in the Debt Security Register or by wire transfer of immediately available funds to an account appropriately designated by the holder hereof. Notwithstanding the foregoing, so long as the holder of this Debt Security is the Institutional Trustee, payment of the principal of and premium, if any, and interest on this Debt Security shall be made in immediately available funds when due at such place and to such account as may be designated by the Institutional Trustee. All payments in respect of this Debt Security shall be payable in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts.

A-3

Upon submission of Notice (as defined in the Indenture) and so long as no Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture has occurred and is continuing, the Company shall have the right under the Indenture, from time to time and without causing an Event of Default, to defer payments of interest on the Debt Securities by extending the interest distribution period on the Debt Securities at any time and from time to time during the term of the Debt Securities, for up to 20 consecutive quarterly periods (each such extended interest distribution period, an "Extension Period"), during which Extension Period no interest shall be due and payable (except any Additional Interest that may be due and payable). During any Extension Period, interest will continue to accrue on the Debt Securities, and interest on such accrued interest (such accrued interest and interest thereon referred to herein as "Deferred Interest") will accrue at an annual rate equal to the Interest Rate applicable during such Extension Period, compounded quarterly from the date such Deferred Interest would have been payable were it not for the Extension Period, to the extent permitted by law. No Extension Period may end on a date other than an Interest Payment Date. At the end of any such Extension Period the Company shall pay all Deferred Interest then accrued and unpaid on the Debt Securities; provided, however, that no Extension Period may extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date; and provided, further, however, during any such Extension Period, the Company may not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock or (ii) make any payment of principal of or premium, if any, or interest on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Debt Securities or (iii) make any payment under any guarantees of the Company that rank in all respects pari passu with or junior in respect to the Capital Securities Guarantee (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company (A) in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, (B) in connection with a dividend reinvestment or stockholder stock purchase plan or (C) in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock), as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange, reclassification, combination or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (c) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock). Prior to the termination of any Extension Period, the Company may further extend such Extension Period; provided, that no Extension Period (including all previous and further consecutive extensions that are part of such Extension Period) shall exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Upon the termination of any Extension Period and upon the payment of all Deferred Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Deferred Interest shall be due and payable during an Extension Period, except at the end thereof, but Deferred Interest shall accrue upon each installment of interest that would otherwise have been due and payable during such Extension Period until such installment is paid. The Company must give the Trustee notice of its election to begin any Extension Period or extend an Extension Period ("Notice") not later than the related regular record date for the relevant Interest Payment Date. The Notice shall describe why the Company has elected to begin an Extension Period. The Notice shall acknowledge and affirm the Company's understanding that it is prohibited from issuing dividends and other distributions during the Extension Period. Upon receipt of the Notice, the Placement Agent shall have the right, at its sole discretion, to disclose the name of the Company, the fact that the Company has elected to begin an Extension Period and other information that such Placement Agent, at its sole discretion, deems relevant to the Company's election to begin an Extension Period. The Trustee shall give notice of the Company's election to begin a new Extension Period to the Securityholders.

A-4

The indebtedness evidenced by this Debt Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Debt Security is issued subject to the provisions of the Indenture with respect thereto. Each holder of this Debt Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on such Securityholder's behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee such Securityholder's attorney-in-fact for any and all such purposes. Each holder hereof, by such holder's acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such Securityholder upon said provisions.

The Company waives diligence, presentment, demand for payment, notice of nonpayment, notice of protest, and all other demands and notices.

This Debt Security shall not be entitled to any benefit under the Indenture hereinafter referred to and shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by or on behalf of the Trustee.

The provisions of this Debt Security are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place.

A-5

IN WITNESS WHEREOF, the Company has duly executed this certificate.

Cathay General Bancorp

By:__________________________________________

Name:________________________________________

Title:_________________________________________

Dated:__________________, 2007

CERTIFICATE OF AUTHENTICATION

This represents Debt Securities referred to in the within-mentioned Indenture.

LaSalle Bank National Association, not in its

individual capacity but solely as Trustee

By:__________________________________________

Authorized Signatory

Dated:__________________, 2007

A-6

[FORM OF REVERSE OF SECURITY]

This Debt Security is one of a duly authorized series of Debt Securities of the Company, all issued or to be issued pursuant to an Indenture (the "Indenture"), dated as of March 30, 2007, duly executed and delivered between the Company and LaSalle Bank National Association, as Trustee (the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Debt Securities (referred to herein as the "Debt Securities") of which this Debt Security is a part. The summary of the terms of this Debt Security contained herein does not purport to be complete and is qualified by reference to the Indenture.

Upon the occurrence and continuation of a Tax Event, an Investment Company Event or a Capital Treatment Event (each a "Special Event"), this Debt Security may become due and payable, in whole or in part, at any time, within 90 days following the occurrence of such Tax Event, Investment Company Event or Capital Treatment Event (the "Special Redemption Date"), as the case may be, at the Special Redemption Price.

The Company shall also have the right to redeem this Debt Security at the option of the Company, in whole or in part, on any March 15, June 15, September 15 or December 15 on or after June 15, 2012 (a "Redemption Date"), at the Redemption Price.

Any redemption pursuant to either of the two preceding paragraphs will be made, subject to the receipt by the Company of prior approval from any regulatory authority with jurisdiction over the Company if such approval is then required under applicable capital guidelines or policies of such regulatory authority, upon not less than 30 days' nor more than 60 days' notice. If the Debt Securities are only partially redeemed by the Company, the Debt Securities will be redeemed pro rata or by lot or by any other method utilized by the Trustee.

"Redemption Price" means 100% of the principal amount of the Debt Securities being redeemed plus accrued and unpaid interest on such Debt Securities to the Redemption Date.

"Special Redemption Price" means, with respect to the redemption of any Debt Security following a Special Event, an amount in cash equal to 103.525% of the principal amount of Debt Securities to be redeemed prior to June 15, 2008 and thereafter equal to the percentage of the principal amount of the Debt Securities that is specified below for the Special Redemption Date plus, in each case, unpaid interest accrued thereon to the Special Redemption Date:

Special Redemption During the 12-Month Period Beginning June 15	Percentage of Principal Amount
2008	103.140%
2009	102.355%
2010	101.570%
2011	100.785%
2012 and thereafter	100.000%

A-7

In the event of redemption of this Debt Security in part only, a new Debt Security or Debt Securities for the unredeemed portion hereof will be issued in the name of the Securityholder hereof upon the cancellation hereof.

In certain cases where an Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture shall have occurred and be continuing, the principal of all of the Debt Securities may be declared, and, in certain cases, shall ipso facto become, due and payable, and upon such declaration of acceleration shall become due and payable, in each case, in the manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debt Securities at the time outstanding affected thereby, as specified in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Securityholders; provided, however, that no such supplemental indenture shall, among other things, without the consent of the holders of each Debt Security then outstanding and affected thereby (i) change the Maturity Date of any Debt Security, or reduce the principal amount thereof or any redemption premium thereon, or reduce the rate (or manner of calculation of the rate) or extend the time of payment of interest thereon, or reduce (other than as a result of the maturity or earlier redemption of any such Debt Security in accordance with the terms of the Indenture and such Debt Security) or increase the aggregate principal amount of Debt Securities then outstanding, or change any of the redemption provisions, or make the principal thereof or any interest or premium thereon payable in any coin or currency other than United States Dollars, or impair or affect the right of any Securityholder to institute suit for the payment thereof, or (ii) reduce the aforesaid percentage of Debt Securities, the holders of which are required to consent to any such supplemental indenture. The Indenture also contains provisions permitting the holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding, on behalf of all of the Securityholders, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture, and its consequences, except (a) a default in payments due in respect of any of the Debt Securities, (b) in respect of covenants or provisions of the Indenture which cannot be modified or amended without the consent of the holder of each Debt Security affected, or (c) in respect of the covenants of the Company relating to its ownership of Common Securities of the Trust. Any such consent or waiver by the registered holder of this Debt Security (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Securityholder and upon all future holders and owners of this Debt Security and of any Debt Security issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debt Security.

No reference herein to the Indenture and no provision of this Debt Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay all payments due on this Debt Security at the time and place and at the rate and in the money herein prescribed.

A-8

As provided in the Indenture and subject to certain limitations herein and therein set forth, this Debt Security is transferable by the registered holder hereof on the Debt Security Register of the Company, upon surrender of this Debt Security for registration of transfer at the office or agency of the Trustee in Chicago, Illinois accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered holder hereof or such Securityholder's attorney duly authorized in writing, and thereupon one or more new Debt Securities of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such registration of transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this Debt Security, the Company, the Trustee, any Authenticating Agent, any Paying Agent, any transfer agent and the Debt Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debt Security shall be overdue and notwithstanding any notice of ownership or writing hereon) for the purpose of receiving payment of the principal of and premium, if any, and interest on this Debt Security and for all other purposes, and neither the Company nor the Trustee nor any Authenticating Agent nor any Paying Agent nor any transfer agent nor any Debt Security Registrar shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the interest on this Debt Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

The Debt Securities are issuable only in registered certificated form without coupons. As provided in the Indenture and subject to certain limitations herein and therein set forth, Debt Securities are exchangeable for a like aggregate principal amount of Debt Securities of a different authorized denomination, as requested by the Securityholder surrendering the same.

All terms used in this Debt Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE DEBT SECURITIES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

A-9

EX-4.1.1

EXHIBIT 4.1.1

AMENDED AND RESTATED DECLARATION

OF TRUST

CATHAY CAPITAL TRUST III

Dated as of March 30, 2007

TABLE OF CONTENTS

Page

ARTICLE I INTERPRETATION AND DEFINITIONS
SECTION 1.1.	Definitions	1
ARTICLE II ORGANIZATION
SECTION 2.1.	Name	9
SECTION 2.2.	Office	9
SECTION 2.3.	Purpose	9
SECTION 2.4.	Authority	9
SECTION 2.5.	Title to Property of the Trust	10
SECTION 2.6.	Powers and Duties of the Trustees and the Administrators	10
SECTION 2.7.	Prohibition of Actions by the Trust and the Trustees	14
SECTION 2.8.	Powers and Duties of the Institutional Trustee	15
SECTION 2.9.	Certain Duties and Responsibilities of the Trustees and the Administrators	17
SECTION 2.10.	Certain Rights of Institutional Trustee	19
SECTION 2.11.	Delaware Trustee	21
SECTION 2.12.	Execution of Documents	21
SECTION 2.13.	Not Responsible for Recitals or Issuance of Securities	21
SECTION 2.14.	Duration of Trust	22
SECTION 2.15.	Mergers	22
ARTICLE III SPONSOR
SECTION 3.1.	Sponsor's Purchase of Common Securities	24
SECTION 3.2.	Responsibilities of the Sponsor	24
ARTICLE IV TRUSTEES AND ADMINISTRATORS
SECTION 4.1.	Number of Trustees	24

-i-

TABLE OF CONTENTS

(continued)

Page

SECTION 4.2.	Delaware Trustee	24
SECTION 4.3.	Institutional Trustee; Eligibility	25
SECTION 4.4.	Certain Qualifications of the Delaware Trustee Generally	25
SECTION 4.5.	Administrators	25
SECTION 4.6.	Initial Delaware Trustee	26
SECTION 4.7.	Appointment, Removal and Resignation of the Trustees and the Administrators	26
SECTION 4.8.	Vacancies Among Trustees	28
SECTION 4.9.	Effect of Vacancies	28
SECTION 4.10.	Meetings of the Trustees and the Administrators	28
SECTION 4.11.	Delegation of Power	28
SECTION 4.12.	Merger, Conversion, Consolidation or Succession to Business	29
ARTICLE V DISTRIBUTIONS
SECTION 5.1.	Distributions	29
ARTICLE VI ISSUANCE OF SECURITIES
SECTION 6.1.	General Provisions Regarding Securities	30
SECTION 6.2.	Paying Agent, Transfer Agent, Calculation Agent and Registrar	31
SECTION 6.3.	Form and Dating	31
SECTION 6.4.	Book-Entry Capital Securities	32
SECTION 6.5.	Mutilated, Destroyed, Lost or Stolen Certificates	34
SECTION 6.6.	Temporary Securities	34
SECTION 6.7.	Cancellation	34
SECTION 6.8.	Rights of Holders; Waivers of Past Defaults	35
ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1.	Dissolution and Termination of Trust	36

-ii-

TABLE OF CONTENTS

(continued)

Page

ARTICLE VIII TRANSFER OF INTERESTS
SECTION 8.1.	General	37
SECTION 8.2.	Transfer Procedures and Restrictions	38
SECTION 8.3.	Deemed Security Holders	42
ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1.	Liability	42
SECTION 9.2.	Exculpation	43
SECTION 9.3.	Fiduciary Duty	43
SECTION 9.4.	Indemnification	44
SECTION 9.5.	Outside Businesses	47
SECTION 9.6.	Compensation; Fee	47
ARTICLE X ACCOUNTING
SECTION 10.1.	Fiscal Year	48
SECTION 10.2.	Certain Accounting Matters	48
SECTION 10.3.	Banking	49
SECTION 10.4.	Withholding	49
ARTICLE XI AMENDMENTS AND MEETINGS
SECTION 11.1.	Amendments	49
SECTION 11.2.	Meetings of the Holders of the Securities; Action by Written Consent	51
ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1.	Representations and Warranties of Institutional Trustee	53
SECTION 12.2.	Representations and Warranties of Delaware Trustee	54

-iii-

TABLE OF CONTENTS

(continued)

Page

ARTICLE XIII MISCELLANEOUS
SECTION 13.1.	Notices	54
SECTION 13.2.	Governing Law	56
SECTION 13.3.	Submission to Jurisdiction	56
SECTION 13.4.	Intention of the Parties	56
SECTION 13.5.	Headings	56
SECTION 13.6.	Successors and Assigns	56
SECTION 13.7.	Partial Enforceability	57
SECTION 13.8.	Counterparts	57

-iv-

TABLE OF CONTENTS

(continued)

Page

ANNEXES AND EXHIBITS
ANNEX I	Terms of TP Securities and Common Securities
EXHIBIT A-1	Form of Capital Security Certificate
EXHIBIT A-2	Form of Common Security Certificate

-v-

AMENDED AND RESTATED DECLARATION OF TRUST

OF

CATHAY CAPITAL TRUST III

March 30, 2007

AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration"), dated and effective as of March 30, 2007, by the Trustees (as defined herein), the Administrators (as defined herein), the Sponsor (as defined herein) and the holders from time to time of undivided beneficial interests in the assets of the Trust (as defined herein) to be issued pursuant to this Declaration.

WHEREAS, the Delaware Trustee and the Sponsor established Cathay Capital Trust III (the "Trust"), a statutory trust under the Statutory Trust Act (as defined herein), pursuant to a Declaration of Trust, dated as of March 28, 2007 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Delaware on March 28, 2007, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in the Debentures (as defined herein) of the Debenture Issuer (as defined herein) in connection with the issuance of the Capital Securities (as defined herein);

WHEREAS, as of the date hereof, no interests in the assets of the Trust have been issued; and

WHEREAS, all of the Trustees, the Administrators and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration.

NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a statutory trust under the Statutory Trust Act and that this Declaration constitutes the governing instrument of such statutory trust, and that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration, and, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties, intending to be legally bound hereby, amend and restate in its entirety the Original Declaration and agree as follows:

ARTICLE I

INTERPRETATION AND DEFINITIONS

SECTION 1.1.   Definitions. Unless the context otherwise requires:

(a)  capitalized terms used in this Declaration but not defined in the preamble above or elsewhere herein have the respective meanings assigned to them in this Section 1.1 or, if not defined in this Section 1.1 or elsewhere herein, in the Indenture;

(b)  a term defined anywhere in this Declaration has the same meaning throughout;

(c)  all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time;

(d)  all references in this Declaration to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise specified;

(e)  a term defined in the Trust Indenture Act (as defined herein) has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and

(f)  a reference to the singular includes the plural and vice versa.

"Additional Interest" has the meaning set forth in Section 3.06 of the Indenture.

"Administrative Action" has the meaning set forth in paragraph 4(a) of Annex I.

"Administrators" means each of Heng W. Chen and Anthony M. Tang, solely in such Person's capacity as Administrator of the Trust continued hereunder and not in such Person's individual capacity, or such Administrator's successor in interest in such capacity, or any successor appointed as herein provided.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder.

"Applicable Depositary Procedures" means, with respect to any transfer or transaction involving a Book-Entry Capital Security, the rules and procedures of the Depositary for such Book-Entry Capital Security, in each case to the extent applicable to such transaction and as in effect from time to time.

"Authorized Officer" of a Person means any Person that is authorized to bind such Person.

"Bankruptcy Event" means, with respect to any Person:

(a)a court having jurisdiction in the premises enters a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or for any substantial part of its property, or orders the winding-up or liquidation of its affairs, and such decree, appointment or order remains unstayed and in effect for a period of 90 consecutive days; or

(b)such Person commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of such Person of any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts as they become due.

-2-

"Book-Entry Capital Security" means a Capital Security, the ownership and transfers of which shall be made through book entries by a Depositary.

"Business Day" means any day other than Saturday, Sunday or any other day on which banking institutions in Wilmington, Delaware or New York City or the city of the Corporate Trust Office are permitted or required by any applicable law or executive order to close.

"Calculation Agent" has the meaning set forth in Section 1.01 of the Indenture.

"Capital Securities" has the meaning set forth in Section 6.1(a).

"Capital Securities Purchase Agreements" means the Capital Securities Purchase Agreement dated as of March 28, 2007 among the Trust, the Sponsor and Alesco Preferred Funding XIV, Ltd., the Capital Securities Purchase Agreement dated as of March 28, 2007 among the Trust, the Sponsor and Alesco Preferred Funding XV, Ltd., and the Capital Securities Purchase Agreement dated as of March 28, 2007 among the Trust, the Sponsor and US Bank National Association.

"Capital Security Certificate" means a definitive Certificate registered in the name of the Holder representing a Capital Security substantially in the form of Exhibit A 1.

"Capital Treatment Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Certificate" means any certificate evidencing Securities.

"Certificate of Trust" means the certificate of trust filed with the Secretary of State of the State of Delaware with respect to the Trust, as amended and restated from time to time.

"Closing Date" means the date of execution and delivery of this Declaration.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation.

"Commission" means the United States Securities and Exchange Commission.

"Common Securities" has the meaning set forth in Section 6.1(a).

"Common Security Certificate" means a definitive Certificate registered in the name of the Holder representing a Common Security substantially in the form of Exhibit A-2.

"Company Indemnified Person" means (a) any Administrator; (b) any Affiliate of any Administrator; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Administrator; or (d) any officer, employee or agent of the Trust or its Affiliates.

-3-

"Corporate Trust Office" means the office of the Institutional Trustee at which the corporate trust business of the Institutional Trustee shall, at any particular time, be principally administered, which office shall at all times be located in the United States and at the date of execution of this Declaration is located at LaSalle Bank National Association, 135 S. LaSalle Street, Suite 1511, Chicago, Illinois 60603, Attn: CDO Trust Services Group - Cathay Capital Trust III.

"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.

"Covered Person" means: (a) any Administrator, officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.

"Debenture Issuer" means Cathay General Bancorp, a bank holding company incorporated in Delaware, in its capacity as issuer of the Debentures under the Indenture.

"Debenture Trustee" means LaSalle Bank National Association, not in its individual capacity but solely as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee.

"Debentures" means the Junior Subordinated Debt Securities due June 15, 2037 to be issued by the Debenture Issuer under the Indenture.

"Deferred Interest" means any interest on the Debentures that would have been overdue and unpaid for more than one Distribution Payment Date but for the imposition of an Extension Period, and the interest that shall accrue (to the extent that the payment of such interest is legally enforceable) on such interest at the Coupon Rate applicable during such Extension Period, compounded quarterly from the date on which such Deferred Interest would otherwise have been due and payable until paid or made available for payment.

"Definitive Capital Securities" means any Capital Securities in definitive form issued by the Trust.

"Depositary" means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Sponsor or any successor thereto. DTC will be the initial Depositary.

"Depositary Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

"Delaware Trustee" has the meaning set forth in Section 4.2.

"Direct Action" has the meaning set forth in Section 2.8(e).

"Distribution" means a distribution payable to Holders of Securities in accordance with Section 5.1.

-4-

"Distribution Payment Date" has the meaning set forth in paragraph 2(e) of Annex I.

"DTC" means The Depository Trust Company or any successor thereto.

"Distribution Payment Period" means the period from and including a Distribution Payment Date, or in the case of the first Distribution Payment Period, the original date of issuance of the Securities, to, but excluding, the next succeeding Distribution Payment Date or, in the case of the last Distribution Payment Period, the Redemption Date, Special Redemption Date or Maturity Date (each as defined in the Indenture), as the case may be, for the related Debentures.

"Event of Default" means the occurrence of an Indenture Event of Default.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation.

"Extension Period" has the meaning set forth in paragraph 2(e) of Annex I.

"Fiduciary Indemnified Person" shall mean each of the Institutional Trustee (including in its individual capacity), the Delaware Trustee (including in its individual capacity), any Affiliate of the Institutional Trustee or the Delaware Trustee, and any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Institutional Trustee or the Delaware Trustee.

"Fiscal Year" has the meaning set forth in Section 10.1.

"Global Capital Security" means a Capital Securities Certificate evidencing ownership of Book-Entry Capital Securities.

"Guarantee" means the Guarantee Agreement, dated as of the Closing Date, of the Sponsor (the "Guarantor") in respect of the Capital Securities.

"Holder" means a Person in whose name a Certificate representing a Security is registered on the register maintained by or on behalf of the Registrar, such Person being a beneficial owner within the meaning of the Statutory Trust Act.

"Indemnified Person" means a Company Indemnified Person or a Fiduciary Indemnified Person.

"Indenture" means the Indenture, dated as of the Closing Date, between the Debenture Issuer and the Debenture Trustee, and any indenture supplemental thereto pursuant to which the Debentures are to be issued.

"Indenture Event of Default" means an "Event of Default" as defined in the Indenture.

"Initial Purchaser" means the Initial Purchaser of the Capital Securities.

-5-

"Institutional Trustee" means the Trustee meeting the eligibility requirements set forth in Section 4.3.

"Investment Company" means an investment company as defined in the Investment Company Act.

"Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation.

"Investment Company Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Legal Action" has the meaning set forth in Section 2.8(e).

"LIBOR" means the London Interbank Offered Rate for U.S. Dollar deposits in Europe as determined by the Calculation Agent according to paragraph 2(b) of Annex I.

"LIBOR Banking Day" has the meaning set forth in paragraph 2(b)(1) of Annex I.

"LIBOR Business Day" has the meaning set forth in paragraph 2(b)(1) of Annex I.

"LIBOR Determination Date" has the meaning set forth in paragraph 2(b)(1) of Annex I.

"Liquidation" has the meaning set forth in paragraph 3 of Annex I.

"Liquidation Distribution" has the meaning set forth in paragraph 3 of Annex I.

"Majority in liquidation amount of the Securities" means Holders of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class.

"Notice" has the meaning set forth in Section 2.11 of the Indenture.

"Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include:

(a)a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto;

(b)a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate;

(c)a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

-6-

(d)a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"Owner" means each Person who is the beneficial owner of Book-Entry Capital Securities as reflected in the records of the Depositary or, if a Depositary Participant is not the beneficial owner, then the beneficial owner as reflected in the records of the Depositary Participant.

"Paying Agent" has the meaning set forth in Section 6.2.

"Payment Amount" has the meaning set forth in Section 5.1.

"Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

"Placement Agreement" means the Placement Agreement relating to the offering and sale of Capital Securities.

"PORTAL" has the meaning set forth in Section 2.6(a)(i)(E).

"Property Account" has the meaning set forth in Section 2.8(c).

"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.

"QIB" means a "qualified institutional buyer" as defined under Rule 144A.

"Quorum" means a majority of the Administrators or, if there are only two Administrators, both of them.

"Redemption Date" has the meaning set forth in paragraph 4(a) of Annex I.

"Redemption/Distribution Notice" has the meaning set forth in paragraph 4(e) of Annex I.

"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Registrar" has the meaning set forth in Section 6.2.

"Relevant Trustee" has the meaning set forth in Section 4.7(a).

"Responsible Officer" means, with respect to the Institutional Trustee, any officer within the Corporate Trust Office of the Institutional Trustee with direct responsibility for the administration of this Declaration, including any vice-president, any assistant vice-president, any secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Corporate Trust Office of the Institutional Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

-7-

"Restricted Securities Legend" has the meaning set forth in Section 8.2(c).

"Rule 144A" means Rule 144A under the Securities Act.

"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.

"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.

"Securities" means the Common Securities and the Capital Securities, as applicable.

"Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation.

"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Special Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Sponsor" means Cathay General Bancorp, a bank holding company that is a U.S. Person incorporated in Delaware, or any successor entity in a merger, consolidation or amalgamation that is a U.S. Person, in its capacity as sponsor of the Trust.

"Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq., as it may be amended from time to time, or any successor legislation.

"Successor Delaware Trustee" has the meaning set forth in Section 4.7(e).

"Successor Entity" has the meaning set forth in Section 2.15(b).

"Successor Institutional Trustee" has the meaning set forth in Section 4.7(b).

"Successor Securities" has the meaning set forth in Section 2.15(b).

"Super Majority" has the meaning set forth in paragraph 5(b) of Annex I.

"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.

"10% in liquidation amount of the Securities" means Holders of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of 10% or more of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class.

"Transfer Agent" has the meaning set forth in Section 6.2.

-8-

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time-to-time, or any successor legislation.

"Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder.

"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or owing to, the Property Account and (c) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Institutional Trustee pursuant to the trusts of this Declaration.

"U.S. Person" means a United States Person as defined in Section 7701(a)(30) of the Code.

ARTICLE II

ORGANIZATION

SECTION 2.1.   Name. The Trust is continued hereby and shall be known as "Cathay Capital Trust III," as such name may be modified from time to time by the Administrators following written notice to the Institutional Trustee and the Holders of the Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Administrators.

SECTION 2.2.   Office. The address of the principal office of the Trust, which shall be in a state of the United States or the District of Columbia, is 777 North Broadway, Los Angeles, California 90012. On ten Business Days' written notice to the Institutional Trustee and the Holders of the Securities, the Administrators may designate another principal office, which shall be in a state of the United States or the District of Columbia.

SECTION 2.3.   Purpose. The exclusive purposes and functions of the Trust are (a) to issue and sell the Securities representing undivided beneficial interests in the assets of the Trust, (b) to invest the gross proceeds from such sale to acquire the Debentures, (c) to facilitate direct investment in the assets of the Trust through issuance of the Common Securities and the Capital Securities and (d) except as otherwise limited herein, to engage in only those other activities incidental thereto that are deemed necessary or advisable by the Institutional Trustee, including, without limitation, those activities specified in this Declaration. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust.

SECTION 2.4.   Authority. Except as specifically provided in this Declaration, the Institutional Trustee shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by a Trustee on behalf of the Trust and in accordance with such Trustee's powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. The Administrators shall have only those ministerial duties set forth herein with respect to accomplishing the purposes of the Trust and are not intended to be trustees or fiduciaries with respect to the Trust or the Holders. The Institutional Trustee shall have the right, but shall not be obligated except as provided in Section 2.6, to perform those duties assigned to the Administrators.

-9-

SECTION 2.5.   Title to Property of the Trust. Except as provided in Section 2.6(g) and Section 2.8 with respect to the Debentures and the Property Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust.

SECTION 2.6.   Powers and Duties of the Trustees and the Administrators.

(a)  The Trustees and the Administrators shall conduct the affairs of the Trust in accordance with the terms of this Declaration. Subject to the limitations set forth in paragraph (b) of this Section, and in accordance with the following provisions (i) and (ii), the Administrators and, at the direction of the Administrators, the Trustees, shall have the authority to enter into all transactions and agreements determined by the Administrators to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees or the Administrators, as the case may be, under this Declaration, and to perform all acts in furtherance thereof, including without limitation, the following:

(i)  Each Administrator shall have the power, duty and authority, and is hereby authorized, to act on behalf of the Trust with respect to the following matters:

(A)  the issuance and sale of the Securities;

(B)  to acquire the Debentures with the proceeds of the sale of the Securities; provided, however, that the Administrators shall cause legal title to the Debentures to be held of record in the name of the Institutional Trustee for the benefit of the Holders;

(C)  to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, such agreements as may be necessary or desirable in connection with the purposes and function of the Trust, including agreements with the Paying Agent, a Debenture subscription agreement between the Trust and the Sponsor and a Common Securities subscription agreement between the Trust and the Sponsor;

(D)  ensuring compliance with the Securities Act and applicable state securities or blue sky laws;

(E)  if and at such time determined solely by the Sponsor at the request of the Holders, assisting in the designation of the Capital Securities for trading in the Private Offering, Resales and Trading through the Automatic Linkages ("PORTAL") system if available;

-10-

(F)  the sending of notices (other than notices of default) and other information regarding the Securities and the Debentures to the Holders in accordance with this Declaration, including notice of any notice received from the Debenture Issuer of its election to defer payments of interest on the Debentures by extending the interest payment period under the Indenture;

(G)  the appointment of a Paying Agent, Transfer Agent and Registrar in accordance with this Declaration;

(H)  execution and delivery of the Securities in accordance with this Declaration;

(I)  execution and delivery of closing certificates pursuant to the Placement Agreement and the application for a taxpayer identification number;

(J)  unless otherwise determined by the Holders of a Majority in liquidation amount of the Securities or as otherwise required by the Statutory Trust Act, to execute on behalf of the Trust (either acting alone or together with any or all of the Administrators) any documents that the Administrators have the power to execute pursuant to this Declaration;

(K)  the taking of any action incidental to the foregoing as the Sponsor or an Administrator may from time to time determine is necessary or advisable to give effect to the terms of this Declaration for the benefit of the Holders (without consideration of the effect of any such action on any particular Holder);

(L)  to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Capital Securities and Holders of Common Securities as to such actions and applicable record dates;

(M)  to duly prepare and file on behalf of the Trust all applicable tax returns and tax information reports that are required to be filed with respect to the Trust;

(N)  to negotiate the terms of, and the execution and delivery of, the Placement Agreement and the Capital Securities Purchase Agreements related thereto, providing for the sale of the Capital Securities;

(O)  to employ or otherwise engage employees, agents (who may be designated as officers with titles), managers, contractors, advisors, attorneys and consultants and pay reasonable compensation for such services;

-11-

(P)  to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust;

(Q)  to give the certificate required by § 314(a)(4) of the Trust Indenture Act to the Institutional Trustee, which certificate may be executed by an Administrator; and

(R)  to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory trust under the laws of each jurisdiction (other than the State of Delaware) in which such existence is necessary to protect the limited liability of the Holders of the Capital Securities or to enable the Trust to effect the purposes for which the Trust was created.

(ii)  As among the Trustees and the Administrators, the Institutional Trustee shall have the power, duty and authority, and is hereby authorized, to act on behalf of the Trust with respect to the following matters:

(A)  the establishment of the Property Account;

(B)  the receipt of the Debentures;

(C)  the collection of interest, principal and any other payments made in respect of the Debentures in the Property Account;

(D)  the distribution through the Paying Agent of amounts owed to the Holders in respect of the Securities;

(E)  the exercise of all of the rights, powers and privileges of a holder of the Debentures;

(F)  the sending of notices of default and other information regarding the Securities and the Debentures to the Holders in accordance with this Declaration;

(G)  the distribution of the Trust Property in accordance with the terms of this Declaration;

(H)  to the extent provided in this Declaration, the winding up of the affairs of and liquidation of the Trust;

(I)  after any Event of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof)) (provided, that such Event of Default is not by or with respect to the Institutional Trustee), the taking of any action incidental to the foregoing as the Institutional Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Declaration and protect and conserve the Trust Property for the benefit of the Holders (without consideration of the effect of any such action on any particular Holder);

-12-

(J)  to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory trust under the laws of the State of Delaware to protect the limited liability of the Holders of the Capital Securities or to enable the Trust to effect the purposes for which the Trust was created; and

(K)  to undertake any actions set forth in § 317(a) of the Trust Indenture Act.

(iii)  The Institutional Trustee shall have the power and authority, and is hereby authorized, to act on behalf of the Trust with respect to any of the duties, liabilities, powers or the authority of the Administrators set forth in Section 2.6(a)(i)(E) and (F) herein but shall not have a duty to do any such act unless specifically requested to do so in writing by the Sponsor, and shall then be fully protected in acting pursuant to such written request; and in the event of a conflict between the action of the Administrators and the action of the Institutional Trustee, the action of the Institutional Trustee shall prevail.

(b)  So long as this Declaration remains in effect, the Trust (or the Trustees or Administrators acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, neither the Trustees nor the Administrators may cause the Trust to (i) acquire any investments or engage in any activities not authorized by this Declaration, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Holders, except as expressly provided herein, (iii) take any action that would cause (or in the case of the Institutional Trustee, to the actual knowledge of a Responsible Officer would cause) the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money or issue any other debt or (v) take or consent to any action that would result in the placement of a lien on any of the Trust Property. The Institutional Trustee shall, at the sole cost and expense of the Trust, defend all claims and demands of all Persons at any time claiming any lien on any of the Trust Property adverse to the interest of the Trust or the Holders in their capacity as Holders.

(c)  In connection with the issuance and sale of the Capital Securities, the Sponsor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Sponsor in furtherance of the following prior to the date of this Declaration are hereby ratified and confirmed in all respects):

(i)  the taking of any action necessary to obtain an exemption from the Securities Act;

-13-

(ii)  the determination of the States in which to take appropriate action to qualify or register for sale all or part of the Capital Securities and the determination of any and all such acts, other than actions which must be taken by or on behalf of the Trust, and the advisement of and direction to the Trustees of actions they must take on behalf of the Trust, and the preparation for execution and filing of any documents to be executed and filed by the Trust or on behalf of the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States in connection with the sale of the Capital Securities; and

(iii)  the taking of any other actions necessary or desirable to carry out any of the foregoing activities.

(d)  Notwithstanding anything herein to the contrary, the Administrators, the Institutional Trustee and the Holders of a Majority in liquidation amount of the Common Securities are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that (i) the Trust will not be deemed to be an Investment Company (in the case of the Institutional Trustee, to the actual knowledge of a Responsible Officer), and (ii) the Trust will not fail to be classified as a grantor trust for United States federal income tax purposes (in the case of the Institutional Trustee, to the actual knowledge of a Responsible Officer) and (iii) the Trust will not take any action inconsistent with the treatment of the Debentures as indebtedness of the Debenture Issuer for United States federal income tax purposes (in the case of the Institutional Trustee, to the actual knowledge of a Responsible Officer). In this connection, the Institutional Trustee, the Administrators and the Holders of a Majority in liquidation amount of the Common Securities are authorized to take any action, not inconsistent with applicable laws or this Declaration, as amended from time to time, that each of the Institutional Trustee, the Administrators and such Holders determine in their discretion to be necessary or desirable for such purposes, even if such action adversely affects the interests of the Holders of the Capital Securities.

(e)  All expenses incurred by the Administrators or the Trustees pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the Trustees shall have no obligations with respect to such expenses.

(f)  The assets of the Trust shall consist of the Trust Property.

(g)  Legal title to all Trust Property shall be vested at all times in the Institutional Trustee (in its capacity as such) and shall be held and administered by the Institutional Trustee for the benefit of the Trust in accordance with this Declaration.

(h)  If the Institutional Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Declaration and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Institutional Trustee or to such Holder, then and in every such case the Sponsor, the Institutional Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Institutional Trustee and the Holders shall continue as though no such proceeding had been instituted.

-14-

SECTION 2.7.   Prohibition of Actions by the Trust and the Trustees. The Trust shall not, and the Institutional Trustee and the Administrators shall not, and the Administrators shall cause the Trust not to, engage in any activity other than as required or authorized by this Declaration. In particular, the Trust shall not, and the Institutional Trustee and the Administrators shall not cause the Trust to:

(a)  invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders of the Securities pursuant to the terms of this Declaration and of the Securities;

(b)  acquire any assets other than as expressly provided herein;

(c)  possess Trust Property for other than a Trust purpose;

(d)  make any loans or incur any indebtedness other than loans represented by the Debentures;

(e)  possess any power or otherwise act in such a way as to vary the Trust Property or the terms of the Securities;

(f)  issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or

(g)  other than as provided in this Declaration (including Annex I), (i) direct the time, method and place of exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (ii) waive any past default that is waivable under the Indenture, (iii) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (iv) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless the Trust shall have received a written opinion of counsel experienced in such matters to the effect that such amendment, modification or termination will not cause the Trust to cease to be classified as a grantor trust for United States federal income tax purposes.

SECTION 2.8.   Powers and Duties of the Institutional Trustee.

(a)  The legal title to the Debentures shall be owned by and held of record in the name of the Institutional Trustee in trust for the benefit of the Trust. The right, title and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Institutional Trustee in accordance with Section 4.7. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered.

(b)  The Institutional Trustee shall not transfer its right, title and interest in the Debentures to the Administrators or to the Delaware Trustee.

(c)  The Institutional Trustee shall:

-15-

(i)  establish and maintain a segregated non-interest bearing trust account (the "Property Account") in the United States (as defined in Treasury Regulations § 301.7701-7), in the name of and under the exclusive control of the Institutional Trustee, and maintained in the Institutional Trustee's trust department, on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Debentures held by the Institutional Trustee, deposit such funds into the Property Account and make payments to the Holders of the Capital Securities and Holders of the Common Securities from the Property Account in accordance with Section 5.1. Funds in the Property Account shall be held uninvested until disbursed in accordance with this Declaration;

(ii)  engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Capital Securities and the Common Securities to the extent the Debentures are redeemed or mature; and

(iii)  upon written notice of distribution issued by the Administrators in accordance with the terms of the Securities, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Debentures to Holders of Securities upon the occurrence of certain circumstances pursuant to the terms of the Securities.

(d)  The Institutional Trustee shall take all actions and perform such duties as may be specifically required of the Institutional Trustee pursuant to the terms of the Securities.

(e)  The Institutional Trustee may bring or defend, pay, collect, compromise, arbitrate, resort to legal action with respect to, or otherwise adjust claims or demands of or against, the Trust (a "Legal Action") which arise out of or in connection with an Event of Default of which a Responsible Officer of the Institutional Trustee has actual knowledge or the Institutional Trustee's duties and obligations under this Declaration or the Trust Indenture Act; provided, however, that if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or premium, if any, on or principal of the Debentures on the date such interest, premium, if any, or principal is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of the Capital Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or premium, if any, or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of the Capital Securities to the extent of any payment made by the Debenture Issuer to such Holder of the Capital Securities in such Direct Action; provided, however, that a Holder of the Common Securities may exercise such right of subrogation only if no Event of Default with respect to the Capital Securities has occurred and is continuing.

(f)  The Institutional Trustee shall continue to serve as a Trustee until either:

(i)  the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of the Securities pursuant to the terms of the Securities and this Declaration (including Annex I) and the certificate of cancellation referenced in Section 7.1(b) has been filed; or

-16-

(ii)  a Successor Institutional Trustee has been appointed and has accepted that appointment in accordance with Section 4.7.

(g)  The Institutional Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of the Debentures under the Indenture and, if an Event of Default occurs and is continuing, the Institutional Trustee may, for the benefit of Holders of the Securities, enforce its rights as holder of the Debentures subject to the rights of the Holders pursuant to this Declaration (including Annex I) and the terms of the Securities.

(h)  The Institutional Trustee must exercise the powers set forth in this Section 2.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 2.3, and the Institutional Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 2.3.

SECTION 2.9.   Certain Duties and Responsibilities of the Trustees and the Administrators.

(a)  The Institutional Trustee, before the occurrence of any Event of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof)) and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Institutional Trustee. In case an Event of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof)), has occurred (that has not been cured or waived pursuant to Section 6.8), the Institutional Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b)  The duties and responsibilities of the Trustees and the Administrators shall be as provided by this Declaration and, in the case of the Institutional Trustee, by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Declaration shall require any Trustee or Administrator to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Declaration relating to the conduct or affecting the liability of or affording protection to the Trustees or the Administrators shall be subject to the provisions of this Article. Nothing in this Declaration shall be construed to release a Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct or bad faith. Nothing in this Declaration shall be construed to release an Administrator from liability for its own gross negligent action, its own gross negligent failure to act, or its own willful misconduct or bad faith. To the extent that, at law or in equity, a Trustee or an Administrator has duties (including fiduciary duties) to the Trust or to the Holders, such Trustee's or Administrator's duties may be restricted or eliminated by provisions in this Declaration, except that this Declaration may not eliminate the implied contractual covenant of good faith and fair dealing. A Trustee or Administrator shall not be liable to the Trust or a Holder or another Person that is party to or is otherwise bound by the Declaration for breach of fiduciary duty for such Trustee's or Administrator's good faith reliance on the provisions of the Declaration. The provisions of this Declaration, to the extent that they restrict or eliminate the liabilities of the Trustees or the Administrators otherwise existing at law or in equity, are agreed by the Sponsor and the Holders to replace such other liabilities of the Trustees or the Administrators, as the case may be, except that no provision of this Declaration may limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing.

-17-

(c)  All payments made by the Institutional Trustee or a Paying Agent in respect of the Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Institutional Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Holder, by its acceptance of a Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees and the Administrators are not personally liable to it for any amount distributable in respect of any Security or for any other liability in respect of any Security. This Section 2.9(c) does not limit the liability of the Trustees expressly set forth elsewhere in this Declaration or, in the case of the Institutional Trustee, in the Trust Indenture Act.

(d)  No provision of this Declaration shall be construed to relieve the Institutional Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct or bad faith with respect to matters that are within the authority of the Institutional Trustee under this Declaration, except that:

(i)  the Institutional Trustee shall not be liable for any error or judgment made in good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved that the Institutional Trustee was negligent in ascertaining the pertinent facts;

(ii)  the Institutional Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Capital Securities or the Common Securities, as applicable, relating to the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under this Declaration;

(iii)  the Institutional Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Property Account shall be to deal with such property in a similar manner as the Institutional Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act;

-18-

(iv)  the Institutional Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Sponsor; and money held by the Institutional Trustee need not be segregated from other funds held by it except in relation to the Property Account maintained by the Institutional Trustee pursuant to Section 2.8(c)(i) and except to the extent otherwise required by law; and

(v)  the Institutional Trustee shall not be responsible for monitoring the compliance by the Administrators or the Sponsor with their respective duties under this Declaration, nor shall the Institutional Trustee be liable for any default or misconduct of the Administrators or the Sponsor.

SECTION 2.10.   Certain Rights of Institutional Trustee. Subject to the provisions of Section 2.9.

(a)  the Institutional Trustee may conclusively rely and shall fully be protected in acting or refraining from acting in good faith upon any resolution, written opinion of counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties;

(b)  if (i) in performing its duties under this Declaration, the Institutional Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Declaration, the Institutional Trustee finds the same ambiguous or inconsistent with any other provisions contained herein, or (iii) the Institutional Trustee is unsure of the application of any provision of this Declaration, then, except as to any matter as to which the Holders of Capital Securities are entitled to vote under the terms of this Declaration, the Institutional Trustee may deliver a notice to the Sponsor requesting the Sponsor's opinion as to the course of action to be taken and the Institutional Trustee shall take such action, or refrain from taking such action, as the Institutional Trustee in its sole discretion shall deem advisable and in the best interests of the Holders, in which event the Institutional Trustee shall have no liability except for its own negligence, willful misconduct or bad faith;

(c)  any direction or act of the Sponsor or the Administrators contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate;

(d)  whenever in the administration of this Declaration, the Institutional Trustee shall deem it desirable that a matter be proved or established before undertaking, suffering or omitting any action hereunder, the Institutional Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Administrators;

-19-

(e)  the Institutional Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or reregistration thereof;

(f)  the Institutional Trustee may consult with counsel of its selection (which counsel may be counsel to the Sponsor or any of its Affiliates) and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice; the Institutional Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction;

(g)  the Institutional Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any of the Holders pursuant to this Declaration, unless such Holders shall have offered to the Institutional Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; provided, that nothing contained in this Section 2.10(g) shall be taken to relieve the Institutional Trustee, upon the occurrence of an Event of Default (of which the Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof)) that has not been cured or waived, of its obligation to exercise the rights and powers vested in it by this Declaration;

(h)  the Institutional Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one or more Holders, but the Institutional Trustee may make such further inquiry or investigation into such facts or matters as it may see fit;

(i)  the Institutional Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys and the Institutional Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent or attorney appointed with due care by it hereunder;

(j)  whenever in the administration of this Declaration the Institutional Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Institutional Trustee (i) may request instructions from the Holders of the Common Securities and the Capital Securities, which instructions may be given only by the Holders of the same proportion in liquidation amount of the Common Securities and the Capital Securities as would be entitled to direct the Institutional Trustee under the terms of the Common Securities and the Capital Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be fully protected in acting in accordance with such instructions;

(k)  except as otherwise expressly provided in this Declaration, the Institutional Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration;

-20-

(l)  when the Institutional Trustee incurs expenses or renders services in connection with a Bankruptcy Event, such expenses (including the fees and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law or law relating to creditors rights generally;

(m)  the Institutional Trustee shall not be charged with knowledge of an Event of Default unless a Responsible Officer of the Institutional Trustee has actual knowledge of such event or the Institutional Trustee receives written notice of such event from any Holder, except with respect to an Event of Default pursuant to Sections 5.01(a), 5.01(b) or 5.01(c) of the Indenture (other than an Event of Default resulting from the default in the payment of Additional Interest or premium, if any, if the Institutional Trustee does not have actual knowledge or written notice that such payment is due and payable), of which the Institutional Trustee shall be deemed to have knowledge;

(n)  any action taken by the Institutional Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Institutional Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Institutional Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Institutional Trustee's or its agent's taking such action; and

(o)  no provision of this Declaration shall be deemed to impose any duty or obligation on the Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Institutional Trustee shall be construed to be a duty.

SECTION 2.11.   Delaware Trustee. Notwithstanding any other provision of this Declaration other than Section 4.2, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of any of the Trustees or the Administrators described in this Declaration (except as may be required under the Statutory Trust Act). Except as set forth in Section 4.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of § 3807 of the Statutory Trust Act.

SECTION 2.12.   Execution of Documents. Unless otherwise determined in writing by the Institutional Trustee, and except as otherwise required by the Statutory Trust Act, the Institutional Trustee, or any one or more of the Administrators, as the case may be, is authorized to execute and deliver on behalf of the Trust any documents, agreements, instruments or certificates that the Trustees or the Administrators, as the case may be, have the power and authority to execute pursuant to Section 2.6.

SECTION 2.13.   Not Responsible for Recitals or Issuance of Securities. The recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration, the Debentures or the Securities.

-21-

SECTION 2.14.   Duration of Trust. The Trust, unless dissolved pursuant to the provisions of Article VII hereof, shall have existence for thirty-five (35) years from the Closing Date.

SECTION 2.15.   Mergers.

(a)  The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except as described in this Section 2.15 and except with respect to the distribution of Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 3 of Annex I.

(b)  The Trust may, with the consent of the Administrators and the Institutional Trustee (which consent will not be unreasonably withheld) and without the consent of the Holders of the Capital Securities, consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to a trust organized as such under the laws of any state; provided, that:

(i)  if the Trust is not the survivor, such successor entity (the "Successor Entity") either:

(A)  expressly assumes all of the obligations of the Trust under the Securities; or

(B)  substitutes for the Securities other securities having substantially the same terms as the Securities (the "Successor Securities") so that the Successor Securities rank the same as the Securities rank with respect to Distributions and payments upon Liquidation, redemption and otherwise;

(ii)  the Sponsor expressly appoints a trustee of the Successor Entity that possesses the same powers and duties as the Institutional Trustee;

(iii)  the Capital Securities or any Successor Securities (excluding any securities substituted for the Common Securities) are listed or quoted, or any Successor Securities will be listed or quoted upon notification of issuance, on any national securities exchange or with another organization on which the Capital Securities are then listed or quoted, if any;

(iv)  such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the rating, if any, on the Capital Securities (including any Successor Securities) to be downgraded or withdrawn by any nationally recognized statistical rating organization, if the Capital Securities are then rated;

-22-

(v)  such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of such Holders' interests in the Successor Entity as a result of such merger, consolidation, amalgamation or replacement);

(vi)  such Successor Entity has a purpose substantially identical to that of the Trust;

(vii)  prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Trust has received a written opinion of a nationally recognized independent counsel to the Trust experienced in such matters to the effect that:

(A)  such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the Holders' interests in the Successor Entity);

(B)  following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor the Successor Entity will be required to register as an Investment Company; and

(C)  following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Trust (or the Successor Entity) will continue to be classified as a grantor trust for United States federal income tax purposes;

(viii)  the Sponsor guarantees the obligations of such Successor Entity under the Successor Securities to the same extent provided by the Guarantee, the Debentures and this Declaration; and

(ix)  prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Institutional Trustee shall have received an Officers' Certificate of the Administrators and an opinion of counsel, each to the effect that all conditions precedent of this paragraph (b) to such transaction have been satisfied.

(c)  Notwithstanding Section 2.15(b), the Trust shall not, except with the consent of Holders of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to, any other Person or permit any other Person to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the Trust or Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes.

-23-

ARTICLE III

SPONSOR

SECTION 3.1.   Sponsor's Purchase of Common Securities. On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the Trust, in an amount at least equal to 3% of the capital of the Trust, at the same time as the Capital Securities are sold.

SECTION 3.2.   Responsibilities of the Sponsor. In connection with the issue and sale of the Capital Securities, the Sponsor shall have the exclusive right and responsibility and sole decision to engage in, or direct the Administrators to engage in, the following activities:

(a)  to determine the States in which to take appropriate action to qualify or register for sale of all or part of the Capital Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States;

(b)  to prepare for filing and request the Administrators to cause the filing by the Trust, as may be appropriate, of an application to the PORTAL system, for listing or quotation upon notice of issuance of any Capital Securities, as requested by the Holders of not less than a Majority in liquidation amount of the Capital Securities; and

(c)  to negotiate the terms of and/or execute and deliver on behalf of the Trust, the Placement Agreement and other related agreements providing for the sale of the Capital Securities.

ARTICLE IV

TRUSTEES AND ADMINISTRATORS

SECTION 4.1.   Number of Trustees. The number of Trustees initially shall be two, and:

(a)  at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and

(b)  after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holder of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holder of the Common Securities; provided, however, that there shall be a Delaware Trustee if required by Section 4.2; and there shall always be one Trustee who shall be the Institutional Trustee, and such Trustee may also serve as Delaware Trustee if it meets the applicable requirements, in which case Section 2.11 shall have no application to such entity in its capacity as Institutional Trustee.

SECTION 4.2.   Delaware Trustee. If required by the Statutory Trust Act, one Trustee (the "Delaware Trustee") shall be:

(a)  a natural person who is a resident of the State of Delaware; or

-24-

(b)  if not a natural person, an entity which is organized under the laws of the United States or any state thereof or the District of Columbia, has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law, including §3807 of the Statutory Trust Act.

SECTION 4.3.   Institutional Trustee; Eligibility.

(a)  There shall at all times be one Trustee which shall act as Institutional Trustee which shall:

(i)  not be an Affiliate of the Sponsor;

(ii)  not offer or provide credit or credit enhancement to the Trust; and

(iii)  be a banking corporation or national association organized and doing business under the laws of the United States of America or any state thereof or of the District of Columbia and authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least fifty million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state or District of Columbia authority. If such corporation or national association publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 4.3(a)(iii), the combined capital and surplus of such corporation or national association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b)  If at any time the Institutional Trustee shall cease to be eligible to so act under Section 4.3(a), the Institutional Trustee shall immediately resign in the manner and with the effect set forth in Section 4.7.

(c)  If the Institutional Trustee has or shall acquire any "conflicting interest" within the meaning of § 310(b) of the Trust Indenture Act, the Institutional Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to this Declaration.

(d)  The initial Institutional Trustee shall be LaSalle Bank National Association.

SECTION 4.4.   Certain Qualifications of the Delaware Trustee Generally. The Delaware Trustee shall be a U.S. Person and either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers.

SECTION 4.5.   Administrators. Each Administrator shall be a U.S. Person.

There shall at all times be at least one Administrator. Except where a requirement for action by a specific number of Administrators is expressly set forth in this Declaration and except with respect to any action the taking of which is the subject of a meeting of the Administrators, any action required or permitted to be taken by the Administrators may be taken by, and any power of the Administrators may be exercised by, or with the consent of, any one such Administrator acting alone.

-25-

SECTION 4.6.   Initial Delaware Trustee. The initial Delaware Trustee shall be LaSalle National Trust Delaware.

SECTION 4.7.   Appointment, Removal and Resignation of the Trustees and the Administrators.

(a)  No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of this Section 4.7.

(b)  Subject to Section 4.7(a), a Relevant Trustee may resign at any time by giving written notice thereof to the Holders of the Securities and by appointing a successor Relevant Trustee, except in the case of the Delaware Trustee's successor which shall be appointed by Holders of a Majority in liquidation amount of the Common Securities. Upon the resignation of the Institutional Trustee, the Institutional Trustee shall appoint a successor by requesting from at least three Persons meeting the eligibility requirements their expenses and charges to serve as the successor Institutional Trustee on a form provided by the Administrators, and selecting the Person who agrees to the lowest reasonable expense and charges (the "Successor Institutional Trustee"). If the instrument of acceptance by the successor Relevant Trustee required by this Section 4.7 shall not have been delivered to the Relevant Trustee within 60 days after the giving of such notice of resignation or delivery of the instrument of removal, the Relevant Trustee may petition, at the expense of the Trust, any federal, state or District of Columbia court of competent jurisdiction for the appointment of a successor Relevant Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Relevant Trustee. The Institutional Trustee shall have no liability for the selection of such successor pursuant to this Section 4.7.

(c)  Unless an Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by an act of the Holders of a Majority in liquidation amount of the Common Securities. If any Trustee shall be so removed, the Holders of the Common Securities, by act of the Holders of a Majority in liquidation amount of the Common Securities delivered to the Relevant Trustee, shall promptly appoint a successor Relevant Trustee, and such successor Trustee shall comply with the applicable requirements of this Section 4.7. If an Event of Default shall have occurred and be continuing, the Institutional Trustee or the Delaware Trustee, or both of them, may be removed by the act of the Holders of a Majority in liquidation amount of the Capital Securities, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust). If any Trustee shall be so removed, the Holders of Capital Securities, by act of the Holders of a Majority in liquidation amount of the Capital Securities then outstanding delivered to the Relevant Trustee, shall promptly appoint a successor Relevant Trustee or Trustees, and such successor Trustee shall comply with the applicable requirements of this Section 4.7. If no successor Relevant Trustee shall have been so appointed by the Holders of a Majority in liquidation amount of the Capital Securities and accepted appointment in the manner required by this Section 4.7 within 30 days after delivery of an instrument of removal, the Relevant Trustee or any Holder who has been a Holder of the Securities for at least six months may, on behalf of himself and all others similarly situated, petition any federal, state or District of Columbia court of competent jurisdiction for the appointment of a successor Relevant Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a successor Relevant Trustee or Trustees.

-26-

(d)  The Institutional Trustee shall give notice of each resignation and each removal of a Trustee and each appointment of a successor Trustee to all Holders and to the Sponsor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Institutional Trustee.

(e)  Notwithstanding the foregoing or any other provision of this Declaration, in the event a Delaware Trustee who is a natural person dies or is adjudged by a court to have become incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by the Institutional Trustee (provided the Institutional Trustee satisfies the requirements of a Delaware Trustee as set forth in Section 4.2) following the procedures in this Section 4.7 (with the successor being a Person who satisfies the eligibility requirement for a Delaware Trustee set forth in this Declaration) (the "Successor Delaware Trustee").

(f)  In case of the appointment hereunder of a successor Relevant Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with respect to the Securities shall execute and deliver an amendment hereto wherein each successor Relevant Trustee shall accept such appointment and which (a) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Securities and the Trust and (b) shall add to or change any of the provisions of this Declaration as shall be necessary to provide for or facilitate the administration of the Trust by more than one Relevant Trustee, it being understood that nothing herein or in such amendment shall constitute such Relevant Trustees co-trustees and upon the execution and delivery of such amendment the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on request of the Trust or any successor Relevant Trustee, such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Relevant Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Securities and the Trust subject to the payment of all unpaid fees, expenses and indemnities of such retiring Relevant Trustee.

(g)  No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be.

(h)  The Holders of the Capital Securities will have no right to vote to appoint, remove or replace the Administrators, which voting rights are vested exclusively in the Holders of the Common Securities.

-27-

(i)  Any successor Delaware Trustee shall file an amendment to the Certificate of Trust with the Secretary of State of the State of Delaware identifying the name and principal place of business of such Delaware Trustee in the State of Delaware.

SECTION 4.8.   Vacancies Among Trustees. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 4.1, or if the number of Trustees is increased pursuant to Section 4.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Trustees or, if there are more than two, a majority of the Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 4.7.

SECTION 4.9.   Effect of Vacancies. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust or terminate this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled by the appointment of a Trustee in accordance with Section 4.7, the Institutional Trustee shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration.

SECTION 4.10.   Meetings of the Trustees and the Administrators. Meetings of the Trustees or the Administrators shall be held from time to time upon the call of any Trustee or Administrator, as applicable. Regular meetings of the Trustees and the Administrators, respectively, may be in person in the United States or by telephone, at a place (if applicable) and time fixed by resolution of the Trustees or the Administrators, as applicable. Notice of any in-person meetings of the Trustees or the Administrators shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Trustees or the Administrators or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Trustee or an Administrator, as the case may be, at a meeting shall constitute a waiver of notice of such meeting except where a Trustee or an Administrator, as the case may be, attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Trustees or the Administrators, as the case may be, may be taken at a meeting by vote of a majority of the Trustees or the Administrators present (whether in person or by telephone) and eligible to vote with respect to such matter; provided, that, in the case of the Administrators, a Quorum is present, or without a meeting by the unanimous written consent of the Trustees or the Administrators, as the case may be. Meetings of the Trustees and the Administrators together shall be held from time to time upon the call of any Trustee or Administrator.

SECTION 4.11.   Delegation of Power.

(a)  Any Trustee or any Administrator, as the case may be, may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 that is a U.S. Person his or her power for the purpose of executing any documents, instruments or other writings contemplated in Section 2.6.

-28-

(b)  The Trustees shall have power to delegate from time to time to such of their number or to any officer of the Trust that is a U.S. Person, the doing of such things and the execution of such instruments or other writings either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein.

SECTION 4.12.   Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Institutional Trustee or the Delaware Trustee, as the case may be, may be merged or converted or with which either may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Institutional Trustee or the Delaware Trustee, as the case may be, shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Institutional Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware Trustee, as the case may be, hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided such Person shall be otherwise qualified and eligible under this Article and, provided, further, that such Person shall file an amendment to the Certificate of Trust with the Secretary of State of the State of Delaware as contemplated in Section 4.7(i).

ARTICLE V

DISTRIBUTIONS

SECTION 5.1.   Distributions.

(a)Holders shall receive Distributions in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Capital Securities and the Common Securities in accordance with the preferences set forth in their respective terms. If and to the extent that the Debenture Issuer makes a payment of interest (including any Additional Interest or Deferred Interest) or premium, if any, on and/or principal on the Debentures held by the Institutional Trustee (the amount of any such payment being a "Payment Amount"), the Institutional Trustee shall and is directed, to the extent funds are available in the Property Account for that purpose, to make a distribution (a "Distribution") of the Payment Amount to Holders. For the avoidance of doubt, funds in the Property Account shall not be distributed to Holders to the extent of any taxes payable by the Trust, in the case of withholding taxes, as determined by the Institutional Trustee or any Paying Agent and, in the case of taxes other than withholding tax taxes, as determined by the Administrators in a written notice to the Institutional Trustee.

(b)As a condition to the payment of any principal of or interest on the Securities without the imposition of withholding tax, the Administrators shall require the previous delivery of properly completed and signed applicable U.S. federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or applicable successor form) in the case of a person that is a "United States person" within the meaning of Section 7701(a)(30) of the Code or an Internal Revenue Service Form W-8 (or applicable successor form) in the case of a person that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code, and any other certification acceptable to it to enable the Institutional Trustee or any Paying Agent to determine their respective duties and liabilities with respect to any taxes or other charges that they may be required to pay, deduct or withhold in respect of such Securities.

-29-

ARTICLE VI

ISSUANCE OF SECURITIES

SECTION 6.1.   General Provisions Regarding Securities.

(a)  The Administrators shall on behalf of the Trust issue one series of capital securities, evidenced by a certificate substantially in the form of Exhibit A-1, representing undivided beneficial interests in the assets of the Trust and having such terms as are set forth in Annex I (the "Capital Securities"), and one series of common securities, evidenced by a certificate substantially in the form of Exhibit A-2, representing undivided beneficial interests in the assets of the Trust and having such terms as are set forth in Annex I (the "Common Securities"). The Trust shall issue no securities or other interests in the assets of the Trust other than the Capital Securities and the Common Securities. The Capital Securities rank pari passu and payment thereon shall be made Pro Rata with the Common Securities except that, where an Event of Default has occurred and is continuing, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of the Capital Securities.

(b)  The Certificates shall be signed on behalf of the Trust by one or more Administrators. Such signature shall be the facsimile or manual signature of any Administrator. In case any Administrator of the Trust who shall have signed any of the Securities shall cease to be such Administrator before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Administrator. Any Certificate may be signed on behalf of the Trust by such person who, at the actual date of execution of such Security, shall be an Administrator of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such an Administrator. A Capital Security shall not be valid until authenticated by the manual signature of an Authorized Officer of the Institutional Trustee. Such signature shall be conclusive evidence that the Capital Security has been authenticated under this Declaration. Upon written order of the Trust signed by one Administrator, the Institutional Trustee shall authenticate the Capital Securities for original issue. The Institutional Trustee may appoint an authenticating agent that is a U.S. Person acceptable to the Trust to authenticate the Capital Securities. A Common Security need not be so authenticated and shall be valid upon execution by one or more Administrators.

(c)  The Capital Securities issued pursuant to Regulation S of the Securities Act or to QIBs shall be, except as provided in Section 6.4, Book-Entry Capital Securities issued in the form of one or more Global Capital Securities registered in the name of the Depositary, or its nominee and deposited with the Depositary or a custodian for the Depositary for credit by the Depositary to the respective accounts of the Depositary Participants thereof (or such other accounts as they may direct).

-30-

(d)  The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.

(e)  Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable, and each Holder thereof shall be entitled to the benefits provided by this Declaration.

(f)  Every Person, by virtue of having become a Holder in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration and the Guarantee.

SECTION 6.2.   Paying Agent, Transfer Agent, Calculation Agent and Registrar.

(a)  The Trust shall maintain an office or agency where the Securities may be presented for payment (the "Paying Agent"), and an office or agency where Securities may be presented for registration of transfer or exchange (the "Transfer Agent"). The Trust hereby appoints the Institutional Trustee as Paying Agent and Transfer Agent at LaSalle Bank National Association, CDO Trust Services Group, 135 South LaSalle Street, Suite 1511, Chicago, Illinois 60603 - Cathay Capital Trust III. The Trust shall also keep or cause to be kept a register for the purpose of registering Securities and transfers and exchanges of Securities, such register to be held by a registrar (the "Registrar"). The Administrators may appoint the Paying Agent, the Registrar and the Transfer Agent, and may appoint one or more additional Paying Agents, one or more co-Registrars, or one or more co-Transfer Agents in such other locations as it shall determine. The term "Paying Agent" includes any additional Paying Agent, the term "Registrar" includes any additional Registrar or co-Registrar and the term "Transfer Agent" includes any additional Transfer Agent or co-Transfer Agent. The Administrators may change any Paying Agent, Transfer Agent or Registrar at any time without prior notice to any Holder. The Administrators shall notify the Institutional Trustee of the name and address of any Paying Agent, Transfer Agent and Registrar not a party to this Declaration. The Administrators hereby initially appoint the Institutional Trustee to act as Registrar for the Capital Securities and the Common Securities at its Corporate Trust Office. The Institutional Trustee or any of its Affiliates in the United States may act as Paying Agent, Transfer Agent or Registrar.

(b)  The Trust shall also appoint a Calculation Agent, which shall determine the Coupon Rate in accordance with the terms of the Securities. The Trust initially appoints the Institutional Trustee as Calculation Agent.

SECTION 6.3.   Form and Dating.

(a)  The Capital Securities and the Institutional Trustee's certificate of authentication thereon shall be substantially in the form of Exhibit A-1, and the Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates may be typed, printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrators, as conclusively evidenced by their execution thereof. The Certificates may have letters, numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject, if any, or usage (provided, that any such notation, legend or endorsement is in a form acceptable to the Sponsor). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the Institutional Trustee in writing. Each Capital Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent applicable, the Institutional Trustee, the Delaware Trustee, the Administrators and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. Capital Securities will be issued only in blocks having a stated liquidation amount of not less than $100,000 and multiples of $1,000 in excess thereof.

-31-

(b)  The Capital Securities sold by the Trust to the initial purchasers pursuant to the Placement Agreement and the Capital Securities Purchase Agreements shall be issued in book entry form, registered in the name of Cede & Co., as nominee on behalf of the Depository Trust Company, without coupons, and held by the Institutional Trustee as custodian for the Depository Trust Company.

SECTION 6.4.   Book-Entry Capital Securities.

(a)  A Global Capital Security may be exchanged, in whole or in part, for Definitive Capital Securities Certificates registered in the names of Owners only if such exchange complies with Article VIII and (i) the Depositary advises the Administrators and the Institutional Trustee in writing that the Depositary is no longer willing or able properly to discharge its responsibilities with respect to the Global Capital Security, and no qualified successor is appointed by the Administrators within ninety (90) days of receipt of such notice, (ii) the Depositary ceases to be a clearing agency registered under the Exchange Act and the Administrators fail to appoint a qualified successor within ninety (90) days of obtaining knowledge of such event, (iii) the Administrators at their option advise the Institutional Trustee in writing that the Trust elects to terminate the book-entry system through the Depositary or (iv) an Indenture Event of Default has occurred and is continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Administrators shall notify the Depositary and instruct the Depositary to notify all Owners of Book-Entry Capital Securities and the Institutional Trustee of the occurrence of such event and of the availability of Definitive Capital Securities Certificates to Owners of the Capital Securities requesting the same. Upon the issuance of Definitive Capital Securities Certificates, the Administrators and the Institutional Trustee shall recognize the Holders of the Definitive Capital Securities Certificates as Holders. Notwithstanding the foregoing, if an Owner of a beneficial interest in a Global Capital Security wishes at any time to transfer an interest in such Global Capital Security to a Person other than a QIB, such transfer shall be effected, subject to the Applicable Depository Procedures, in accordance with the provisions of this Section 6.4 and Article VIII, and the transferee shall receive a Definitive Capital Securities Certificate in connection with such transfer. A holder of a Definitive Capital Securities Certificate that is a QIB may upon request, and in accordance with the provisions of this Section 6.4 and Article VIII, exchange such Definitive Capital Securities Certificate for a beneficial interest in a Global Capital Security.

-32-

(b)  If any Global Capital Security is to be exchanged for Definitive Capital Securities Certificates or canceled in part, or if any Definitive Capital Securities Certificate is to be exchanged in whole or in part for any Global Capital Security, then either (i) such Global Capital Security shall be so surrendered for exchange or cancellation as provided in this Section 6.4 and Article VIII or (ii) the aggregate liquidation amount represented by such Global Capital Security shall be reduced, subject to Section 6.3, or increased by an amount equal to the liquidation amount represented by that portion of the Global Capital Security to be so exchanged or canceled, or equal to the liquidation amount represented by such Definitive Capital Securities Certificates to be so exchanged for any Global Capital Security, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Institutional Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender to the Administrators or the Registrar of any Global Capital Security or Securities by the Depositary, accompanied by registration instructions, the Administrators, or any one of them, shall execute the Definitive Capital Securities Certificates in accordance with the instructions of the Depositary. None of the Registrar, Administrators, or the Institutional Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

(c)  Every Definitive Capital Securities Certificate executed and delivered upon registration or transfer of, or in exchange for or in lieu of, a Global Capital Security or any portion thereof shall be executed and delivered in the form of, and shall be, a Global Capital Security, unless such Definitive Capital Securities Certificate is registered in the name of a Person other than the Depositary for such Global Capital Security or a nominee thereof.

(d)  The Depositary or its nominee, as registered owner of a Global Capital Security, shall be the Holder of such Global Capital Security for all purposes under this Declaration and the Global Capital Security, and Owners with respect to a Global Capital Security shall hold such interests pursuant to the Applicable Depositary Procedures. The Registrar, the Administrators and the Institutional Trustee shall be entitled to deal with the Depositary for all purposes of this Declaration relating to the Global Capital Securities (including the payment of the liquidation amount of and Distributions on the Book-Entry Capital Securities represented thereby and the giving of instructions or directions by Owners of Book-Entry Capital Securities represented thereby and the giving of notices) as the sole Holder of the Book-Entry Capital Securities represented thereby and shall have no obligations to the Owners thereof. None of the Administrators, the Institutional Trustee nor the Registrar shall have any liability in respect of any transfers effected by the Depositary.

(e)  The rights of the Owners of the Book-Entry Capital Securities shall be exercised only through the Depositary and shall be limited to those established by law, the Applicable Depositary Procedures and agreements between such Owners and the Depositary and/or the Depositary Participants; provided, solely for the purpose of determining whether the Holders of the requisite amount of Capital Securities have voted on any matter provided for in this Declaration, to the extent that Capital Securities are represented by a Global Capital Security, the Administrators and the Institutional Trustee may conclusively rely on, and shall be fully protected in relying on, any written instrument (including a proxy) delivered to the Institutional Trustee by the Depositary setting forth the Owners' votes or assigning the right to vote on any matter to any other Persons either in whole or in part. To the extent that Capital Securities are represented by a Global Capital Security, the initial Depositary will make book-entry transfers among the Depositary Participants and receive and transmit payments on the Capital Securities that are represented by a Global Capital Security to such Depositary Participants, and none of the Sponsor, the Administrators or the Institutional Trustee shall have any responsibility or obligation with respect thereto.

-33-

(f)  To the extent that a notice or other communication to the Holders is required under this Declaration, for so long as Capital Securities are represented by a Global Capital Security, the Administrator and the Institutional Trustee shall give all such notices and communications to the Depositary, and shall have no obligations to the Owners.

SECTION 6.5.   Mutilated, Destroyed, Lost or Stolen Certificates. If: (a) any mutilated Certificates should be surrendered to the Registrar, or if the Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate; and (b) there shall be delivered to the Registrar, the Administrators and the Institutional Trustee such security or indemnity as may be required by them to hold each of them harmless; then, in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, an Administrator on behalf of the Trust shall execute (and in the case of a Capital Security Certificate, the Institutional Trustee shall authenticate) and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this Section 6.5, the Registrar or the Administrators may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.

SECTION 6.6.   Temporary Securities. Until definitive Securities are ready for delivery, the Administrators may prepare and, in the case of the Capital Securities, the Institutional Trustee shall authenticate, temporary Securities. Temporary Securities shall be substantially in form of definitive Securities but may have variations that the Administrators consider appropriate for temporary Securities. Without unreasonable delay, the Administrators shall prepare and, in the case of the Capital Securities, the Institutional Trustee shall authenticate definitive Securities in exchange for temporary Securities.

SECTION 6.7.   Cancellation. The Administrators at any time may deliver Securities to the Registrar for cancellation. The Registrar shall forward to the Institutional Trustee any Securities surrendered to it for registration of transfer, redemption or payment. The Institutional Trustee shall promptly cancel all Securities surrendered for registration of transfer, payment, replacement or cancellation and shall dispose of such canceled Securities in accordance with its standard procedures or otherwise as the Administrators direct. The Administrators may not issue new Securities to replace Securities that have been paid or, except for Securities surrendered for purposes of transfer or exchange, that have been delivered to the Institutional Trustee for cancellation.

-34-

SECTION 6.8.   Rights of Holders; Waivers of Past Defaults.

(a)  The legal title to the Trust Property is vested exclusively in the Institutional Trustee (in its capacity as such) in accordance with Section 2.5, and the Holders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Securities shall be personal property giving only the rights specifically set forth therein and in this Declaration. The Securities shall have no, and the issuance of the Securities shall not be subject to, preemptive or other similar rights and when issued and delivered to Holders against payment of the purchase price therefor, the Securities will be fully paid and nonassessable by the Trust.

(b)  For so long as any Capital Securities remain outstanding, if, upon an Indenture Event of Default under paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Debentures fail to declare the principal of all of the Debentures to be immediately due and payable, the Holders of not less than a Majority in liquidation amount of the Capital Securities then outstanding shall have the right to make such declaration by a notice in writing to the Institutional Trustee, the Sponsor and the Debenture Trustee.

(c)  Upon an Indenture Event of Default under paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture at any time after a declaration of acceleration of maturity of the Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Debenture Trustee as provided in the Indenture, if the Institutional Trustee, subject to the provisions hereof, fails to annul any such declaration and waive such default, the Holders of not less than a Majority in liquidation amount of the Capital Securities, by written notice to the Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and annul such declaration and its consequences if:

(i)  the Sponsor has paid or deposited with the Debenture Trustee a sum sufficient to pay

(A)  all overdue installments of interest on all of the Debentures;

(B)  any accrued Deferred Interest on all of the Debentures;

(C)  all payments on any Debentures that have become due otherwise than by such declaration of acceleration and interest and Deferred Interest thereon at the rate borne by the Debentures; and

(D)  all sums paid or advanced by the Debenture Trustee under the Indenture and the reasonable compensation, documented expenses, disbursements and advances of the Debenture Trustee and the Institutional Trustee, their agents and counsel; and

(ii)  all Events of Default with respect to the Debentures, other than the non-payment of the principal of or premium, if any, on the Debentures that has become due solely by such acceleration, have been cured or waived as provided in Section 5.07 of the Indenture.

-35-

(d)  The Holders of not less than a Majority in liquidation amount of the Capital Securities may, on behalf of the Holders of all the Capital Securities, waive any past default or Event of Default, except a default or Event of Default in the payment of principal or interest (unless such default or Event of Default has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the Debenture Trustee) or a default or Event of Default in respect of a covenant or provision that under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Debenture. No such rescission shall affect any subsequent default or impair any right consequent thereon.

(e)  Upon receipt by the Institutional Trustee of written notice declaring such an acceleration, or rescission and annulment thereof, by Holders of any part of the Capital Securities, a record date shall be established for determining Holders of outstanding Capital Securities entitled to join in such notice, which record date shall be at the close of business on the day the Institutional Trustee receives such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that, unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day that is 90 days after such record date, such notice of declaration of acceleration, or rescission and annulment, as the case may be, shall automatically and without further action by any Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such 90-day period, a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, that is identical to a written notice that has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 6.8.

(f)  Except as otherwise provided in this Section 6.8, the Holders of not less than a Majority in liquidation amount of the Capital Securities may, on behalf of the Holders of all the Capital Securities, waive any past default or Event of Default and its consequences. Upon such waiver, any such default or Event of Default shall cease to exist, and any default or Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

ARTICLE VII

DISSOLUTION AND TERMINATION OF TRUST

SECTION 7.1.   Dissolution and Termination of Trust.

(a)  The Trust shall dissolve on the first to occur of

(i)  unless earlier dissolved, on June 15, 2042, the expiration of the term of the Trust;

-36-

(ii)  a Bankruptcy Event with respect to the Sponsor, the Trust or the Debenture Issuer;

(iii)  (other than in connection with a merger, consolidation or similar transaction not prohibited by the Indenture, this Declaration or the Guarantee, as the case may be) the filing of a certificate of dissolution or its equivalent with respect to the Sponsor or upon the revocation of the charter of the Sponsor and the expiration of 90 days after the date of revocation without a reinstatement thereof;

(iv)  the distribution of all of the Debentures to the Holders of the Securities, upon exercise of the right of the Holders of all of the outstanding Common Securities to dissolve the Trust as provided in Annex I hereto;

(v)  the entry of a decree of judicial dissolution of any Holder of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;

(vi)  when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; or

(vii)  before the issuance of any Securities, with the consent of all of the Trustees and the Sponsor.

(b)  As soon as is practicable after the occurrence of an event referred to in Section 7.1(a), and after satisfaction of liabilities to creditors of the Trust as required by applicable law, including Section 3808 of the Statutory Trust Act, and subject to the terms set forth in Annex I, the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in accordance with the Statutory Trust Act, shall terminate the Trust by filing, at the expense of the Sponsor, a certificate of cancellation with the Secretary of State of the State of Delaware.

(c)  The provisions of Section 2.9 and Article IX shall survive the termination of the Trust.

ARTICLE VIII

TRANSFER OF INTERESTS

SECTION 8.1.   General.

(a)  Subject to Section 6.4 and Section 8.1(c), when Capital Securities are presented to the Registrar with a request to register a transfer or to exchange them for an equal number of Capital Securities represented by different Certificates, the Registrar shall register the transfer or make the exchange if the requirements provided for herein for such transactions are met. To permit registrations of transfers and exchanges, the Trust shall issue and the Institutional Trustee shall authenticate Capital Securities at the Registrar's request.

(b)  Upon issuance of the Common Securities, the Sponsor shall acquire and retain beneficial and record ownership of the Common Securities and, for so long as the Securities remain outstanding, the Sponsor shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Sponsor under the Indenture that is a U.S. Person may succeed to the Sponsor's ownership of the Common Securities.

-37-

(c)  Capital Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration and in the terms of the Capital Securities. To the fullest extent permitted by applicable law, any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void and will be deemed to be of no legal effect whatsoever and any such transferee shall be deemed not to be the holder of such Capital Securities for any purpose, including but not limited to the receipt of Distributions on such Capital Securities, and such transferee shall be deemed to have no interest whatsoever in such Capital Securities.

(d)  The Registrar shall provide for the registration of Securities and of transfers of Securities, which will be effected without charge but only upon payment (with such indemnity as the Registrar may require) in respect of any tax or other governmental charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Securities, the Registrar shall cause one or more new Securities to be issued in the name of the designated transferee or transferees. Any Security issued upon any registration of transfer or exchange pursuant to the terms of this Declaration shall evidence the same Security and shall be entitled to the same benefits under this Declaration as the Security surrendered upon such registration of transfer or exchange. Every Security surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Registrar duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Security surrendered for registration of transfer shall be canceled by the Institutional Trustee pursuant to Section 6.7. A transferee of a Security shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Security. By acceptance of a Security, each transferee shall be deemed to have agreed to be bound by this Declaration.

(e)  Neither the Trust nor the Registrar shall be required (i) to issue, register the transfer of, or exchange any Securities during a period beginning at the opening of business 15 days before the day of any selection of Securities for redemption and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of the Securities to be redeemed, or (ii) to register the transfer or exchange of any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

SECTION 8.2.   Transfer Procedures and Restrictions.

(a)  The Capital Securities shall bear the Restricted Securities Legend (as defined below), which shall not be removed unless there is delivered to the Trust such satisfactory evidence, which may include an opinion of counsel reasonably acceptable to the Administrators and the Institutional Trustee, as may be reasonably required by the Trust or the Institutional Trustee, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act or that such Securities are not "restricted" within the meaning of Rule 144 under the Securities Act. Upon provision of such satisfactory evidence, the Institutional Trustee, at the written direction of the Administrators, shall authenticate and deliver Capital Securities that do not bear the Restricted Securities Legend (other than the legend contemplated by Section 8.2(d)).

-38-

(b)  When Capital Securities are presented to the Registrar (x) to register the transfer of such Capital Securities, or (y) to exchange such Capital Securities for an equal number of Capital Securities represented by different Certificates, the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Capital Securities surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Administrators, the Institutional Trustee and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing.

(c)  Except as permitted by Section 8.2(a), each Capital Security shall bear a legend (the "Restricted Securities Legend") in substantially the following form:

THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO CATHAY CAPITAL TRUST III OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO A "NON U.S. PERSON" IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

-39-

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT OR AN APPLICABLE EXEMPTION THEREFROM.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

-40-

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THE CERTIFICATE WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

(d)  Capital Securities may only be transferred in minimum blocks of $100,000 aggregate liquidation amount (100 Capital Securities) and multiples of $1,000 in excess thereof. Any attempted transfer of Capital Securities in a block having an aggregate liquidation amount of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be a Holder of such Capital Securities for any purpose, including, but not limited to, the receipt of Distributions on such Capital Securities, and such purported transferee shall be deemed to have no interest whatsoever in such Capital Securities.

(e)  Each party hereto understands and hereby agrees that the initial purchaser is intended solely to be an interim holder of the Capital Securities and is purchasing such securities to facilitate consummation of the transactions contemplated herein and in the documents ancillary hereto. Notwithstanding any provision in this Declaration to the contrary, the initial purchaser shall have the right upon notice (a "Transfer Notice") to the Institutional Trustee and the Sponsor to transfer title in and to the Capital Securities; provided the initial purchaser shall take reasonable steps to ensure that such transfer is exempt from registration under the Securities Act of 1933, as amended, and rules promulgated thereunder. Any Transfer Notice delivered to the Institutional Trustee and Sponsor pursuant to the preceding sentence shall indicate the aggregate liquidation amount of Capital Securities being transferred, the name and address of the transferee thereof (the "Transferee") and the date of such transfer. Notwithstanding any provision in this Declaration to the contrary, the transfer by the initial purchaser of title in and to the Capital Securities pursuant to a Transfer Notice shall not be subject to any requirement relating to Opinions of Counsel, Certificates of Transfer or any other Opinion or Certificate applicable to transfers hereunder and relating to Capital Securities.

-41-

(f)Neither the Institutional Trustee nor the Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code or the Investment Company Act.

SECTION 8.3.   Deemed Security Holders.

The Trust, the Administrators, the Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust, the Administrators, the Trustees, the Paying Agent, the Transfer Agent or the Registrar shall have actual or other notice thereof.

ARTICLE IX

LIMITATION OF LIABILITY OF HOLDERS

OF SECURITIES, TRUSTEES OR OTHERS

SECTION 9.1.   Liability.

(a)  Except as expressly set forth in this Declaration, the Guarantee and the terms of the Securities, the Sponsor shall not be:

(i)  personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; and

(ii)  required to pay to the Trust or to any Holder of the Securities any deficit upon dissolution of the Trust or otherwise.

(b)  The Holder of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets.

(c)  Except to the extent provided in Section 9.1(b), and pursuant to § 3803(a) of the Statutory Trust Act, the Holders of the Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware, except as otherwise specifically set forth herein.

-42-

SECTION 9.2.   Exculpation.

(a)  No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person (other than an Administrator) shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct or bad faith with respect to such acts or omissions and except that an Administrator shall be liable for any such loss, damage or claim incurred by reason of such Administrator's gross negligence or willful misconduct or bad faith with respect to such acts or omissions.

(b)  An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and, if selected by such Indemnified Person, has been selected by such Indemnified Person with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid.

(c)It is expressly understood and agreed by the parties hereto that insofar as any document, agreement or certificate is executed on behalf of the Trust by any Trustee (i) such document, agreement or certificate is executed and delivered by such Trustee, not in its individual capacity, but solely as Trustee under this Declaration in the exercise of the powers and authority conferred and vested in it, (ii) each of the representations, undertakings and agreements made on the part of the Trust is made and intended not as representations, warranties, covenants, undertakings and agreements by any Trustee in its individual capacity, but is made and intended for the purpose of binding only the Trust and (iii) under no circumstances shall any Trustee in its individual capacity be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Declaration or any other document, agreement or certificate.

SECTION 9.3.   Fiduciary Duty.

(a)  To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Institutional Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of the Indemnified Person.

-43-

(b)  Whenever in this Declaration an Indemnified Person is permitted or required to make a decision:

(i)  in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or

(ii)  in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law.

SECTION 9.4.   Indemnification.

(a)(i)The Sponsor shall indemnify, to the fullest extent permitted by law, any Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that such Person is or was an Indemnified Person against expenses (including attorneys' fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with such action, suit or proceeding if such Person acted in good faith and in a manner such Person reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Person did not act in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such conduct was unlawful.

(ii)The Sponsor shall indemnify, to the fullest extent permitted by law, any Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that such Person is or was an Indemnified Person against expenses (including attorneys' fees and expenses) actually and reasonably incurred by such Person in connection with the defense or settlement of such action or suit if such Person acted in good faith and in a manner such Person reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Indemnified Person shall have been adjudged to be liable to the Trust, unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper.

-44-

(iii)To the extent that an Indemnified Person shall be successful on the merits or otherwise (including dismissal of an action without prejudice or the settlement of an action without admission of liability) in defense of any action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 9.4(a), or in defense of any claim, issue or matter therein, such Person shall be indemnified, to the fullest extent permitted by law, against expenses (including attorneys' fees and expenses) actually and reasonably incurred by such Person in connection therewith.

(iv)Any indemnification of an Administrator under paragraphs (i) and (ii) of this Section 9.4(a) (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Indemnified Person is proper in the circumstances because such Person has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (A) by the Administrators by a majority vote of a Quorum consisting of such Administrators who were not parties to such action, suit or proceeding, (B) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Administrators so directs, by independent legal counsel in a written opinion, or (C) by the Common Security Holder of the Trust.

(v)To the fullest extent permitted by law, expenses (including attorneys' fees and expenses) incurred by an Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that such Person is not entitled to be indemnified by the Sponsor as authorized in this Section 9.4(a). Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (1) in the case of a Company Indemnified Person (A) by the Administrators by a majority vote of a Quorum of disinterested Administrators, (B) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Administrators so directs, by independent legal counsel in a written opinion or (C) by the Common Security Holder of the Trust, that, based upon the facts known to the Administrators, counsel or the Common Security Holder at the time such determination is made, such Indemnified Person acted in bad faith or in a manner that such Person either believed to be opposed to or did not believe to be in the best interests of the Trust, or, with respect to any criminal proceeding, that such Indemnified Person believed or had reasonable cause to believe such conduct was unlawful, or (2) in the case of a Fiduciary Indemnified Person, by independent legal counsel in a written opinion that, based upon the facts known to the counsel at the time such determination is made, such Indemnified Person acted in bad faith or in a manner that such Indemnified Person either believed to be opposed to or did not believe to be in the best interests of the Trust, or, with respect to any criminal proceeding, that such Indemnified Person believed or had reasonable cause to believe such conduct was unlawful. In no event shall any advance be made (i) to a Company Indemnified Person in instances where the Administrators, independent legal counsel or the Common Security Holder reasonably determine that such Person deliberately breached such Person's duty to the Trust or its Common or Capital Security Holders or (ii) to a Fiduciary Indemnified Person in instances where independent legal counsel promptly and reasonably determines in a written opinion that such Person deliberately breached such Person's duty to the Trust or its Common or Capital Security Holders.

-45-

(b)The Sponsor shall indemnify, to the fullest extent permitted by applicable law, each Indemnified Person from and against any and all loss, damage, liability, tax (other than taxes based on the income of such Indemnified Person), penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person arising out of or in connection with or by reason of the creation, administration or termination of the Trust, or any act or omission of such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Declaration, except that no Indemnified Person shall be entitled to be indemnified in respect of any loss, damage, liability, tax, penalty, expense or claim incurred by such Indemnified Person by reason of negligence, willful misconduct or bad faith with respect to such acts or omissions.

(c)The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 9.4 shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors of the Sponsor or Capital Security Holders of the Trust or otherwise, both as to action in such Person's official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 9.4 shall be deemed to be provided by a contract between the Sponsor and each Indemnified Person who serves in such capacity at any time while this Section 9.4 is in effect. Any repeal or modification of this Section 9.4 shall not affect any rights or obligations then existing.

(d)The Sponsor or the Trust may purchase and maintain insurance on behalf of any Person who is or was an Indemnified Person against any liability asserted against such Person and incurred by such Person in any such capacity, or arising out of such Person's status as such, whether or not the Sponsor would have the power to indemnify such Person against such liability under the provisions of this Section 9.4.

(e)For purposes of this Section 9.4, references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any Person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 9.4 with respect to the resulting or surviving entity as such Person would have with respect to such constituent entity if its separate existence had continued.

-46-

(f)The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 9.4 shall, unless otherwise provided when authorized or ratified, continue as to a Person who has ceased to be an Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a Person.

(g)The provisions of this Section 9.4 shall survive the termination of this Declaration or the earlier resignation or removal of the Institutional Trustee. The obligations of the Sponsor under this Section 9.4 to compensate and indemnify the Trustees and to pay or reimburse the Trustees for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Securities upon all property and funds held or collected by the Trustees as such, except funds held in trust for the benefit of the holders of particular Capital Securities, provided, that the Sponsor is the holder of the Common Securities.

SECTION 9.5.   Outside Businesses. Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee (subject to Section 4.3(c)) may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. None of any Covered Person, the Sponsor, the Delaware Trustee or the Institutional Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Institutional Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates.

SECTION 9.6.   Compensation; Fee.

(a)  Subject to the provisions set forth in the Fee Agreement between the Institutional Trustee, Cohen & Company and the Company of even date herewith, the Sponsor agrees:

(i)  to pay to the Trustees from time to time such compensation for all services rendered by them hereunder as the parties shall agree in writing from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

(ii)  except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable, documented expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Declaration (including the reasonable compensation and the expenses and disbursements of their respective agents and counsel), except any such expense, disbursement or advance attributable to their negligence or willful misconduct.

-47-

(b)  The provisions of this Section 9.6 shall survive the dissolution of the Trust and the termination of this Declaration and the removal or resignation of any Trustee.

ARTICLE X

ACCOUNTING

SECTION 10.1.   Fiscal Year. The fiscal year (the "Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code.

SECTION 10.2.   Certain Accounting Matters.

(a)  At all times during the existence of the Trust, the Administrators shall keep, or cause to be kept at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations § 301.7701-7, full books of account, records and supporting documents, which shall reflect in reasonable detail each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied.

(b)  The Administrators shall either (i) cause each Form 10-K and Form 10-Q prepared by the Sponsor and filed with the Commission in accordance with the Exchange Act to be delivered directly to each Holder of Securities, within 90 days after the filing of each Form 10-K and within 30 days after the filing of each Form 10-Q or (ii) cause to be prepared at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations § 301.7701-7, and delivered directly to each of the Holders of Securities, within 90 days after the end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss.

(c)  The Administrators shall cause to be duly prepared and delivered to each of the Holders of Securities Form 1099 or such other annual United States federal income tax information statement required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Administrators shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust.

(d)  The Administrators shall cause to be duly prepared in the United States, as defined for purposes of Treasury Regulations § 301.7701-7, and filed an annual United States federal income tax return on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Administrators on behalf of the Trust with any state or local taxing authority.

(e)  The Administrators will cause the Sponsor's regulatory reports to be delivered to the Holder promptly following their filing with the Federal Reserve.

-48-

SECTION 10.3.   Banking. The Trust shall maintain one or more bank accounts in the United States, as defined for purposes of Treasury Regulations § 301.7701-7, in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Debentures held by the Institutional Trustee shall be made directly to the Property Account and no other funds of the Trust shall be deposited in the Property Account. The sole signatories for such accounts (including the Property Account) shall be designated by the Institutional Trustee.

SECTION 10.4.   Withholding. The Institutional Trustee or any Paying Agent and the Administrators shall comply with all withholding requirements under United States federal, state and local law. As a condition to the payment of any principal of or interest on any Debt Security without the imposition of withholding tax, the Institutional Trustee or any Paying Agent shall require the previous delivery of properly completed and signed applicable U.S. federal income tax certifications (generally, an Internal Revenue Service Form W-9 (or applicable successor form) in the case of a person that is a "United States person" within the meaning of Section 7701(a)(30) of the Code or an Internal Revenue Service Form W-8 (or applicable successor form) in the case of a person that is not a "United States person" within the meaning of Section 7701(a)(30) of the Code) and any other certification acceptable to it to enable the Institutional Trustee or any Paying Agent and the Trustee to determine their respective duties and liabilities with respect to any taxes or other charges that they may be required to pay, deduct or withhold in respect of such Debt Security or the holder of such Debt Security under any present or future law or regulation of the United States or any political subdivision thereof or taxing authority therein or to comply with any reporting or other requirements under any such law or regulation. The Administrators shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Institutional Trustee or any Paying Agent is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a Distribution to the Holder in the amount of the withholding. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Institutional Trustee or any Paying Agent may reduce subsequent Distributions by the amount of such withholding.

ARTICLE XI

AMENDMENTS AND MEETINGS

SECTION 11.1.   Amendments.

(a)  Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may only be amended by a written instrument approved and executed by:

(i)  the Institutional Trustee,

(ii)  if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, the Delaware Trustee,

-49-

(iii)  if the amendment affects the rights, powers, duties, obligations or immunities of the Administrators, the Administrators, and

(iv)  the Holders of a Majority in liquidation amount of the Common Securities.

(b)  Notwithstanding any other provision of this Article XI, no amendment shall be made, and any such purported amendment shall be void and ineffective:

(i)  unless the Institutional Trustee shall have first received

(A)  an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and

(B)  an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities) and that all conditions precedent to the execution and delivery of such amendment have been satisfied; or

(ii)  if the result of such amendment would be to

(A)  cause the Trust to cease to be classified for purposes of United States federal income taxation as a grantor trust;

(B)  reduce or otherwise adversely affect the powers of the Institutional Trustee in contravention of the Trust Indenture Act;

(C)  cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act; or

(D)  cause the Debenture Issuer to be unable to treat an amount equal to the Liquidation Amount of the Capital Securities as "Tier 1 Capital" for purposes of the capital adequacy guidelines of (x) the Federal Reserve (or, if the Debenture Issuer is not a bank holding company, such guidelines or policies applied to the Debenture Issuer as if the Debenture Issuer were subject to such guidelines of policies) or of (y) any other regulatory authority having jurisdiction over the Debenture Issuer.

(c)  Except as provided in Section 11.1(d), (e) or (g), no amendment shall be made, and any such purported amendment shall be void and ineffective, unless the Holders of a Majority in liquidation amount of the Capital Securities shall have consented to such amendment.

(d)  In addition to and notwithstanding any other provision in this Declaration, without the consent of each affected Holder, this Declaration may not be amended to (i) change the amount or timing of any Distribution on the Securities or any redemption or liquidation provisions applicable to the Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Securities as of a specified date or (ii) restrict the right of a Holder to institute suit for the enforcement of any such payment on or after such date.

-50-

(e)  Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be amended without the consent of all of the Holders of the Securities.

(f)  The rights of the Holders of the Capital Securities and Common Securities, as applicable, under Article IV to increase or decrease the number of, and appoint and remove, Trustees shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Capital Securities or Common Securities, as applicable.

(g)  Subject to Section 11.1(a), this Declaration may be amended by the Institutional Trustee and the Holder of a Majority in liquidation amount of the Common Securities without the consent of the Holders of the Capital Securities to:

(i)  cure any ambiguity;

(ii)  correct or supplement any provision in this Declaration that may be defective or inconsistent with any other provision of this Declaration;

(iii)  add to the covenants, restrictions or obligations of the Sponsor; or

(iv)  modify, eliminate or add to any provision of this Declaration to such extent as may be necessary or desirable, including, without limitation, to ensure that the Trust will be classified for United States federal income tax purposes at all times as a grantor trust and will not be required to register as an Investment Company under the Investment Company Act (including without limitation to conform to any change in Rule 3a-5, Rule 3a-7 or any other applicable rule under the Investment Company Act or written change in interpretation or application thereof by any legislative body, court, government agency or regulatory authority) which amendment does not have a material adverse effect on the right, preferences or privileges of the Holders of Securities;

provided, however, that no such modification, elimination or addition referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect the powers, preferences or rights of Holders of Capital Securities.

SECTION 11.2.   Meetings of the Holders of the Securities; Action by Written Consent.

(a)  Meetings of the Holders of any class of Securities may be called at any time by the Administrators (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital Securities are listed or admitted for trading, if any. The Administrators shall call a meeting of the Holders of such class if directed to do so by the Holders of not less than 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Administrators one or more notices in a writing stating that the signing Holders of the Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of the Securities calling a meeting shall specify in writing the Certificates held by the Holders of the Securities exercising the right to call a meeting and only those Securities represented by such Certificates shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met.

-51-

(b)  Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of the Securities:

(i)  notice of any such meeting shall be given to all the Holders of the Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of the Holders of the Securities is permitted or required under this Declaration or the rules of any stock exchange on which the Capital Securities are listed or admitted for trading, if any, such vote, consent or approval may be given at a meeting of the Holders of the Securities. Any action that may be taken at a meeting of the Holders of the Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of the Securities owning not less than the minimum amount of Securities that would be necessary to authorize or take such action at a meeting at which all Holders of the Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of the Securities entitled to vote who have not consented in writing. The Administrators may specify that any written ballot submitted to the Holders of the Securities for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Administrators;

(ii)  each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of the Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders of the Securities were stockholders of a Delaware corporation; each meeting of the Holders of the Securities shall be conducted by the Administrators or by such other Person that the Administrators may designate; and

(iii)  unless the Statutory Trust Act, this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Capital Securities are then listed for trading, if any, otherwise provides, the Administrators, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of the Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote; provided, however, that each meeting shall be conducted in the United States (as that term is defined in Treasury Regulations § 301.7701-7).

-52-

ARTICLE XII

REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

AND DELAWARE TRUSTEE

SECTION 12.1.   Representations and Warranties of Institutional Trustee. The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional Trustee's acceptance of its appointment as Institutional Trustee, that:

(a)  the Institutional Trustee is a banking corporation or national association with trust powers, duly organized, validly existing and in good standing under the laws of the State of New York or the United States of America, respectively, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration;

(b)  the Institutional Trustee has a combined capital and surplus of at least fifty million U.S. dollars ($50,000,000);

(c)  the Institutional Trustee is not an affiliate of the Sponsor, nor does the Institutional Trustee offer or provide credit or credit enhancement to the Trust;

(d)  the execution, delivery and performance by the Institutional Trustee of this Declaration has been duly authorized by all necessary action on the part of the Institutional Trustee. This Declaration has been duly executed and delivered by the Institutional Trustee, and under Delaware law (excluding any securities laws) constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether considered in a proceeding in equity or at law);

(e)  the execution, delivery and performance of this Declaration by the Institutional Trustee does not conflict with or constitute a breach of the charter or by-laws of the Institutional Trustee; and

(f)  no consent, approval or authorization of, or registration with or notice to, any state or federal banking authority governing the trust powers of the Institutional Trustee is required for the execution, delivery or performance by the Institutional Trustee of this Declaration.

-53-

SECTION 12.2.   Representations and Warranties of Delaware Trustee. The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that:

(a)  if it is not a natural person, the Delaware Trustee is duly organized, validly existing and has its principal place of business in the State of Delaware;

(b)  if it is not a natural person, the execution, delivery and performance by the Delaware Trustee of this Declaration has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. This Declaration has been duly executed and delivered by the Delaware Trustee, and under Delaware law (excluding any securities laws) constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether considered in a proceeding in equity or at law);

(c)  if it is not a natural person, the execution, delivery and performance of this Declaration by the Delaware Trustee does not conflict with or constitute a breach of the articles of association or by-laws of the Delaware Trustee;

(d)  it has trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration;

(e)  no consent, approval or authorization of, or registration with or notice to, any state or federal banking authority governing the trust powers of the Delaware Trustee is required for the execution, delivery or performance by the Delaware Trustee of this Declaration; and

(f)  if the Delaware Trustee is a natural person, he or she is a resident of the State of Delaware.

ARTICLE XIII

MISCELLANEOUS

SECTION 13.1.   Notices. All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied (which telecopy shall be followed by notice delivered or mailed by first class mail) or mailed by first class mail, as follows:

(a)  if given to the Trust, in care of the Administrators at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders of the Securities):

-54-

Cathay Capital Trust III

c/o Cathay General Bancorp

777 North Broadway

Los Angeles, California 90012

Attention: Heng Chen

Telecopy: (213) 617-0981

Telephone: (213) 625-4752

(b)  if given to the Delaware Trustee, at the mailing address set forth below (or such other address as the Delaware Trustee may give notice of to the Holders of the Securities):

LaSalle National Trust Delaware

1201 N. Orange Street, Suite 1000

Wilmington, Delaware 19801

Attn: Robert W. Eaddy

Telecopy: 302-427-1414

Telephone: 302-427-1401

(c)  if given to the Institutional Trustee, at the Institutional Trustee's mailing address set forth below (or such other address as the Institutional Trustee may give notice of to the Holders of the Securities):

LaSalle Bank National Association

135 S. LaSalle Street, Suite 1511

Chicago, Illinois 60603

Attention: CDO Trust Services Group

Cathay Capital Trust III

Telecopy: 312-904-0524

Telephone: 312-904-0283

(d)  if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice of to the Trust):

Cathay General Bancorp

777 North Broadway

Los Angeles, California 90012

Attention: Heng Chen

Telecopy: (213) 617-0981

Telephone: (213) 625-4752

(e)  if given to any other Holder, at the address set forth on the books and records of the Trust.

All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.

-55-

SECTION 13.2.   Governing Law. This Declaration and the rights and obligations of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of Delaware and all rights, obligations and remedies shall be governed by such laws without regard to the principles of conflict of laws of the State of Delaware or any other jurisdiction that would call for the application of the law of any jurisdiction other than the State of Delaware.

SECTION 13.3.   Submission to Jurisdiction.

(a)  Each of the parties hereto agrees that any suit, action or proceeding arising out of or based upon this Declaration, or the transactions contemplated hereby, may be instituted in any of the courts of the State of New York located in the Borough of Manhattan, City and State of New York, and further agrees to submit to the jurisdiction of Delaware, and to any actions that are instituted in state or Federal court in Wilmington, Delaware and any competent court in the place of its corporate domicile in respect of actions brought against it as a defendant. In addition, each such party irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of such suit, action or proceeding brought in any such court and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum and irrevocably waives any right to which it may be entitled on account of its place of corporate domicile. Each such party hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Declaration or the transactions contemplated hereby. Each such party agrees that final judgment in any proceedings brought in such a court shall be conclusive and binding upon it and may be enforced in any court to the jurisdiction of which it is subject by a suit upon such judgment.

(b)  Each of the Sponsor, the Trustees, the Administrators and the Holder of the Common Securities irrevocably consents to the service of process on it in any such suit, action or proceeding by the mailing thereof by registered or certified mail, postage prepaid, to it at its address given in or pursuant to Section 13.1 hereof.

(c)  To the extent permitted by law, nothing herein contained shall preclude any party from effecting service of process in any lawful manner or from bringing any suit, action or proceeding in respect of this Declaration in any other state, country or place.

SECTION 13.4.   Intention of the Parties. It is the intention of the parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties.

SECTION 13.5.   Headings. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof.

SECTION 13.6.   Successors and Assigns. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether or not so expressed.

-56-

SECTION 13.7.   Partial Enforceability. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

SECTION 13.8.   Counterparts. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees and Administrators to any of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

-57-

IN WITNESS WHEREOF, the undersigned have caused this Declaration to be duly executed as of the day and year first above written.

LASALLE NATIONAL TRUST DELAWARE,

as Delaware Trustee

By:  /s/ Evelyn Cruz                                       

Name: Evelyn Cruz                                         

Title: Assistant Vice President                    

LASALLE BANK NATIONAL

ASSOCIATION, as Institutional Trustee

By:  /s/ Mike Oliver                                        

Name: Mike Oliver                                          

Title: Assistant Vice President                     

CATHAY GENERAL BANCORP,

as Sponsor

By:  /s/ Heng. W. Chen                                  

Name: Heng W. Chen

Title: Executive Vice President and

Chief Financial Officer

By:  /s/ Heng W. Chen                                   

Name: Heng W. Chen

Administrator

By:  /s/ Anthony M. Tang                              

Name: Anthony M. Tang

Administrator

-58-

ANNEX I

TERMS OF

CAPITAL SECURITIES AND

COMMON SECURITIES

Pursuant to Section 6.1 of the Amended and Restated Declaration of Trust, dated as of March 30, 2007 (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration):

1.  Designation and Number.

(a)  Capital Securities. 45,000 Capital Securities of Cathay Capital Trust III (the "Trust"), with an aggregate stated liquidation amount with respect to the assets of the Trust of Forty Five Million Dollars ($45,000,000) and a stated liquidation amount with respect to the assets of the Trust of $1,000 per Capital Security, are hereby designated for the purposes of identification only as the "TP Securities" (the "Capital Securities"). The Capital Security Certificates evidencing the Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange on which the Capital Securities are listed, if any.

(b)  Common Securities. 1,392 Common Securities of the Trust (the "Common Securities") will be evidenced by Common Security Certificates substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. The Common Securities will have an aggregate stated liquidation amount with respect to the assets of the Trust of One Million Three Hundred Ninety Two Thousand Dollars ($1,392,000) and a stated liquidation amount with respect to the assets of the Trust of $1,000 per Common Security.

2.  Distributions.

(a)  Distributions payable on each Security will be payable at a variable per annum rate of interest, reset quarterly, equal to LIBOR, as determined on the LIBOR Determination Date for such Distribution Payment Period, plus 1.48% (the "Coupon Rate") of the stated liquidation amount of $1,000 per Security (provided, however, that the Coupon Rate for any Distribution Payment Period may not exceed the highest rate permitted by New York law, as the same may be modified by United States law of general applicability), such Coupon Rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Except as set forth below in respect of an Extension Period, Distributions in arrears for more than one quarterly period will bear interest thereon compounded quarterly at the applicable Coupon Rate for each such quarterly period (to the extent permitted by applicable law). The term "Distributions" as used herein includes cash distributions, any such compounded distributions and any Additional Interest payable on the Debentures unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds legally available in the Property Account therefor. The amount of Distributions payable for any Distribution Payment Period will be computed for any full quarterly Distribution Payment Period on the basis of a 360-day year and the actual number of days elapsed in the relevant Distribution period; provided, however, that upon the occurrence of a Special Event redemption pursuant to paragraph 4(a) below the amounts payable pursuant to this Declaration shall be calculated as set forth in the definition of Special Redemption Price.

A-I-1

(b)  LIBOR shall be determined by the Calculation Agent in accordance with the following provisions:

(1)  On the second LIBOR Business Day (provided, that on such day commercial banks are open for business (including dealings in foreign currency deposits) in London (a "LIBOR Banking Day"), and otherwise the next preceding LIBOR Business Day that is also a LIBOR Banking Day) prior to March 15, June 15, September 15 and December 15 (or, with respect to the first Distribution Payment Period, on March 28, 2007), (each such day, a "LIBOR Determination Date") for such Distribution Payment Period), the Calculation Agent shall obtain the rate for three-month U.S. Dollar deposits in Europe, which appears on Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) or such other page as may replace such Telerate Page 3750 on the Moneyline Telerate, Inc. service (or such other service or services as may be nominated by the British Banker's Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits), as of 11:00 a.m. (London time) on such LIBOR Determination Date, and the rate so obtained shall be LIBOR for such Distribution Payment Period. "LIBOR Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banking institutions in The City of New York or Chicago, Illinois are authorized or obligated by law or executive order to be closed. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on the same LIBOR Determination Date, the corrected rate as so substituted will be the applicable LIBOR for that Distribution Payment Period.

(2)  If, on any LIBOR Determination Date, such rate does not appear on Telerate Page 3750 or such other page as may replace such Telerate Page 3750 on the Moneyline Telerate, Inc. service (or such other service or services as may be nominated by the British Banker's Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits), the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London Interbank market for three-month U.S. Dollar deposits in Europe (in an amount determined by the Calculation Agent) by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal the arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such a quotation, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that at least two leading banks in the City of New York (as selected by the Calculation Agent) are quoting on the relevant LIBOR Determination Date for three-month U.S. Dollar deposits in Europe at approximately 11:00 a.m. (London time) (in an amount determined by the Calculation Agent). As used herein, "Reference Banks" means four major banks in the London Interbank market selected by the Calculation Agent.

A-I-2

(3)  If the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR for the applicable Distribution Payment Period shall be LIBOR in effect for the immediately preceding Distribution Payment Period.

(c)  All percentages resulting from any calculations on the Securities will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward).

(d)  As soon as practicable following each LIBOR Determination Date, but in no event later than the 30th day following such LIBOR Determination Date, the Calculation Agent shall notify, in writing, the Sponsor and the Paying Agent of the applicable Coupon Rate in effect for the related Distribution Payment Period. The Calculation Agent shall, upon the request of the Holder of any Securities, provide the Coupon Rate then in effect. All calculations made by the Calculation Agent in the absence of manifest error shall be conclusive for all purposes and binding on the Sponsor and the Holders of the Securities. Any error in a calculation of the Coupon Rate by the Calculation Agent may be corrected at any time by the delivery of notice of such corrected Coupon Rate as provided above. The Paying Agent shall be entitled to rely on information received from the Calculation Agent or the Sponsor as to the Coupon Rate. The Sponsor shall, from time to time, provide any necessary information to the Paying Agent relating to any original issue discount and interest on the Securities that is included in any payment and reportable for taxable income calculation purposes. Failure to notify the Sponsor, the Institutional Trustee or the Paying Agent of the applicable Coupon Rate shall not affect the obligation of the Sponsor to make payment on the Debentures at such Coupon Rate.

A-I-3

(e)  Distributions on the Securities will be cumulative, will accrue from the date of original issuance, and will be payable, subject to extension of Distribution payment periods as described herein, quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing June 15, 2007 (each, a "Distribution Payment Date"). Subject to prior submission of Notice (as defined in the Indenture), and so long as no Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture has occurred and is continuing, the Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures by extending the interest distribution period for up to 20 consecutive quarterly periods (each, an "Extension Period") at any time and from time to time on the Debentures, subject to the conditions described below, during which Extension Period no interest shall be due and payable (except any Additional Interest that may be due and payable). During any Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest (such accrued interest and interest thereon referred to herein as "Deferred Interest") will accrue at an annual rate equal to the Coupon Rate in effect for each such Extension Period, compounded quarterly from the date such Deferred Interest would have been payable were it not for the Extension Period, to the extent permitted by law. No Extension Period may end on a date other than a Distribution Payment Date. At the end of any such Extension Period, the Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the Debentures; provided, however, that no Extension Period may extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date; and provided, further, that, during any such Extension Period, the Debenture Issuer may not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Debenture Issuer's capital stock or (ii) make any payment of principal or premium or interest on or repay, repurchase or redeem any debt securities of the Debenture Issuer that rank pari passu in all respects with or junior in interest to the Debentures or (iii) make any payment under any guarantees of the Debenture Issuer that rank in all respects pari passu with or junior in interest to the Guarantee (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Debenture Issuer (A) in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, (B) in connection with a dividend reinvestment or stockholder stock purchase plan or (C) in connection with the issuance of capital stock of the Debenture Issuer (or securities convertible into or exercisable for such capital stock), as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange, reclassification, combination or conversion of any class or series of the Debenture Issuer's capital stock (or any capital stock of a subsidiary of the Debenture Issuer) for any class or series of the Debenture Issuer's capital stock or of any class or series of the Debenture Issuer's indebtedness for any class or series of the Debenture Issuer's capital stock, (c) the purchase of fractional interests in shares of the Debenture Issuer's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock. Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period; provided, that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Upon the termination of any Extension Period and upon the payment of all Deferred Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Deferred Interest shall be due and payable during an Extension Period, except at the end thereof, but Deferred Interest shall accrue upon each installment of interest that would otherwise have been due and payable during such Extension Period until such installment is paid. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds legally available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

A-I-4

(f)  Distributions on the Securities will be payable to the Holders thereof as they appear on the books and records of the Registrar on the relevant record dates. The relevant record dates shall be 15 days before the relevant Distribution Payment Date. Distributions payable on any Securities that are not punctually paid on any Distribution Payment Date, as a result of the Debenture Issuer having failed to make a payment under the Debentures, as the case may be, when due (taking into account any Extension Period), will cease to be payable to the Person in whose name such Securities are registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person in whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture. Notwithstanding anything to the contrary contained herein, if any Distribution Payment Date, other than on the Maturity Date, any Redemption Date or the Special Redemption Date, falls on a day that is not a Business Day, then any Distributions payable will be paid on, and such Distribution Payment Date will be moved to, the next succeeding Business Day, and additional Distributions will accrue for each day that such payment is delayed as a result thereof. If the Maturity Date, Redemption Date or Special Redemption Date falls on a day that is not a Business Day, then the principal, premium, if any, and/or interest payable on such date will be paid on the next succeeding Business Day, and no additional interest will accrue (except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day).

(g)  In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed pro rata (as defined herein) among the Holders of the Securities.

3.  Liquidation Distribution Upon Dissolution. In the event of the voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (each, a "Liquidation") other than in connection with a redemption of the Debentures, the Holders of the Securities will be entitled to receive out of the assets of the Trust available for distribution to Holders of the Securities, after satisfaction of liabilities to creditors of the Trust (to the extent not satisfied by the Debenture Issuer), distributions equal to the aggregate of the stated liquidation amount of $1,000 per Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless in connection with such Liquidation, the Debentures in an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on, and having the same record date as, such Securities, after paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with Section 3808(e) of the Statutory Trust Act, shall be distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.

A-I-5

The Sponsor, as the Holder of all of the Common Securities, has the right at any time to, upon receipt of an opinion of nationally recognized tax counsel that Holders will not recognize any gain or loss for United States federal income tax purposes as a result of the distribution Debentures, dissolve the Trust (including without limitation upon the occurrence of a Tax Event, an Investment Company Event or a Capital Treatment Event), subject to the receipt by the Debenture Issuer of prior approval from any regulatory authority having jurisdiction over the Sponsor that is primarily responsible for regulating the activities of the Sponsor if such approval is then required under applicable capital guidelines or policies of such regulatory authority, and, after satisfaction of liabilities to creditors of the Trust, cause the Debentures to be distributed to the Holders of the Securities on a Pro Rata basis in accordance with the aggregate stated liquidation amount thereof.

The Trust shall dissolve on the first to occur of (i) June 15, 2042, the expiration of the term of the Trust, (ii) a Bankruptcy Event with respect to the Sponsor, the Trust or the Debenture Issuer, (iii) (other than in connection with a merger, consolidation or similar transaction not prohibited by the Indenture, this Declaration or the Guarantee, as the case may be) the filing of a certificate of dissolution or its equivalent with respect to the Sponsor or upon the revocation of the charter of the Sponsor and the expiration of 90 days after the date of revocation without a reinstatement thereof, (iv) the distribution to the Holders of the Securities of the Debentures, upon exercise of the right of the Holder of all of the outstanding Common Securities to dissolve the Trust as described above, (v) the entry of a decree of a judicial dissolution of the Sponsor or the Trust, or (vi) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities. As soon as practicable after the dissolution of the Trust and upon completion of the winding up of the Trust, the Trust shall terminate upon the filing of a certificate of cancellation with the Secretary of State of the State of Delaware.

If a Liquidation of the Trust occurs as described in clause (i), (ii), (iii) or (v) in the immediately preceding paragraph, the Trust shall be liquidated by the Institutional Trustee of the Trust as expeditiously as such Trustee determines to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to the Holders of the Securities, the Debentures on a Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such distribution is determined by the Institutional Trustee not to be practical, in which event such Holders will be entitled to receive out of the assets of the Trust available for distribution to the Holders, after satisfaction of liabilities to creditors of the Trust to the extent not satisfied by the Debenture Issuer, an amount equal to the Liquidation Distribution. An early Liquidation of the Trust pursuant to clause (iv) of the immediately preceding paragraph shall occur if the Institutional Trustee determines that such Liquidation is possible by distributing, after satisfaction of liabilities to creditors of Trust, to the Holders of the Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

If, upon any such Liquidation, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on such Capital Securities shall be paid to the Holders of the Securities on a Pro Rata basis, except that if an Event of Default has occurred and is continuing, the Capital Securities shall have a preference over the Common Securities with regard to such distributions.

A-I-6

Upon any such Liquidation of the Trust involving a distribution of the Debentures, if at the time of such Liquidation, the Capital Securities were rated by at least one nationally-recognized statistical rating organization, the Debenture Issuer will use its reasonable best efforts to obtain from at least one such or other rating organization a rating for the Debentures.

After the date for any distribution of the Debentures upon dissolution of the Trust, (i) the Securities of the Trust will be deemed to be no longer outstanding, (ii) any certificates representing the Capital Securities will be deemed to represent undivided beneficial interests in such of the Debentures as have an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the distribution rate of, and bearing accrued and unpaid interest equal to accrued and unpaid distributions on, the Securities until such certificates are presented to the Debenture Issuer or its agent for transfer or reissuance (and until such certificates are so surrendered, no payments of interest or principal shall be made to Holders of Securities in respect of any payments due and payable under the Debentures) and (iii) all rights of Holders of Securities under the Capital Securities or the Common Securities, as applicable, shall cease, except the right of such Holders to receive Debentures upon surrender of certificates representing such Securities.

4.  Redemption and Distribution.

(a)  The Debentures will mature on June 15, 2037. The Debentures may be redeemed by the Debenture Issuer, in whole or in part, on any March 15, June 15, September 15 or December 15 on or after June 15, 2012 at the Redemption Price, upon not less than 30 nor more than 60 days' notice to Holders of such Debentures. In addition, upon the occurrence and continuation of a Tax Event, an Investment Company Event or a Capital Treatment Event, the Debentures may be redeemed by the Debenture Issuer in whole or in part, at any time within 90 days following the occurrence of such Tax Event, Investment Company Event or Capital Treatment Event, as the case may be (the "Special Redemption Date"), at the Special Redemption Price, upon not less than 30 nor more than 60 days' notice to Holders of the Debentures so long as such Tax Event, Investment Company Event or Capital Treatment Event, as the case may be, is continuing. In each case, the right of the Debenture Issuer to redeem the Debentures is subject to the Debenture Issuer having received prior approval from any regulatory authority having jurisdiction over the Debenture Issuer, if such approval is then required under applicable capital guidelines or policies of such regulatory authority.

"Tax Event" means the receipt by the Debenture Issuer and the Trust of an opinion of counsel experienced in such matters to the effect that, as a result of any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement (including any private letter ruling, technical advice memorandum, regulatory procedure, notice or announcement) (an "Administrative Action") or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Debenture Issuer or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debentures; (ii) if the Debenture Issuer is organized and existing under the laws of the United States or any state thereof or the District of Columbia, interest payable by the Debenture Issuer on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Debenture Issuer, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes (including withholding taxes), duties, assessments or other governmental charges.

A-I-7

"Investment Company Event" means the receipt by the Debenture Issuer and the Trust of an opinion of counsel experienced in such matters to the effect that, as a result of a change in law or regulation or written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within 90 days of the date of such opinion will be, considered an "investment company" that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the original issuance of the Debentures.

"Capital Treatment Event" means, if the Debenture Issuer is organized and existing under the laws of the United States or any state thereof or the District of Columbia, the receipt by the Debenture Issuer and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change in, the laws, rules or regulations of the United States or any political subdivision thereof or therein, or any rules, guidelines or policies of any applicable regulatory authority for the Debenture Issuer or (b) any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that, within 90 days of the receipt of such opinion, the aggregate Liquidation Amount of the Capital Securities will not be eligible to be treated by the Debenture Issuer as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve (or any successor regulatory authority with jurisdiction over bank or financial holding companies), as then in effect and applicable to the Debenture Issuer (or if the Debenture Issuer is not a bank holding company, such guidelines applied to the Debenture Issuer as if the Debenture Issuer were subject to such guidelines); provided, however, that the inability of the Debenture Issuer to treat all or any portion of the aggregate Liquidation Amount of the Capital Securities as Tier 1 Capital shall not constitute the basis for a Capital Treatment Event, if such inability results from the Debenture Issuer having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1 Capital treatment in excess of the amount which may now or hereafter qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines; provided further, however, that the distribution of the Debentures in connection with the liquidation of the Trust by the Debenture Issuer shall not in and of itself constitute a Capital Treatment Event unless such liquidation shall have occurred in connection with a Tax Event or an Investment Company Event.

"Special Event" means any of a Capital Treatment Event, a Tax Event or an Investment Company Event.

A-I-8

"Special Redemption Price" means, with respect to the redemption of any Debentures following a Special Event, an amount in cash equal to 103.525% of the principal amount of Debentures to be redeemed prior to June 15, 2008 and thereafter equal to the percentage of the principal amount of the Debentures that is specified below for the Special Redemption Date plus, in each case, unpaid interest accrued thereon to the Special Redemption Date:

Special Redemption During the 12-Month Period Beginning June 15	Percentage of Principal Amount
2008	103.140%
2009	102.355%
2010	101.570%
2011	100.785%
2012 and thereafter	100.000%

"Redemption Date" means the date fixed for the redemption of Capital Securities, which shall be any March 15, June 15, September 15 or December 15 on or after June 15, 2012.

"Redemption Price" means 100% of the principal amount of the Debentures being redeemed plus accrued and unpaid interest on such Debentures to the Redemption Date.

(b)  Upon the repayment in full at maturity or redemption in whole or in part of the Debentures (other than following the distribution of the Debentures to the Holders of the Securities), the proceeds from such repayment or payment shall concurrently be applied to redeem Pro Rata at the applicable Redemption Price, Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so repaid or redeemed; provided, however, that holders of such Securities shall be given not less than 30 nor more than 60 days' notice of such redemption (other than at the scheduled maturity of the Debentures).

(c)  If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Capital Securities will be redeemed Pro Rata and the Capital Securities to be redeemed will be as described in Section 4(e)(ii) below.

(d)  The Trust may not redeem fewer than all the outstanding Capital Securities unless all accrued and unpaid Distributions have been paid on all Capital Securities for all quarterly Distribution periods terminating on or before the date of redemption.

(e)  Redemption or Distribution Procedures.

(i)  Notice of any redemption of, or notice of distribution of the Debentures in exchange for, the Securities (a "Redemption/Distribution Notice") will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Debentures. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 4(e)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of such Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of such Securities at the address of each such Holder appearing on the books and records of the Registrar. No defect in the Redemption/Distribution Notice or in the mailing thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder.

A-I-9

(ii)  In the event that fewer than all the outstanding Securities are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital Securities.

(iii)  If the Securities are to be redeemed and the Trust gives a Redemption/Distribution Notice, which notice may only be issued if the Debentures are redeemed as set out in this Section 4 (which notice will be irrevocable), then, provided, that the Institutional Trustee has a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Institutional Trustee will, with respect to Book-Entry Capital Securities, on the Redemption Date or Special Redemption Date, as applicable, irrevocably deposit with the Depositary for such Book-Entry Capital Securities, to the extent available therefor, funds sufficient to pay the relevant Redemption Price or Special Redemption Price, as applicable, and will give such Depositary irrevocable instructions and authority to pay the Redemption Price or Special Redemption Price, as applicable, to the Owners of the Capital Securities. With respect to Capital Securities that are not Book-Entry Capital Securities, the Institutional Trustee will pay, to the extent available therefor, the relevant Redemption Price or Special Redemption Price, as applicable, to the Holders of such Securities by check mailed to the address of each such Holder appearing on the books and records of the Trust on the redemption date. If a Redemption/Distribution Notice shall have been given and funds deposited as required, then immediately prior to the close of business on the date of such deposit, Distributions will cease to accrue on the Securities so called for redemption and all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the applicable Redemption Price or Special Redemption Price, as applicable, specified in Section 4(a). If any date fixed for redemption of Securities is not a Business Day, then payment of any such Redemption Price or Special Redemption Price, as applicable, payable on such date will be made on the next succeeding day that is a Business Day except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price or Special Redemption Price, as applicable, in respect of any Securities is improperly withheld or refused and not paid either by the Trust or by the Debenture Issuer as guarantor pursuant to the Guarantee, Distributions on such Securities will continue to accrue at the then applicable rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price or Special Redemption Price, as applicable. In the event of any redemption of the Capital Securities issued by the Trust in part, the Trust shall not be required to (i) issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before any selection for redemption of the Capital Securities and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of the Capital Securities to be so redeemed or (ii) register the transfer of or exchange any Capital Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Capital Securities being redeemed in part.

A-I-10

(iv)  Redemption/Distribution Notices shall be sent by the Trust (A) in respect of the Capital Securities, to the Holders thereof, and (B) in respect of the Common Securities, to the Holder thereof.

(v)  Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), and provided, that the acquiror is not the Holder of the Common Securities or the obligor under the Indenture, the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Capital Securities by tender, in the open market or by private agreement.

5.  Voting Rights - Capital Securities.

(a)  Except as provided under Sections 5(b) and 7 and as otherwise required by law and the Declaration, the Holders of the Capital Securities will have no voting rights. The Administrators are required to call a meeting of the Holders of the Capital Securities if directed to do so by Holders of not less than 10% in liquidation amount of the Capital Securities.

(b)  Subject to the requirements of obtaining a tax opinion by the Institutional Trustee in certain circumstances set forth in the last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Capital Securities, voting separately as a class, have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under the Declaration, including the right to direct the Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies available under the Indenture as the holder of the Debentures, (ii) waive any past default that is waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (iv) consent on behalf of all the Holders of the Capital Securities to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required; provided, however, that, where a consent or action under the Indenture would require the consent or act of the holders of greater than a simple majority in principal amount of Debentures (a "Super Majority") affected thereby, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of not less than the proportion in liquidation amount of the Capital Securities outstanding which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. If the Institutional Trustee fails to enforce its rights under the Debentures after the Holders of a Majority or Super Majority, as the case may be, in liquidation amount of such Capital Securities have so directed the Institutional Trustee, to the fullest extent permitted by law, a Holder of the Capital Securities may institute a legal proceeding directly against the Debenture Issuer to enforce the Institutional Trustee's rights under the Debentures without first instituting any legal proceeding against the Institutional Trustee or any other person or entity. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or premium, if any, on or principal of the Debentures on the date such interest, premium, if any, on or principal is payable (or in the case of redemption, the redemption date), then a Holder of record of the Capital Securities may directly institute a proceeding for enforcement of payment, on or after the respective due dates specified in the Debentures, to such Holder directly of the principal of or premium, if any, or interest on the Debentures having an aggregate principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder. The Institutional Trustee shall notify all Holders of the Capital Securities of any default actually known to the Institutional Trustee with respect to the Debentures unless (x) such default has been cured prior to the giving of such notice or (y) the Institutional Trustee determines in good faith that the withholding of such notice is in the interest of the Holders of such Capital Securities, except where the default relates to the payment of principal of or interest on any of the Debentures. Such notice shall state that such Indenture Event of Default also constitutes an Event of Default hereunder. Except with respect to directing the time, method and place of conducting a proceeding for a remedy, the Institutional Trustee shall not take any of the actions described in clause (i), (ii) or (iii) above unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes.

A-I-11

In the event the consent of the Institutional Trustee, as the holder of the Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture, the Institutional Trustee may request the written direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require the consent of a Super Majority, the Institutional Trustee may only give such consent at the written direction of the Holders of not less than the proportion in liquidation amount of such Securities outstanding which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. The Institutional Trustee shall not take any such action in accordance with the written directions of the Holders of the Securities unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes.

A waiver of an Indenture Event of Default will constitute a waiver of the corresponding Event of Default hereunder. Any required approval or direction of Holders of the Capital Securities may be given at a separate meeting of Holders of the Capital Securities convened for such purpose, at a meeting of all of the Holders of the Securities in the Trust or pursuant to written consent. The Institutional Trustee will cause a notice of any meeting at which Holders of the Capital Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of the Capital Securities. Each such notice will include a statement setting forth the following information (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Capital Securities will be required for the Trust to redeem and cancel Capital Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities.

A-I-12

Notwithstanding that Holders of the Capital Securities are entitled to vote or consent under any of the circumstances described above, any of the Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not entitle the Holder thereof to vote or consent and shall, for purposes of such vote or consent, be treated as if such Capital Securities were not outstanding.

In no event will Holders of the Capital Securities have the right to vote to appoint, remove or replace the Administrators, which voting rights are vested exclusively in the Sponsor as the Holder of all of the Common Securities of the Trust. Under certain circumstances as more fully described in the Declaration, Holders of Capital Securities have the right to vote to appoint, remove or replace the Institutional Trustee and the Delaware Trustee.

6.  Voting Rights - Common Securities.

(a)  Except as provided under Sections 6(b), 6(c) and 7 and as otherwise required by law and the Declaration, the Common Securities will have no voting rights.

(b)  The Holders of the Common Securities are entitled, in accordance with Article IV of the Declaration, to vote to appoint, remove or replace any Administrators.

(c)  Subject to Section 6.8 of the Declaration and only after each Event of Default (if any) with respect to the Capital Securities has been cured, waived or otherwise eliminated and subject to the requirements of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under the Declaration, including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture Trustee with respect to the Debentures, (ii) waiving any past default and its consequences that are waivable under the Indenture, or (iii) exercising any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable, provided, however, that, where a consent or action under the Indenture would require a Super Majority, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of not less than the proportion in liquidation amount of the Common Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. Notwithstanding this Section 6(c), the Institutional Trustee shall not revoke any action previously authorized or approved by a vote or consent of the Holders of the Capital Securities. Other than with respect to directing the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee shall not take any action described in clause (i), (ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. If the Institutional Trustee fails to enforce its rights under the Declaration, to the fullest extent permitted by law any Holder of the Common Securities may institute a legal proceeding directly against any Person to enforce the Institutional Trustee's rights under the Declaration, without first instituting a legal proceeding against the Institutional Trustee or any other Person.

A-I-13

Any approval or direction of Holders of the Common Securities may be given at a separate meeting of Holders of the Common Securities convened for such purpose, at a meeting of all of the Holders of the Securities in the Trust or pursuant to written consent. The Administrators will cause a notice of any meeting at which Holders of the Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of the Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents.

No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities.

7.  Amendments to Declaration and Indenture.

(a)  In addition to any requirements under Section 11.1 of the Declaration, if any proposed amendment to the Declaration provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the Liquidation of the Trust, other than as described in Section 7.1 of the Declaration, then the Holders of outstanding Securities, voting together as a single class, will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of not less than a Majority in liquidation amount of the Securities affected thereby; provided, however, if any amendment or proposal referred to in clause (i) above would adversely affect only the Capital Securities or only the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a Majority in liquidation amount of such class of Securities.

(b)  In the event the consent of the Institutional Trustee as the holder of the Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debentures, the Institutional Trustee shall request the written direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification, or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require a Super Majority, the Institutional Trustee may only give such consent at the written direction of the Holders of not less than the proportion in liquidation amount of the Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.

A-I-14

(c)  Notwithstanding the foregoing, no amendment or modification may be made to the Declaration if such amendment or modification would (i) cause the Trust to be classified for purposes of United States federal income taxation as other than a grantor trust, (ii) reduce or otherwise adversely affect the powers of the Institutional Trustee or (iii) cause the Trust to be deemed an "investment company" which is required to be registered under the Investment Company Act.

(d)  Notwithstanding any provision of the Declaration, the right of any Holder of the Capital Securities to receive payment of distributions and other payments upon redemption or otherwise, on or after their respective due dates, or to institute a suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. For the protection and enforcement of the foregoing provision, each and every Holder of the Capital Securities shall be entitled to such relief as can be given either at law or equity.

8.  Pro Rata. A reference in these terms of the Securities to any payment, distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder of the Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Capital Securities Pro Rata according to the aggregate liquidation amount of the Capital Securities held by the relevant Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of the Common Securities Pro Rata according to the aggregate liquidation amount of the Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding.

9.  Ranking. The Capital Securities rank pari passu with, and payment thereon shall be made Pro Rata with, the Common Securities except that, where an Event of Default has occurred and is continuing, the rights of Holders of the Common Securities to receive payment of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of the Holders of the Capital Securities with the result that no payment of any Distribution on, or Redemption Price or Special Redemption Price of, any Common Security, and no other payment on account of redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all outstanding Capital Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price or Special Redemption Price the full amount of such Redemption Price or the Special Redemption Price on all outstanding Capital Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Institutional Trustee shall first be applied to the payment in full in cash of all Distributions on, or the Redemption Price or the Special Redemption Price of, the Capital Securities then due and payable.

A-I-15

10.  Acceptance of Guarantee and Indenture. Each Holder of the Capital Securities and the Common Securities, by the acceptance of such Securities, agrees to the provisions of the Guarantee, including the subordination provisions therein and to the provisions of the Indenture.

11.  No Preemptive Rights. The Holders of the Securities shall have no, and the issuance of the Securities is not subject to, preemptive or similar rights to subscribe for any additional securities.

12.  Miscellaneous. These terms constitute a part of the Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture to a Holder without charge on written request to the Sponsor at its principal place of business.

A-I-16

EXHIBIT A-1

FORM OF CAPITAL SECURITY CERTIFICATE

[FORM OF FACE OF SECURITY]

THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO CATHAY CAPITAL TRUST III OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO A "NON U.S. PERSON" IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (D) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

A-1-1

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT OR AN APPLICABLE EXEMPTION THEREFROM.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

A-1-2

IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THE CERTIFICATE WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.

A-1-3

Certificate Number[P-001]  Number of Capital Securities: 45,000

CUSIP No.____________________

Certificate Evidencing Capital Securities

of

Cathay Capital Trust III

TP Securities

(liquidation amount $1,000 per Capital Security)

Cathay Capital Trust III, a statutory trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co., as nominee on behalf of the Depository Trust Company (the "Holder"), is the registered owner of 45,000 capital securities of the Trust representing undivided beneficial interests in the assets of the Trust, designated the TP Securities (liquidation amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the Declaration (as defined below), the Capital Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this Certificate duly endorsed and in proper form for transfer. The Capital Securities represented hereby are issued pursuant to, and the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust, dated as of March 30, 2007, among Heng W. Chen and Anthony M. Tang, as Administrators, LaSalle National Trust Delaware, as Delaware Trustee, LaSalle Bank National Association, as Institutional Trustee, Cathay General Bancorp, as Sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, including the designation of the terms of the Capital Securities as set forth in Annex I to the Declaration, as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture to the Holder without charge upon written request to the Sponsor at its principal place of business.

By acceptance of this Security, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

By acceptance of this Security, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Capital Securities as evidence of beneficial ownership in the Debentures.

This Capital Security is governed by, and shall be construed in accordance with, the laws of the State of Delaware, without regard to principles of conflict of laws.

A-1-4

IN WITNESS WHEREOF, the Trust has duly executed this certificate.

Cathay Capital Trust III

By:____________________________________

Name:______________________________

Title: Administrator

Dated:__________________________________

CERTIFICATE OF AUTHENTICATION

This represents Capital Securities referred to in the within-mentioned Declaration.

LASALLE BANK NATIONAL

ASSOCIATION, not in its individual capacity

but solely as Institutional Trustee

By:____________________________________

        Authorized Signatory

Dated:__________________________________

A-1-5

[FORM OF REVERSE OF SECURITY]

Distributions payable on each Capital Security will be payable at a variable per annum rate of interest, reset quarterly, equal to LIBOR (as defined in the Declaration) plus 1.48% (the "Coupon Rate") of the stated liquidation amount of $1,000 per Capital Security (provided, however, that the Coupon Rate for any Distribution Payment Period may not exceed the highest rate permitted by New York law, as the same may be modified by United States law of general applicability), such Coupon Rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears for more than one quarterly period will bear interest thereon compounded quarterly at the then applicable Coupon Rate for each such quarterly period (to the extent permitted by applicable law). The term "Distributions" as used herein includes cash distributions, any such compounded distributions and any Additional Interest payable on the Debentures unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds legally available in the Property Account therefor. The amount of Distributions payable for any period shall be computed for any full quarterly Distribution period on the basis of a 360-day year and the actual number of days elapsed in the relevant Distribution Payment Period.

A-1-6

Except as otherwise described below, Distributions on the Capital Securities will be cumulative, will accrue from the date of original issuance and will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on June 15, 2007 (each, a "Distribution Payment Date"). Subject to prior submission of Notice (as defined in the Indenture), and so long as no Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture has occurred and is continuing, the Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures by extending the interest distribution period for up to 20 consecutive quarterly periods (each, an "Extension Period") at any time and from time to time on the Debentures, subject to the conditions described below, during which Extension Period no interest shall be due and payable (except any Additional Interest that may be due and payable). During any Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest (such accrued interest and interest thereon referred to herein as "Deferred Interest") will accrue at an annual rate equal to the Coupon Rate in effect for each such Extension Period, compounded quarterly from the date such Deferred Interest would have been payable were it not for the Extension Period, to the extent permitted by law. No Extension Period may end on a date other than a Distribution Payment Date. At the end of any such Extension Period, the Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the Debentures; provided, however, that no Extension Period may extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period; provided, that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Upon the termination of any Extension Period and upon the payment of all Deferred Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Deferred Interest (except any Additional Amounts that may be due and payable) shall be due and payable during an Extension Period, except at the end thereof, but Deferred Interest shall accrue upon each installment of interest that would otherwise have been due and payable during such Extension Period until such installment is paid. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds legally available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

The Capital Securities shall be redeemable as provided in the Declaration.

A-1-7

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:

_______________________

_______________________

_______________________

(Insert assignee's social security or tax identification number)

_______________________

_______________________

_______________________

(Insert address and zip code of assignee),

and irrevocably appoints           

as agent to transfer this Capital Security Certificate on the books of the Trust. The agent may substitute another to act for it, him or her.

Date:____________________________

Signature:________________________

(Sign exactly as your name appears on the other side of this Capital Security Certificate)

Signature Guarantee:1 _____________________________

_________________

1 Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Security registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-1-8

EXHIBIT A-2

FORM OF COMMON SECURITY CERTIFICATE

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

EXCEPT AS SET FORTH IN SECTION 8.1(b) OF THE DECLARATION (AS DEFINED BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED.

A-2-1

Certificate Number[C-001] Number of Common Securities: 1,392

Certificate Evidencing Common Securities

of

Cathay Capital Trust III

Cathay Capital Trust III, a statutory trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cathay General Bancorp (the "Holder") is the registered owner of 1,392 common securities of the Trust representing undivided beneficial interests in the assets of the Trust (liquidation amount $1,000 per Common Security) (the "Common Securities"). The Common Securities represented hereby are issued pursuant to, and the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust, dated as of March 30, 2007, among Heng W. Chen and Anthony M. Tang, as Administrators, LaSalle National Trust Delaware, as Delaware Trustee, LaSalle Bank National Association, as Institutional Trustee, the Holder, as Sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration, as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Sponsor will provide a copy of the Declaration and the Indenture to the Holder without charge upon written request to the Sponsor at its principal place of business.

As set forth in the Declaration, when an Event of Default has occurred and is continuing, the rights of Holders of Common Securities to payment in respect of Distributions and payments upon Liquidation, redemption or otherwise are subordinated to the rights of payment of Holders of the Capital Securities.

By acceptance of this Certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

By acceptance of this Certificate, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of undivided beneficial ownership in the Debentures.

This Common Security is governed by, and shall be construed in accordance with, the laws of the State of Delaware, without regard to principles of conflict of laws.

A-2-2

IN WITNESS WHEREOF, the Trust has executed this certificate as of this ______ day of ____________________, 2007.

Cathay Capital Trust III

By: ________________________________________

Name:___________________________________

Title: Administrator

A-2-3

[FORM OF REVERSE OF SECURITY]

Distributions payable on each Common Security will be identical in amount to the Distributions payable on each Capital Security, which is at a variable per annum rate of interest, reset quarterly, equal to LIBOR (as defined in the Declaration) plus 1.48% (the "Coupon Rate") of the stated liquidation amount of $1,000 per Capital Security (provided, however, that the Coupon Rate for any Distribution Payment Period may not exceed the highest rate permitted by New York law, as the same may be modified by United States law of general applicability), such Coupon Rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears for more than one quarterly period will bear interest thereon compounded quarterly at the then applicable Coupon Rate for each such quarterly period (to the extent permitted by applicable law). The term "Distributions" as used herein includes cash distributions, any such compounded distributions and any Additional Interest payable on the Debentures unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds legally available in the Property Account therefor. The amount of Distributions payable for any period shall be computed for any full quarterly Distribution period on the basis of a 360-day year and the actual number of days elapsed in the relevant Distribution Payment Period.

Except as otherwise described below, Distributions on the Common Securities will be cumulative, will accrue from the date of original issuance and will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on June 15, 2007 (each, a "Distribution Payment Date"). Subject to prior submission of Notice (as defined in the Indenture), and so long as no Event of Default pursuant to paragraphs (c), (e), (f) or (g) of Section 5.01 of the Indenture has occurred and is continuing, the Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures by extending the interest distribution period for up to 20 consecutive quarterly periods (each, an "Extension Period") at any time and from time to time on the Debentures, subject to the conditions described below, during which Extension Period no interest shall be due and payable (except any Additional Interest that may be due and payable). During any Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest (such accrued interest and interest thereon referred to herein as "Deferred Interest") will accrue at an annual rate equal to the Coupon Rate in effect for each such Extension Period, compounded quarterly from the date such Deferred Interest would have been payable were it not for the Extension Period, to the extent permitted by law. No Extension Period may end on a date other than a Distribution Payment Date. At the end of any such Extension Period, the Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on the Debentures; provided, however, that no Extension Period may extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period, provided, that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date, Redemption Date (to the extent redeemed) or Special Redemption Date. Upon the termination of any Extension Period and upon the payment of all Deferred Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Deferred Interest (except any Additional Interest that may be due and payable) shall be due and payable during an Extension Period, except at the end thereof, but Deferred Interest shall accrue upon each installment of interest that would otherwise have been due and payable during such Extension Period until such installment is paid. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date.

A-2-4

Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds legally available for the payment of such distributions in the Property Account of the Trust. The Trust's funds legally available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

The Common Securities shall be redeemable as provided in the Declaration.

A-2-5

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:

_______________________________

_______________________________

_______________________________

(Insert assignee's social security or tax identification number)

_______________________________

_______________________________

_______________________________

(Insert address and zip code of assignee),

and irrevocably appoints ________ as agent to transfer this Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.

Date:________________________________

Signature:____________________________

(Sign exactly as your name appears on the other side of this Common Security Certificate)

Signature Guarantee:2 _________________________

_______________________

2 Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union, meeting the requirements of the Security registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-2-6

EX-4.1.2

EXHIBIT 4.1.2 

GUARANTEE AGREEMENT

CATHAY GENERAL BANCORP

Dated as of March 30, 2007

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.1.	DEFINITIONS AND INTERPRETATION	1
ARTICLE II POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 2.1.	POWERS AND DUTIES OF THE GUARANTEE TRUSTEE	4
SECTION 2.2.	CERTAIN RIGHTS OF THE GUARANTEE TRUSTEE	5
SECTION 2.3.	NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE	7
SECTION 2.4.	EVENTS OF DEFAULT; WAIVER	7
SECTION 2.5.	EVENTS OF DEFAULT; NOTICE	8
ARTICLE III THE GUARANTEE TRUSTEE
SECTION 3.1.	THE GUARANTEE TRUSTEE; ELIGIBILITY	8
SECTION 3.2.	APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE	9
ARTICLE IV GUARANTEE
SECTION 4.1.	GUARANTEE	9
SECTION 4.2.	WAIVER OF NOTICE AND DEMAND	10
SECTION 4.3.	OBLIGATIONS NOT AFFECTED	10
SECTION 4.4.	RIGHTS OF HOLDERS	11
SECTION 4.5.	GUARANTEE OF PAYMENT	11
SECTION 4.6.	SUBROGATION	11
SECTION 4.7.	INDEPENDENT OBLIGATIONS	12
SECTION 4.8.	ENFORCEMENT	12
ARTICLE V LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1.	LIMITATION OF TRANSACTIONS	12
SECTION 5.2.	RANKING	13
ARTICLE VI TERMINATION
SECTION 6.1.	TERMINATION	13

-i-

ARTICLE VII INDEMNIFICATION
SECTION 7.1.	EXCULPATION	14
SECTION 7.2.	INDEMNIFICATION	14
SECTION 7.3.	COMPENSATION; REIMBURSEMENT OF EXPENSES	15
ARTICLE VIII MISCELLANEOUS
SECTION 8.1.	SUCCESSORS AND ASSIGNS	16
SECTION 8.2.	AMENDMENTS	16
SECTION 8.3.	NOTICES	16
SECTION 8.4.	BENEFIT	17
SECTION 8.5.	GOVERNING LAW	17
SECTION 8.6.	COUNTERPARTS	17

-ii-

GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (the "Guarantee"), dated as of March 30, 2007, is executed and delivered by Cathay General Bancorp, incorporated in Delaware (the "Guarantor"), and LaSalle Bank National Association, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of Cathay Capital Trust III, a Delaware statutory trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of March 30, 2007, among the trustees named therein of the Issuer, the administrators of the Issuer named therein, Cathay General Bancorp, as sponsor, and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof securities, having an aggregate liquidation amount of up to $45,000,000, designated the TP Securities (the "Capital Securities"); and

WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1.   Definitions and Interpretation.

In this Guarantee, unless the context otherwise requires:

(a)  capitalized terms used in this Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b)  a term defined anywhere in this Guarantee has the same meaning throughout;

(c)  all references to "the Guarantee" or "this Guarantee" are to this Guarantee as modified, supplemented or amended from time to time;

(d)  all references in this Guarantee to Articles and Sections are to Articles and Sections of this Guarantee, unless otherwise specified;

(e)  terms defined in the Declaration as of the date of execution of this Guarantee have the same meanings when used in this Guarantee, unless otherwise defined in this Guarantee or unless the context otherwise requires; and

(f)  a reference to the singular includes the plural and vice versa.

"Beneficiaries" means any Person to whom the Issuer is or hereafter becomes indebted or liable.

"Corporate Trust Office" means the office of the Guarantee Trustee at which the corporate trust business of the Guarantee Trustee shall, at any particular time, be principally administered.

"Covered Person" means any Holder of Capital Securities.

"Debentures" means the junior subordinated debentures of Cathay General Bancorp, designated the Junior Subordinated Debt Securities due 2037, held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

"Event of Default" has the meaning set forth in Section 2.4.

"Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be paid on such Capital Securities to the extent the Issuer has funds available in the Property Account (as defined in the Declaration) therefor at such time, (ii) the Redemption Price (as defined in the Indenture) to the extent the Issuer has funds available in the Property Account therefor at such time, with respect to any Capital Securities called for redemption by the Issuer, (iii) the Special Redemption Price (as defined in the Indenture) to the extent the Issuer has funds available in the Property Account therefor at such time, with respect to Capital Securities called for redemption upon the occurrence of a Special Event (as defined in the Indenture), and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to the Holders of the Capital Securities in exchange therefor as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent the Issuer has funds available in the Property Account therefor at such time, and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer as required by applicable law (in either case, the "Liquidation Distribution").

"Guarantee Trustee" means LaSalle Bank National Association, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee and thereafter means each such Successor Guarantee Trustee.

"Holder" means any holder, as registered on the books and records of the Issuer, of any Capital Securities; provided, however, that, in determining whether the holders of the requisite percentage of Capital Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Guarantee Trustee (including in its individual capacity), any Affiliate of the Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Guarantee Trustee.

-2-

"Indenture" means the Indenture, dated as of March 30, 2007, between the Guarantor and LaSalle Bank National Association, not in its individual capacity but solely as trustee, and any indenture supplemental thereto pursuant to which the Debentures are to be issued to the Institutional Trustee of the Issuer.

"Liquidation Distribution" has the meaning set forth in the definition of "Guarantee Payments" herein.

"Majority in liquidation amount of the Capital Securities" means Holder(s) of outstanding Capital Securities, voting together as a class, but separately from the holders of Common Securities, of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to, but excluding, the date upon which the voting percentages are determined) of all Capital Securities then outstanding.

"Obligations" means any costs, expenses or liabilities (but not including liabilities related to taxes) of the Issuer, other than obligations of the Issuer to pay to holders of any Trust Securities the amounts due such holders pursuant to the terms of the Trust Securities.

"Officer's Certificate" means, with respect to any Person, a certificate signed by one Authorized Officer of such Person. Any Officer's Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee shall include:

(a)  a statement that each officer signing the Officer's Certificate has read the covenant or condition and the definitions relating thereto;

(b)  a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officer's Certificate;

(c)  a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d)  a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

"Responsible Officer" means, with respect to the Guarantee Trustee, any officer within the CDO Trust Services Group of the Corporate Trust Office of the Guarantee Trustee with direct responsibility for the administration of any matters relating to this Guarantee, including any vice president, any assistant vice president, any secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Corporate Trust Office of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

-3-

"Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 3.1.

"Trust Securities" means the Common Securities and the Capital Securities.

ARTICLE II

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

SECTION 2.1.   Powers and Duties of the Guarantee Trustee.

(a)  This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person except a Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

(b)  If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders of the Capital Securities.

(c)  The Guarantee Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into this Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.4(b)) and is actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(d)  No provision of this Guarantee shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i)  prior to the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred:

-4-

(A)  the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee, and no implied covenants or obligations shall be read into this Guarantee against the Guarantee Trustee; and

(B)  in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee; but in the case of any such certificates or opinions furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not on their face they conform to the requirements of this Guarantee;

(ii)  the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii)  the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the Holders of not less than a Majority in liquidation amount of the Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee; and

(iv)  no provision of this Guarantee shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds is not reasonably assured to it under the terms of this Guarantee, or security and indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not reasonably assured to it.

SECTION 2.2.   Certain Rights of the Guarantee Trustee.

(a)  Subject to the provisions of Section 2.1:

(i)  The Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

-5-

(ii)  Any direction or act of the Guarantor contemplated by this Guarantee shall be sufficiently evidenced by an Officer's Certificate.

(iii)  Whenever, in the administration of this Guarantee, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer's Certificate of the Guarantor which, upon receipt of such request, shall be promptly delivered by the Guarantor.

(iv)  The Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument or other writing (or any rerecording, refiling or reregistration thereof).

(v)  The Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee from any court of competent jurisdiction.

(vi)  The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity, reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided, however, that nothing contained in this Section 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee.

(vii)  The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(viii)  The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

-6-

(ix)  Any action taken by the Guarantee Trustee or its agents hereunder shall bind the Holders of the Capital Securities, and the signature of the Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Guarantee, both of which shall be conclusively evidenced by the Guarantee Trustee's or its agent's taking such action.

(x)  Whenever in the administration of this Guarantee the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request instructions from the Holders of a Majority in liquidation amount of the Capital Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (C) shall be protected in conclusively relying on or acting in accordance with such instructions.

(xi)  The Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee.

(b)  No provision of this Guarantee shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty.

SECTION 2.3.   Not Responsible for Recitals or Issuance of Guarantee.

The recitals contained in this Guarantee shall be taken as the statements of the Guarantor, and the Guarantee Trustee does not assume any responsibility for their correctness. The Guarantee Trustee makes no representation as to the validity or sufficiency of this Guarantee.

SECTION 2.4.   Events of Default; Waiver.

(a)  An Event of Default under this Guarantee will occur upon the failure of the Guarantor to perform any of its payment or other obligations hereunder.

(b)  The Holders of a Majority in liquidation amount of the Capital Securities may, voting or consenting as a class, on behalf of the Holders of all of the Capital Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and shall be deemed to have been cured, for every purpose of this Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

-7-

SECTION 2.5.   Events of Default; Notice.

(a)  The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Capital Securities, notices of all Events of Default actually known to a Responsible Officer of the Guarantee Trustee, unless such defaults have been cured before the giving of such notice; provided, however, that the Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Capital Securities.

(b)  The Guarantee Trustee shall not be charged with knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice thereof from the Guarantor or a Holder of the Capital Securities, or a Responsible Officer of the Guarantee Trustee charged with the administration of this Guarantee shall have actual knowledge thereof.

ARTICLE III

THE GUARANTEE TRUSTEE

SECTION 3.1.   The Guarantee Trustee; Eligibility.

(a)  There shall at all times be a Guarantee Trustee which shall:

(i)  not be an Affiliate of the Guarantor; and

(ii)  be a corporation or national association organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or Person authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least Fifty Million U.S. Dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation or national association publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 3.1(a)(ii), the combined capital and surplus of such corporation or national association shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b)  If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 3.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set forth in Section 3.2(c).

-8-

(c)  If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest or resign to the extent and in the manner provided by, and subject to, this Guarantee.

SECTION 3.2.   Appointment, Removal and Resignation of the Guarantee Trustee.

(a)  Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default.

(b)  The Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor.

(c)  The Guarantee Trustee appointed to office shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by an instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.

(d)  If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 3.2 within 60 days after delivery of an instrument of removal or resignation, the Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

(e)  No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Guarantee Trustee.

(f)  Upon termination of this Guarantee or removal or resignation of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such termination, removal or resignation.

ARTICLE IV

GUARANTEE

SECTION 4.1.   Guarantee.

(a)  The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense (except as defense of payment by the Issuer), right of set-off or counterclaim that the Issuer may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders.

-9-

(b)  The Guarantor hereby also agrees to assume any and all Obligations of the Issuer and in the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to such Beneficiaries. This Guarantee is intended to be for the Beneficiaries who have received notice hereof.

SECTION 4.2.   Waiver of Notice and Demand.

The Guarantor hereby waives notice of acceptance of this Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

SECTION 4.3.   Obligations Not Affected.

The obligations, covenants, agreements and duties of the Guarantor under this Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

(a)  the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Capital Securities to be performed or observed by the Issuer;

(b)  the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Capital Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Capital Securities (other than an extension of time for the payment of the Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or other sums payable that results from the extension of any interest payment period on the Debentures or any extension of the maturity date of the Debentures permitted by the Indenture);

(c)  any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Capital Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;

(d)  the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer;

-10-

(e)  any invalidity of, or defect or deficiency in, the Capital Securities;

(f)  the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

(g)  any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 4.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 4.4.   Rights of Holders.

(a)  The Holders of a Majority in liquidation amount of the Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee; provided, however, that (subject to Sections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline to follow any such direction if the Guarantee Trustee shall determine that the actions so directed would be unjustly prejudicial to the Holders not taking part in such direction or if the Guarantee Trustee being advised by legal counsel determines that the action or proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees and/or Responsible Officers shall determine that the action or proceeding so directed would involve the Guarantee Trustee in personal liability.

(b)  Any Holder of Capital Securities may institute a legal proceeding directly against the Guarantor to enforce the Guarantee Trustee's rights under this Guarantee, without first instituting a legal proceeding against the Issuer, the Guarantee Trustee or any other Person. The Guarantor waives any right or remedy to require that any such action be brought first against the Issuer, the Guarantee Trustee or any other Person before so proceeding directly against the Guarantor.

SECTION 4.5.   Guarantee of Payment.

This Guarantee creates a guarantee of payment and not of collection.

SECTION 4.6.   Subrogation.

The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Guarantee; provided, however, that the Guarantor shall not (except to the extent required by applicable provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.

-11-

SECTION 4.7.   Independent Obligations.

The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Capital Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8.   Enforcement.

A Beneficiary may enforce the Obligations of the Guarantor contained in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any right or remedy to require that any action be brought against the Issuer or any other person or entity before proceeding against the Guarantor.

The Guarantor shall be subrogated to all rights (if any) of any Beneficiary against the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor under this Guarantee; provided, however, that the Guarantor shall not (except to the extent required by applicable provisions of law) be entitled to enforce or exercise any rights that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if, after giving effect to such payment, any amounts are due and unpaid under this Guarantee.

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1.   Limitation of Transactions.

So long as any Capital Securities remain outstanding, if (a) there shall have occurred and be continuing an Event of Default or (b) the Guarantor shall have selected an Extension Period as provided in the Declaration and such period, or any extension thereof, shall have commenced and be continuing, then the Guarantor may not (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor's capital stock or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Guarantor that rank pari passu in all respects with or junior in interest to the Debentures (other than (i) payments under this Guarantee, (ii) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor (A) in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors, or consultants, (B) in connection with a dividend reinvestment or stockholder stock purchase plan or (C) in connection with the issuance of capital stock of the Guarantor (or securities convertible into or exercisable for such capital stock), as consideration in an acquisition transaction entered into prior to the occurrence of the Event of Default or the applicable Extension Period, (iii) as a result of any exchange, reclassification, combination or conversion of any class or series of the Guarantor's capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor's capital stock or of any class or series of the Guarantor's indebtedness for any class or series of the Guarantor's capital stock, (iv) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (v) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, or (vi) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock).

-12-

SECTION 5.2.   Ranking.

This Guarantee will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all present and future Senior Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees to the foregoing provisions of this Guarantee and the other terms set forth herein. The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with the obligation of Guarantor under that certain Guarantee Agreement, dated June 26, 2003, issued by the Guarantor with respect to the preferred securities issued by Cathay Capital Trust I, the Guarantee Agreement dated September 17, 2003, issued by the Guarantor with respect to the preferred securities issued by Cathay Statutory Trust, and the Guarantee Agreement dated December 10, 2003 with respect to the preferred securities issued by Cathay Capital Trust II.

The right of the Guarantor to participate in any distribution of assets of any of its subsidiaries upon any such subsidiary's liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent the Guarantor may itself be recognized as a creditor of that subsidiary. Accordingly, the Guarantor's obligations under this Guarantee will be effectively subordinated to all existing and future liabilities of the Guarantor's subsidiaries, and claimants should look only to the assets of the Guarantor for payments thereunder. This Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the Guarantor, including Senior Indebtedness of the Guarantor, under any indenture or agreement that the Guarantor may enter into in the future or otherwise.

ARTICLE VI

TERMINATION

SECTION 6.1.   Termination.

This Guarantee shall terminate as to the Capital Securities (i) upon full payment of the Redemption Price or the Special Redemption Price, as the case may be, of all Capital Securities then outstanding, (ii) upon the distribution of all of the Debentures to the Holders of all of the Capital Securities or (iii) upon full payment of the amounts payable in accordance with the Declaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Capital Securities must restore payment of any sums paid under the Capital Securities or under this Guarantee.

-13-

ARTICLE VII

INDEMNIFICATION

SECTION 7.1.   Exculpation.

(a)  No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission of such Indemnified Person in good faith in accordance with this Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omissions.

(b)  An Indemnified Person shall be fully protected in relying in good faith upon the records of the Issuer or the Guarantor and upon such information, opinions, reports or statements presented to the Issuer or the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who, if selected by such Indemnified Person, has been selected with reasonable care by such Indemnified Person, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Capital Securities might properly be paid.

SECTION 7.2.   Indemnification.

(a)  The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence or willful misconduct on the part of the Indemnified Person, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including but not limited to the costs and expenses (including reasonable legal fees and expenses) of the Indemnified Person defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of the Indemnified Person's powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee.

(b)  Promptly after receipt by an Indemnified Person under this Section 7.2 of notice of the commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be made against the Guarantor under this Section 7.2, notify the Guarantor in writing of the commencement thereof; but the failure so to notify the Guarantor (i) will not relieve the Guarantor from liability under paragraph (a) above unless and to the extent that the Guarantor did not otherwise learn of such action and such failure results in the forfeiture by the Guarantor of substantial rights and defenses and (ii) will not, in any event, relieve the Guarantor from any obligations to any Indemnified Person other than the indemnification obligation provided in paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the Guarantor's choice at the Guarantor's expense to represent the Indemnified Person in any action for which indemnification is sought (in which case the Guarantor shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person or Persons except as set forth below); provided, however, that such counsel shall be satisfactory to the Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel to represent the Indemnified Person in any action, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Guarantor shall bear the reasonable fees, costs and expenses of such separate counsel (and local counsel), if (i) the use of counsel chosen by the Guarantor to represent the Indemnified Person would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnified Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnified Persons which are different from or additional to those available to the Guarantor, (iii) the Guarantor shall not have employed counsel satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Guarantor shall authorize the Indemnified Person to employ separate counsel at the expense of the Guarantor. The Guarantor will not, without the prior written consent of the Indemnified Persons, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Persons are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Person from all liability arising out of such claim, action, suit or proceeding.

-14-

SECTION 7.3.   Compensation; Reimbursement of Expenses.

Other than as provided in the Fee Agreement of even date herewith between the Guarantor, Cohen & Company and the Guarantee Trustee, the Guarantor agrees:

(a)  to pay to the Guarantee Trustee from time to time such compensation for all services rendered by it hereunder as the parties shall agree to from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

(b)  except as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by it in accordance with any provision of this Guarantee (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct.

The provisions of this Section 7.3 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee.

-15-

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1.   Successors and Assigns.

All guarantees and agreements contained in this Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Capital Securities then outstanding. Except in connection with any merger or consolidation of the Guarantor with or into another entity or any sale, transfer or lease of the Guarantor's assets or capital stock to another entity, in each case to the extent permitted under the Indenture, the Guarantor may not assign its rights or delegate its obligations under this Guarantee without the prior approval of the Holders of not less than a Majority in liquidation amount of the Capital Securities.

SECTION 8.2.   Amendments.

Except with respect to any changes that do not adversely affect the rights of Holders of the Capital Securities in any material respect (in which case no consent of Holders will be required), this Guarantee may be amended only with the prior approval of the Holders of not less than a Majority in liquidation amount of the Capital Securities. The provisions of the Declaration with respect to amendments thereof shall apply equally with respect to amendments of the Guarantee.

SECTION 8.3.   Notices.

All notices provided for in this Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:

(a)  If given to the Guarantee Trustee, at the Guarantee Trustee's mailing address set forth below (or such other address as the Guarantee Trustee may give notice of to the Holders of the Capital Securities):

LaSalle Bank National Association

135 S. LaSalle Street, Suite 1511

Chicago, Illinois 60603

Attention: CDO Trust Services Group

Cathay Capital Trust III

Telecopy: (312) 904-0524

Telephone: (312) 904-0283

(b)  If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Capital Securities and to the Guarantee Trustee):

-16-

Cathay General Bancorp

777 North Broadway

Los Angeles, California 90012

Attention: Heng Chen

Telecopy: (213) 617-0981

Telephone: (213) 625-4752

(c)  If given to any Holder of the Capital Securities, at the address set forth on the books and records of the Issuer.

All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.

SECTION 8.4.   Benefit.

This Guarantee is solely for the benefit of the Holders of the Capital Securities and, subject to Section 2.1(a), is not separately transferable from the Capital Securities.

SECTION 8.5.   Governing Law.

THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

SECTION 8.6.   Counterparts.

This Guarantee may contain more than one counterpart of the signature page and this Guarantee may be executed by the affixing of the signature of the Guarantor and the Guarantee Trustee to any of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

-17-

THIS GUARANTEE is executed as of the day and year first above written.

CATHAY GENERAL BANCORP, as Guarantor

By: /s/ Heng W. Chen                                                 

Name: Heng W. Chen

Title: Executive Vice President and

Chief Financial Officer

LASALLE BANK NATIONAL

ASSOCIATION, as Guarantee Trustee

By: /s/ Mike Oliver                                                      

Name: Mike Oliver                                                       

Title: Assistant Vice President                                      

-18-

EX-10.6

EXHIBIT 10.6

Cathay Bank

Bonus Deferral Agreement

This Bonus Deferral Agreement ("Agreement"), is amended and restated effective as of November 23, 2004, between Dunson Cheng, Chairman, President, & CEO of Cathay General Bancorp and Cathay Bank (the "Executive"), and Cathay General Bancorp and Cathay Bank (collectively, the "Company") constitutes the agreement between the Executive and the Company for the deferral by the Executive of payment of that portion of the Executive's incentive bonus for 2004 in excess of $225,000 ("Deferred Amount"). Except as otherwise provided for below, the Company shall pay the Deferred Amount on January 1 of the first year following the Executive's separation from service from the Company. If the Executive is a specified employee (as defined in Section 409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the "Code") and determined pursuant to related IRS guidance and Treasury regulations now and as may be enacted in the future), the Company shall pay the Deferred Amount on the later of: (i) January 1 of the first year following the Executive's separation from service from the Company; or (ii) the first day of the seventh month following the Executive's separation from service with the Company. The Company may delay the Deferred Amount payment in accordance with Section 1.409A-2(b)(7)(i) of the Treasury regulations to the extent that it reasonably anticipates that if the payment were made as scheduled, the Company's deduction with respect to such payment would not be permitted due to the application of Code Section 162(m).

1.  In exchange for the Agreement by the Executive to defer payment of the Deferred Amount, the Company will compute interest beginning December 16, 2004, at 7.0% per annum computed based on the actual number of days during each period divided by the actual number of days for the full year. The Deferred Amount will be increased at the end of each quarter by the interest so computed for the last quarter. For December 31, 2004, the Deferred Amount will be increased by the interest so computed for the December 16 to December 31, 2004, period. Beginning on the tenth anniversary of the Agreement, the interest rate shall be adjusted to 275 basis points over the then prevailing interest rate on a ten-year U. S. Treasury note.

2.  Executive agrees to allow the Company to amend the terms of the Agreement, including further deferring the date of the payment of the Deferred Amount, and take such other actions as may be necessary, to comply Code Section 409A and related IRS guidance and Treasury regulations now and as may be enacted in the future and to comply with any corresponding California income tax law and regulations that may be in effect as of or enacted subsequent to the date of this Agreement. However, any changes to the Deferred Amount and Section 1 above require the consent of Executive.

3.  The Company shall indemnify and reimburse to the Executive an amount which after payment of applicable Federal, state, and local taxes by the Executive would be sufficient to pay any Federal and California taxes that are incurred by the Executive as a result of failure to comply with Section 409A and related regulations of the Code and any corresponding California income tax law and regulations ("Gross-Up Payment"). Except as provided in the preceding sentence, the Company is not providing any indemnification to the Executive for any normal or regular Federal or state income taxes related to the Deferred Amount. Any Gross-Up Payment shall be promptly paid by the Company to the Executive, but by no later than the end of the Executive's taxable year next following the Executive's taxable year in which the Executive remits the related taxes.

-1-

4.  Cathay General Bancorp ("Bancorp") and Cathay Bank ("Bank") shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Bancorp or Bank, by agreement in form and substance reasonably satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that Bancorp or the Bank would be required to perform it if no such succession had taken place. As used in this Agreement, the "Company" shall mean the Bancorp and Bank as hereinbefore defined and any successor to their respective business and/or assets as aforesaid that becomes bound by the terms and provisions of this Agreement, by operation of law or otherwise.

5.  This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees, and beneficiaries. If the Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate.

6.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. If any of the provisions of this Agreement are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible.

7.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.

EXECUTIVE
By:	/s/ Dunson Cheng
	Dunson Cheng, Chairman, President, & CEO
Date:	November 6, 2007
CATHAY GENERAL BANCORP
By:	/s/ Peter Wu
	Peter Wu, Executive Vice Chairman and COO
By:	/s/ Heng Chen
	Heng Chen, EVP & CFO
Date:	November 8, 2007
CATHAY BANK
By:	/s/ Peter Wu
	Peter Wu, Executive Vice Chairman and COO
By:	/s/ Heng Chen
	Heng Chen, EVP & CFO
Date:	November 8, 2007

-2-

EX-10.7

EXHIBIT 10.7

CATHAY GENERAL BANCORP

2005 INCENTIVE PLAN

        1.    Purposes of the Plan.    

        The purpose of this Plan is to provide a means by which eligible recipients of options and other Stock Awards may be given an opportunity to benefit from increases in value of the Common Stock of Cathay General Bancorp, a Delaware corporation (the “Company”), through the granting of Incentive Stock Options, Nonstatutory Stock Options, Shares, Stock Units and Stock Appreciation Rights. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock Awards or Cash Awards, to attract and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

        2.    Definitions.    

        As used herein, the following definitions shall apply:

        (a)  "Administrator"  means the Board, any Committees or such delegates as shall be administering the Plan in accordance with Section 4 of the Plan.

        (b)  "Affiliate"  means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant ownership interest as determined by the Administrator.

        (c)  "Applicable Laws"  means the requirements relating to the administration of stock option and stock award plans under U.S. federal and state laws, the Code, any stock exchange or quotation system on which the Company has listed or submitted for quotation the Common Stock to the extent provided under the terms of the Company's agreement with such exchange or quotation system and, with respect to Awards subject to the laws of any foreign jurisdiction where Awards are, or will be, granted under the Plan, the laws of such jurisdiction.

        (d)  "Award"  means a Cash Award, Stock Award, or Option granted in accordance with the terms of the Plan.

        (e)  "Awardee"  means an Employeeor Director of the Company or any Affiliate who has been granted an Award under the Plan.

        (f)  "Award Agreement"  means a Cash Award Agreement, Stock Award Agreement and/or Option Agreement, which may be in written or electronic format, in such form and with such terms and conditions as may be specified by the Administrator, evidencing the terms and conditions of an individual Award. Each Award Agreement is subject to the terms and conditions of the Plan.

        (g)  "Board"  means the Board of Directors of the Company.

        (h)  "Cash Award"  means a bonus opportunity awarded under Section 12 pursuant to which a Participant may become entitled to receive an amount based on the satisfaction of such performance criteria as are specified in the agreement or other documents evidencing the Award (the "Cash Award Agreement").

        (i)  "Change in Control"  means any of the following, unless the Administrator provides otherwise:

        i.      any merger or consolidation in which the Company shall not be the surviving entity (or survives only as a subsidiary of another entity whose stockholders did not own all or substantially all of the Common Stock in substantially the same proportions as immediately prior to such transaction),

        ii.     the sale of all or substantially all of the Company's assets to any other person or entity (other than a wholly-owned subsidiary),

        iii.    the acquisition of beneficial ownership of a controlling interest (including, without limitation, power to vote) the outstanding shares of Common Stock by any person or entity (including a "group" as defined by or under Section 13(d)(3) of the Exchange Act),

        iv.    the dissolution or liquidation of the Company,

        v.     a contested election of Directors, as a result of which or in connection with which the persons who were Directors before such election or their nominees (the “Incumbent Directors”) cease to constitute a majority of the Board; provided however that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least fifty percent (50%) of the Incumbent Directors, such new Director shall be considered as an Incumbent Director, or

2

        vi.    any other event specified by the Board or a Committee, regardless of whether at the time an Award is granted or thereafter.

        (j)  "Code"  means the United States Internal Revenue Code of 1986, as amended.

        (k)  "Committee"  means the compensation committee of the Board or a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

        (l)  "Common Stock"  means the common stock of the Company.

        (m)  "Company"  means Cathay General Bancorp, a Delaware corporation, or its successor.

        (n)  "Conversion Award"  has the meaning set forth in Section 4(b)(xi) of the Plan.

        (o)  "Director"  means a member of the Board.

        (p)  "Employee"  means a regular, active employee of the Company or any Affiliate, including an Officer and/or Director. The Administrator shall determine whether or not the chairman of the Board qualifies as an "Employee." Within the limitations of Applicable Law, the Administrator shall have the discretion to determine the effect upon an Award and upon an individual's status as an Employee in the case of (i) any individual who is classified by the Company or its Affiliate as leased from or otherwise employed by a third party or as intermittent or temporary, even if any such classification is changed retroactively as a result of an audit, litigation or otherwise, (ii) any leave of absence approved by the Company or an Affiliate, (iii) any transfer between locations of employment with the Company or an Affiliate or between the Company and any Affiliate or between any Affiliates, (iv) any change in the Awardee's status from an employee to a Director, and (v) at the request of the Company or an Affiliate an employee becomes employed by any partnership, joint venture or corporation not meeting the requirements of an Affiliate in which the Company or an Affiliate is a party.

        (q)  "Exchange Act"  means the United States Securities Exchange Act of 1934, as amended.

        (r)  "Fair Market Value"  means, unless the Administrator determines otherwise, as of any date, either the closing sale price for the Common Stock or the closing bid if no sales were reported, or the average of the bid and ask prices, as selected by the Administrator in its discretion, as reported in such source as the Administrator shall determine.

3

        (s)  "Grant Date"  means the date upon which an Award is granted to an Awardee pursuant to this Plan.

        (t)  "Incentive Stock Option"  means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

        (u)  “Nasdaq” means the Nasdaq Global Select Market or its successor.

(v) "Nonstatutory Stock Option"  means an Option not intended to qualify as an Incentive Stock Option.

        (w)  "Officer"  means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

        (x)  "Option"  means a right granted under Section 8 to purchase a number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in the agreement or other documents evidencing the Option (the "Option Agreement"). Both Options intended to qualify as Incentive Stock Options and Nonstatutory Stock Options may be granted under the Plan.

        (y)  "Participant"  means the Awardee or any person (including any estate) to whom an Award has been assigned or transferred as permitted hereunder.

        (z)  "Plan"  means this Cathay General Bancorp 2005 Incentive Plan.

        (aa)  "Qualifying Performance Criteria"  shall have the meaning set forth in Section 13(b) of the Plan.

        (bb)  "Share"  means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

        (cc)  “Stock Appreciation Right” means a right to receive cash and/or shares of Common Stock based on a change in the Fair Market Value of a specific number of shares of Common Stock granted under Section 11.

4

(dd) "Stock Award"  means an award or issuance of Shares, Stock Units, Stock Appreciation Rights or other similar awards made under Section 11 of the Plan, the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as are expressed in the agreement or other documents evidencing the Award (the "Stock Award Agreement").

        (ee)  "Stock Unit"  means a bookkeeping entry representing an amount equivalent to the Fair Market Value of one Share (or a fraction or multiple of such value), payable in cash, property or Shares. Stock Units represent an unfunded and unsecured obligation of the Company, except as otherwise provided for by the Administrator.

        (ff)  "Subsidiary"  means any company (other than the Company) in an unbroken chain of companies beginning with the Company, provided each company in the unbroken chain (other than the Company) owns, at the time of determination, stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other companies in such chain.

        (gg)  "Termination of Employment"  shall mean ceasing to be an Employee or Director, as determined in the sole discretion of the Administrator. However, for Incentive Stock Option purposes, Termination of Employment will occur when the Awardee ceases to be an employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company or one of its Subsidiaries. The Administrator shall determine whether any corporate transaction, such as a sale or spin-off of a division or business unit, or a joint venture, shall be deemed to result in a Termination of Employment.

        (hh)  "Total and Permanent Disability"  shall have the meaning set forth in Section 22(e)(3) of the Code.

        3.    Stock Subject to the Plan.    

        (a)    Aggregate Limits.    Subject to the provisions of Section 14 of the Plan, the aggregate number of Shares that may be issued pursuant to Awards granted under the Plan is 3,131,854Shares increased by up to 3,624,586 Shares that are issuable upon exercise of options granted pursuant to the Company’s Equity Incentive Plan (the “Prior Plan”) that terminate or expire or become unexercisable for any reason without having been exercised in full after March 22, 2005. Shares subject to Awards that are cancelled, expire or are forfeited shall be available for re-grant under the Plan. The Shares subject to the Plan may be either Shares reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares.

5

         (b)    Code Section 162(m) Limits.    Subject to the provisions of Section 14 of the Plan, the aggregate number of Shares subject to Awards granted under this Plan during any calendar year to any one Awardee shall not exceed 1,000,000. Notwithstanding anything to the contrary in the Plan, the limitations set forth in this Section 3(b) shall be subject to adjustment under Section 14(a) of the Plan only to the extent that such adjustment will not affect the status of any Award intended to qualify as "performance based compensation" under Code Section 162(m).

        4.    Administration of the Plan.    

        (a)    Procedure.    

        i.    Multiple Administrative Bodies.    The Plan shall be administered by the Board, a Committee and/or their delegates.

        ii.    Section 162.    To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as "performance-based compensation" within the meaning of Section 162(m) of the Code, Awards to "covered employees" within the meaning of Section 162(m) of the Code or Employees that the Committee determines may be "covered employees" in the future shall be made by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code.

        iii.    Rule 16b-3.    To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3 promulgated under the Exchange Act ("Rule 16b-3"), Awards to Officers and Directors shall be made by the entire Board or a Committee of two or more "non-employee directors" within the meaning of Rule 16b-3.

        iv.    Other Administration.    The Board or a Committee may delegate to an authorized officer or officers of the Company the power to approve Awards to persons eligible to receive Awards under the Plan who are not (A) subject to Section 16 of the Exchange Act or (B) at the time of such approval, "covered employees" under Section 162(m) of the Code.

        v.    Delegation of Authority for the Day-to-Day Administration of the Plan.    Except to the extent prohibited by Applicable Law, the Administrator may delegate to one or more individuals the day-to-day administration of the Plan and any of the functions assigned to it in this Plan. Such delegation may be revoked at any time.

6

       vi. Nasdaq. In addition, the Plan will be administered in a manner that complies with any applicable Nasdaq or stock exchange listing requirements.

        (b)    Powers of the Administrator.    Subject to the provisions of the Plan and, in the case of a Committee or delegates acting as the Administrator, subject to the specific duties delegated to such Committee or delegates, the Administrator shall have the authority, in its discretion:

        i.      to select the Employees and Directors of the Company or its Affiliates to whom Awards are to be granted hereunder;

        ii.     to determine the number of shares of Common Stock or amount of cash to be covered by each Award granted hereunder;

        iii.    to determine the type of Award to be granted to the selected Employees and Directors;

        iv.    to approve forms of Award Agreements for use under the Plan;

        v.    to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise and/or purchase price (if applicable), the time or times when an Award may be exercised (which may or may not be based on performance criteria), the vesting schedule, any vesting and/or exercisability acceleration or waiver of forfeiture restrictions, the acceptable forms of consideration, the term, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine and may be established at the time an Award is granted or thereafter;

        vi.     to correct administrative errors;

        vii.    to construe and interpret the terms of the Plan (including sub-plans and Plan addenda) and Awards granted pursuant to the Plan;

        viii.   to adopt rules and procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized (A) to adopt the rules and procedures regarding the conversion of local currency, withholding procedures and handling of stock certificates which vary with local requirements and (B) to adopt sub-plans and Plan addenda as the Administrator deems desirable, to accommodate foreign laws, regulations and practice;

7

        ix.  to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans and Plan addenda;

        x.    to modify or amend each Award, including, but not limited to, the acceleration of vesting and/or exercisability, provided, however, that any such amendment is subject to Section 15 of the Plan and except as set forth in that Section, may not impair any outstanding Award unless agreed to in writing by the Participant;

        xi.     to allow Participants to satisfy withholding tax amounts by electing to have the Company withhold from the Shares to be issued upon exercise of a Nonstatutory Stock Option or vesting of a Stock Award that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined in such manner and on such date that the Administrator shall determine or, in the absence of provision otherwise, on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may provide;

        xii.    to authorize conversion or substitution under the Plan of any or all stock options, stock appreciation rights or other stock awards held by service providers of an entity acquired by the Company (the "Conversion Awards"). Any conversion or substitution shall be effective as of the close of the merger, acquisition or other transaction. The Conversion Awards may be Nonstatutory Stock Options or Incentive Stock Options, as determined by the Administrator, with respect to options granted by the acquired entity; provided, however, that with respect to the conversion of stock appreciation rights in the acquired entity, the Conversion Awards shall be Nonstatutory Stock Options. Unless otherwise determined by the Administrator at the time of conversion or substitution, all Conversion Awards shall have the same terms and conditions as Awards generally granted by the Company under the Plan;

        xiii.   to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

        xiv.  to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any Shares issued as a result of or under an Award, including without limitation, (A) restrictions under an insider trading policy and (B) restrictions as to the use of a specified brokerage firm for such resales or other transfers;

8

        xv.  to provide, either at the time an Award is granted or by subsequent action, that an Award shall contain as a term thereof, a right, either in tandem with the other rights under the Award or as an alternative thereto, of the Participant to receive, without payment to the Company, a number of Shares, cash or a combination thereof, the amount of which is determined by reference to the value of the Award; and

        xvi.   to make all other determinations deemed necessary or advisable for administering the Plan and any Award granted hereunder.

        (c)    Effect of Administrator's Decision.    All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, shall be final and binding on all Participants and on all other persons. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.

        5.    Eligibility.    

        Awards may be granted to Employeesand Directors of the Company or any of its Affiliates; provided that Incentive Stock Options may be granted only to Employees of the Company or of a Subsidiary of the Company.

        6.    Term of Plan.    

        The Plan shall become effective upon its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years from the date the Plan is approved by stockholders of the Company unless terminated earlier under Section 15 of the Plan.

        7.    Term of Award.    

        The term of each Award shall be determined by the Administrator and stated in the Award Agreement. In the case of an Option, the term shall be ten (10) years from the Grant Date or such shorter term as may be provided in the Award Agreement; provided that an Incentive Stock Option granted to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Subsidiary shall have a term of no more than five (5) years from the Grant Date; and provided further that the term may be ten and one-half (101/2) years (or a shorter period) in the case of Options granted to Employees in certain jurisdictions outside the United States as determined by the Administrator.

9

        8.    Options.    

        The Administrator may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the Administrator or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the Awardee or within the control of others.

        (a)    Option Agreement.    Each Option Agreement shall contain provisions regarding (i) the number of Shares that may be issued upon exercise of the Option, (ii) the type of Option, (iii) the exercise price of the Shares and the means of payment for the Shares, (iv) the term of the Option, (v) such terms and conditions on the vesting and/or exercisability of an Option as may be determined from time to time by the Administrator, (vi) restrictions on the transfer of the Option or the Shares issued upon exercise of the Option and forfeiture provisions, and (vii) such further terms and conditions, in each case not inconsistent with this Plan as may be determined from time to time by the Administrator.

        (b)    Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:

        i.      In the case of an Incentive Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date; provided however that in the case of an Incentive Stock Option granted to an Employee who on the Grant Date owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the Grant Date.

        ii.     In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the Grant Date.

        iii.    Notwithstanding the foregoing, at the Administrator's discretion, Conversion Awards may be granted in substitution and/or conversion of options of an acquired entity, with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of such substitution and/or conversion.

10

        (c)    No Option Repricings.   Other than in connection with a change in the Company’s capitalization (as described in Section 14(a) of the Plan), the exercise price of an Option maynotbe reduced without stockholder approval.

        (d)    Vesting Period and Exercise Dates.    Options granted under this Plan shall vest and/or be exercisable at such time and in such installments during the period prior to the expiration of the Option's term as determined by the Administrator. The Administrator shall have the right to make the timing of the ability to exercise any Option granted under this Plan subject to continued employment, the passage of time and/or such performance requirements as deemed appropriate by the Administrator. At any time after the grant of an Option, the Administrator may reduce or eliminate any restrictions surrounding any Participant's right to exercise all or part of the Option.

        (e)    Form of Consideration.    The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment, either through the terms of the Option Agreement or at the time of exercise of an Option. Acceptable forms of consideration may include:

        i.      cash;

        ii.     check or wire transfer (denominated in U.S. Dollars);

        iii.    subject to any conditions or limitations established by the Administrator, other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, provided that prior to the date on which the Company becomes subject to FAS 123R, such Shares shall, in the case of Shares acquired by the Participant upon the exercise of an Option, have been owned by the Participant for more than six months on the date of surrender;

        iv.    consideration received by the Company under a broker-assisted sale and remittance program acceptable to the Administrator;

        v.     such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or

        vi.    any combination of the foregoing methods of payment.

11

        9.    Incentive Stock Option Limitations/Terms.    

        (a)    Eligibility.    Only employees (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company or any of its Subsidiaries may be granted Incentive Stock Options.

        (b)    $100,000 Limitation.    Notwithstanding the designation "Incentive Stock Option" in an Option Agreement, if and to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Awardee during any calendar year (under all plans of the Company and any of its Subsidiaries) exceeds U.S. $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 9(b), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the Grant Date.

        (c)    Effect of Termination of Employment on Incentive Stock Options.    

        i.    Generally.    Unless otherwise provided for by the Administrator, upon an Awardee's Termination of Employment other than as a result of circumstances described in Sections 9(c)(ii) and (iii) below, any outstanding Incentive Stock Option granted to such Awardee, whether vested or unvested, to the extent not theretofore exercised, shall terminate immediately upon the Awardee's Termination of Employment; provided, however, that the Administrator may in the Option Agreement specify a period of time (but not beyond the expiration date of the Option) following Termination of Employment during which the Awardee may exercise the Option as to Shares that were vested and exercisable as of the date of Termination of Employment. To the extent such a period following Termination of Employment is specified, the Option shall automatically terminate at the end of such period to the extent the Awardee has not exercised it within such period.

        ii.    Disability of Awardee.    Unless otherwise provided for by the Administrator, upon an Awardee's Termination of Employment as a result of the Awardee's disability, all outstanding Incentive Stock Options granted to such Awardee that were vested and exercisable as of the date of the Awardee’s Termination of Employment may be exercised by the Awardee until (A) one (1) year following Awardee's Termination of Employment as a result of Awardee’s disability, including Total and Permanent Disability; provided, however, that in no event shall an Incentive Stock Option be exercisable after the expiration of the term of such Option. If the Participant does not exercise such Option within the time specified, the Option (to the extent not exercised) shall automatically terminate.

12

        iii.    Death of Awardee.    Unless otherwise provided for by the Administrator, upon an Awardee's Termination of Employment as a result of the Awardee's death, all outstanding Incentive Stock Options granted to such Awardee that were vested and exercisable as of the date of the Awardee’s death may be exercised until the earlier of (A) one (1) year following the Awardee's death or (B) the expiration of the term of such Option. If an Incentive Stock Option is held by the Awardee when he or she dies, the Incentive Stock Option may be exercised, to the extent the Option is vested and exercisable, by the beneficiary designated by the Awardee (as provided in Section 16 of the Plan), the executor or administrator of the Awardee's estate or, if none, by the person(s) entitled to exercise the Incentive Stock Option under the Awardee's will or the laws of descent or distribution. If the Incentive Stock Option is not so exercised within the time specified, such Option (to the extent not exercised) shall automatically terminate.

iv. Other Terminations of Employment. The Administrator may provide in the applicable Option Agreement for different treatment of Options upon Termination of Employment of the Awardee than that specified above.

(d) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any leave that is not a leave required to be provided to the Awardee under Applicable Law. In the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon an Awardee’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Adwardee continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

        (e)    Transferability.    An Incentive Stock Option cannot be transferred by the Awardee otherwise than by will or the laws of descent and distribution, and, during the lifetime of such Awardee, may only be exercised by the Awardee. If the terms of an Incentive Stock Option are amended to permit transferability, the Option will be treated for tax purposes as a Nonstatutory Stock Option. The designation of a beneficiary by an Awardee will not constitute a transfer.

13

        (f)    Exercise Price.    The per Share exercise price of an Incentive Stock Option shall be determined by the Administrator in accordance with Section 8(b)(i) of the Plan.

        (g)    Other Terms.    Option Agreements evidencing Incentive Stock Options shall contain such other terms and conditions as may be necessary to qualify, to the extent determined desirable by the Administrator, with the applicable provisions of Section 422 of the Code.

        10.    Exercise of Option.    

        (a)    Procedure for Exercise; Rights as a Stockholder.    

        i.      Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the respective Option Agreement.

        ii.     An Option shall be deemed exercised when the Company receives (A) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option; (B) full payment for the Shares with respect to which the related Option is exercised; and (C) payment of all applicable withholding taxes.

        iii.    Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Unless provided otherwise by the Administrator or pursuant to this Plan, until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option.

        iv.    The Company shall issue (or cause to be issued) such Shares as administratively practicable after the Option is exercised. An Option may not be exercised for a fraction of a Share.

        (b)    Effect of Termination of Employment on Nonstatutory Stock Options.    

        i.    Generally.    Unless otherwise provided for by the Administrator, upon an Awardee's Termination of Employment other than as a result of circumstances described in Sections 10(b)(ii) and (iii) below, any outstanding Nonstatutory Stock Option granted to such Awardee, whether vested or unvested, to the extent not theretofore exercised, shall terminate immediately upon the Awardee's Termination of Employment; provided, however, that the Administrator may in the Option Agreement specify a period of time (but not beyond the expiration date of the Option) following Termination of Employment during which the Awardee may exercise the Option as to Shares that were vested and exercisable as of the date of Termination of Employment. To the extent such a period following Termination of Employment is specified, the Option shall automatically terminate at the end of such period to the extent the Awardee has not exercised it within such period.

14

        ii.    Disability of Awardee.    Unless otherwise provided for by the Administrator, upon an Awardee's Termination of Employment as a result of the Awardee's disability, all outstanding Nonstatutory Stock Options granted to such Awardee that were vested and exercisable as of the date of the Awardee’s Termination of Employment may be exercised by the Awardee until (A) one(1) year following Awardee’s Termination of Employment as a result of Awardee’s disability, including Total and Permanent Disability or (B) the expiration of the term of such Option. If the Participant does not exercise such Option within the time specified, the Option (to the extent not exercised) shall automatically terminate.

        iii.    Death of Awardee.    Unless otherwise provided for by the Administrator, upon an Awardee's Termination of Employment as a result of the Awardee's death, all outstanding Nonstatutory Stock Options granted to such Awardee that were vested and exercisable as of the date of the Awardee’s death may be exercised until the earlier of (A) one (1) year following the Awardee's death or (B) the expiration of the term of such Option. If a Nonstatutory Stock Option is held by the Awardee when he or she dies, such Option may be exercised, to the extent the Option is vested and exercisable, by the beneficiary designated by the Awardee (as provided in Section 16 of the Plan), the executor or administrator of the Awardee's estate or, if none, by the person(s) entitled to exercise the Nonstatutory Stock Option under the Awardee's will or the laws of descent or distribution. If the Nonstatutory Stock Option is not so exercised within the time specified, such Option (to the extent not exercised) shall automatically terminate.

(c) Leave of Absence. The Administrator shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any leave that is not a leave required to be provided to the Awardee under Applicable Law. In the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon an Awardee’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Adwardee continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

15

        11.    Stock Awards.    

        (a)    Stock Award Agreement.    Each Stock Award Agreement shall contain provisions regarding (i) the number of Shares subject to such Stock Award or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment for the Shares, (iii) the performance criteria (including Qualifying Performance Criteria), if any, and level of achievement versus these criteria that shall determine the number of Shares granted, issued, retainable and/or vested, (iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares as may be determined from time to time by the Administrator, (v) restrictions on the transferability of the Stock Award, and (vi) such further terms and conditions in each case not inconsistent with this Plan as may be determined from time to time by the Administrator.

        (b)    Restrictions and Performance Criteria.    The grant, issuance, retention and/or vesting of each Stock Award or the Shares subject thereto may be subject to such performance criteria (including Qualifying Performance Criteria) and level of achievement versus these criteria as the Administrator shall determine, which criteria may be based on financial performance, personal performance evaluations and/or completion of service by the Awardee. Notwithstanding anything to the contrary herein, the performance criteria for any Stock Award that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code shall be established by the Administrator based on one or more Qualifying Performance Criteria selected by the Administrator and specified in writing not later than ninety (90) days after the commencement of the period of service to which the performance goals relates, provided that the outcome is substantially uncertain at that time (or in such other manner that complies with Section 162(m)).

        (c)    Forfeiture.    Unless otherwise provided for by the Administrator, upon the Awardee's Termination of Employment, the Stock Award and the Shares subject thereto shall be forfeited, provided that to the extent that the Participant purchased any Shares, the Company shall have a right to repurchase the unvested Shares at such price and on such terms and conditions as the Administrator determines.

16

        (d)    Rights as a Stockholder.    Unless otherwise provided by the Administrator, the Participant shall have the rights equivalent to those of a stockholder and shall be a stockholder only after Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) to the Participant. Unless otherwise provided by the Administrator, a Participant holding Stock Units shall be entitled to receive dividend payments as if he or she was an actual stockholder.

(e) Stock Appreciation Rights.

i. General.Stock Appreciation Rights may be granted either alone, in addition to, or in tandem with other Awards granted under the Plan. The Board may grant Stock Appreciation Rights to eligible Participants subject to terms and conditions not inconsistent with this Plan and determined by the Board. The specific terms and conditions applicable to the Participant shall be provided for in the Stock Award Agreement. Stock Appreciation Rights shall be exercisable, in whole or in part, at such times as the Board shall specify in the Stock Award Agreement.

ii. Exercise of Stock Appreciation Right.Upon the exercise of a Stock Appreciation Right, in whole or in part, the Participant shall be entitled to a payment in an amount equal to the excess of the Fair Market Value on the date of exercise of a fixed number of Shares covered by the exercised portion of the Stock Appreciation Right, over the Fair Market Value on the grant date of the Shares covered by the exercised portion of the Stock Appreciation Right (or such other amount calculated with respect to Shares subject to the Award as the Board may determine). The amount due to the Participant upon the exercise of a Stock Appreciation Right shall be paid in such form of consideration as determined by the Board and may be in cash, Shares or a combination thereof, over the period or periods specified in the Stock Award Agreement. A Stock Award Agreement may place limits on the amount that may be paid over any specified period or periods upon the exercise of a Stock Appreciation Right, on an aggregate basis or as to any Participant. A Stock Appreciation Right shall be considered exercised when the Company receives written notice of exercise in accordance with the terms of the Stock Award Agreement from the person entitled to exercise the Stock Appreciation Right.

17

iii. Nonassignability of Stock Appreciation Rights. Except as determined by the Board, no Stock Appreciation Right shall be assignable or otherwise transferable by the Participant except by will or by the laws of descent and distribution.

12.    Cash Awards.    

        Each Cash Award will confer upon the Participant the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one (1) year.

        (a)    Cash Award.    Each Cash Award shall contain provisions regarding (i) the target and maximum amount payable to the Participant as a Cash Award, (ii) the performance criteria and level of achievement versus these criteria which shall determine the amount of such payment, (iii) the period as to which performance shall be measured for establishing the amount of any payment, (iv) the timing of any payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the Cash Award prior to actual payment, (vi) forfeiture provisions, and (vii) such further terms and conditions, in each case not inconsistent with the Plan, as may be determined from time to time by the Administrator. The maximum amount payable as a Cash Award may be a multiple of the target amount payable, but the maximum amount payable pursuant to that portion of a Cash Award granted under this Plan for any fiscal year to any Awardee that is intended to satisfy the requirements for "performance based compensation" under Section 162(m) of the Code shall not exceed U.S. $3,000,000.

        (b)    Performance Criteria.    The Administrator shall establish the performance criteria and level of achievement versus these criteria which shall determine the target and the minimum and maximum amount payable under a Cash Award, which criteria may be based on financial performance and/or personal performance evaluations. The Administrator may specify the percentage of the target Cash Award that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code. Notwithstanding anything to the contrary herein, the performance criteria for any portion of a Cash Award that is intended to satisfy the requirements for "performance-based compensation" under Section 162(m) of the Code shall be a measure established by the Administrator based on one or more Qualifying Performance Criteria selected by the Administrator and specified in writing not later than 90 days after the commencement of the period of service to which the performance goals relates, provided that the outcome is substantially uncertain at that time (or in such other manner that complies with Section 162(m)).

18

        (c)    Timing and Form of Payment.    The Administrator shall determine the timing of payment of any Cash Award. The Administrator may provide for or, subject to such terms and conditions as the Administrator may specify, may permit an Awardee to elect for the payment of any Cash Award to be deferred to a specified date or event. The Administrator may specify the form of payment of Cash Awards, which may be cash or other property, or may provide for an Awardee to have the option for his or her Cash Award, or such portion thereof as the Administrator may specify, to be paid in whole or in part in cash or other property.

        (d)    Termination of Employment.    The Administrator shall have the discretion to determine the effect a Termination of Employment due to (i) disability, (ii) death, or (iii) otherwise shall have on any Cash Award.

        13.    Other Provisions Applicable to Awards.    

        (a)    Non-Transferability of Awards.    Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by beneficiary designation, will or by the laws of descent or distribution. Subject to Section 9(e), the Administrator may in its discretion make an Award transferable to an Awardee's family member or any other person or entity as it deems appropriate. If the Administrator makes an Award transferable, either at the time of grant or thereafter, such Award shall contain such additional terms and conditions as the Administrator deems appropriate, and any transferee shall be deemed to be bound by such terms upon acceptance of such transfer.

        (b)    Qualifying Performance Criteria.    For purposes of this Plan, the term "Qualifying Performance Criteria" shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit, Affiliate or business segment, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Administrator in the Award: (i) cash flow; (ii) earnings (including gross margin, earnings before interest and taxes, earnings before taxes, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholders' equity; (vii) total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x) return on investment; (xi) revenue; (xii) income or net income; (xiii) operating income or net operating income, in aggregate or per share; (xiv) operating profit or net operating profit; (xv) operating margin; (xvi) return on operating revenue; (xvii) market share; (xviii) contract awards or backlog; (xix) overhead or other expense reduction; (xx) growth in stockholder value relative to the moving average of the S&P 500 Index or a peer group index; (xxi) credit rating; (xxii) strategic plan development and implementation (including individual performance objectives that relate to achievement of the Company’s or any business unit’s strategic plan); (xxiii) improvement in workforce diversity; (xxiv) growth of revenue, operating income or net income; (xxv) efficiency ratio; (xxvi) ratio of nonperforming assets to total assets; and (xxvii) any other similar criteria. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; and (E) any gains or losses classified as extraordinary or as discontinued operations in the Company’s financial statements.

19

        (c)    Certification.    Prior to the payment of any compensation under an Award intended to qualify as "performance-based compensation" under Section 162(m) of the Code, the Committee shall certify the extent to which any Qualifying Performance Criteria and any other material terms under such Award have been satisfied (other than in cases where such relate solely to the increase in the value of the Common Stock).

        (d)    Discretionary Adjustments Pursuant to Section 162(m).    Notwithstanding satisfaction of any completion of any Qualifying Performance Criteria, to the extent specified at the time of grant of an Award to "covered employees" within the meaning of Section 162(m) of the Code, the number of Shares, Options or other benefits granted, issued, retainable and/or vested under an Award on account of satisfaction of such Qualifying Performance Criteria may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.

        (e)    Compliance with Section 409A.    Notwithstanding anything to the contrary contained herein, to the extent that the Administrator determines that any Award granted under the Plan is subject to Code Section 409A and unless otherwise specified in the applicable Award Agreement, the Award Agreement evidencing such Award shall incorporate the terms and conditions necessary for such Award to avoid the consequences described in Code Section 409A(a)(1), and to the maximum extent permitted under Applicable Law (and unless otherwise stated in the applicable Award Agreement), the Plan and the Award Agreements shall be interpreted in a manner that results in their conforming to the requirements of Code Section 409A(a)(2), (3) and (4) and any Department of Treasury or Internal Revenue Service regulations or other interpretive guidance issued under Section 409A (whenever issued, the “Guidance”). Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement provides otherwise, with specific reference to this sentence), to the extent that a Participant holding an Award that constitutes “deferred compensation” under Section 409A and the Guidance is a “specified employee” (also as defined thereunder), no distribution or payment of any amount shall be made before a date that is six (6) months following the date of such Participant’s “separation from service” (as defined in Section 409A and the Guidance) or, if earlier, the date of the Participant’s death.

20

        (f)    Deferral of Award Benefits. The Administrator may in its discretion and upon such terms and conditions as it determines appropriate permit one or more Participants whom it selects to (a) defer compensation payable pursuant to the terms of an Award, or (b) defer compensation arising outside the terms of this Plan pursuant to a program that provides for deferred payment in satisfaction of such other compensation amounts through the issuance of one or more Awards. Any such deferral arrangement shall be evidenced by an Award Agreement in such form as the Administrator shall from time to time establish, and no such deferral arrangement shall be a valid and binding obligation unless evidenced by a fully executed Award Agreement, the form of which the Administrator has approved, including through the Administrator’s establishing a written program (the “Program”) under this Plan to govern the form of Award Agreements participating in such Program. Any such Award Agreement or Program shall specify the treatment of dividends or dividend equivalent rights (if any) that apply to Awards governed thereby, and shall further provide that any elections governing payment of amounts pursuant to such Program shall be in writing, shall be delivered to the Company or its agent in a form and manner that complies with Code Section 409A and the Guidance, and shall specify the amount to be distributed in settlement of the deferral arrangement, as well as the time and form of such distribution in a manner that complies with Code Section 409A and the Guidance.

        14.    Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset Sale.    

        (a)    Changes in Capitalization.    Subject to any required action by the stockholders of the Company, (i) the number and kind of Shares covered by each outstanding Award, (ii) the price per Share subject to each such outstanding Award, and (iii) each of the Share limitations set forth in Section 3 of the Plan, shall be proportionately adjusted for any increase or decrease in the number or kind of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award.

21

        (b)    Dissolution or Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised or the Shares subject thereto issued to the Awardee and unless otherwise determined by the Administrator, an Award will terminate immediately prior to the consummation of such proposed transaction.

        (c)    Change in Control.    In the event there is a Change in Control of the Company, as determined by the Board or a Committee, the Board or Committee may, in its discretion, (i) provide for the assumption or substitution of, or adjustment to, each outstanding Award; (ii) accelerate the vesting of Options and terminate any restrictions on Cash Awards or Stock Awards; and/or (iii) provide for termination of Awards as a result of the Change of Control on such terms and conditions as it deems appropriate, including providing for the cancellation of Awards for a cash payment to the Participant.

        15.    Amendment and Termination of the Plan.    

        (a)    Amendment and Termination.    The Administrator may amend, alter or discontinue the Plan or any Award Agreement, but any such amendment shall be subject to approval of the stockholders of the Company in the manner and to the extent required by Applicable Law. To the extent required to comply with Section 162(m), the Company shall seek re-approval of the Plan from time to time by the stockholders. In addition, without limiting the foregoing, unless approved by the stockholders of the Company, no such amendment shall be made that would:

        i.      materially increase the maximum number of Shares for which Awards may be granted under the Plan, other than an increase pursuant to Section 14 of the Plan;

        ii.     reduce the minimum exercise price at which Options may be granted under the Plan;

        iii.     result in a repricing of Options by (x) reducing the exercise price of outstanding Options or (y) canceling an outstanding Option held by an Awardee and re-granting to the Awardee a new Option with a lower exercise price, in either case other than in connection with a change in the Company’s capitalization pursuant to Section 14 of the Plan; or

22

        iv.    change the class of persons eligible to receive Awards under the Plan.

        (b)    Effect of Amendment or Termination.    No amendment, suspension or termination of the Plan shall impair the rights of any Award, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company; provided further that the Administrator may amend an outstanding Award in order to conform it to the Administrator’s intent (in its sole discretion) that such Award not be subject to Code Section 409A(a)(1)(B). Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

        (c)    Effect of the Plan on Other Arrangements.    Neither the adoption of the Plan by the Board or a Committee nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or any Committee to adopt such other incentive arrangements as it or they may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases. The value of Awards granted pursuant to the Plan will not be included as compensation, earnings, salaries or other similar terms used when calculating an Awardee’s benefits under any employee benefit plan sponsored by the Company or any Subsidiary except as such plan otherwise expressly provides.

        16.    Designation of Beneficiary.    

        (a)   An Awardee may file a written designation of a beneficiary who is to receive the Awardee's rights pursuant to Awardee's Award or the Awardee may include his or her Awards in an omnibus beneficiary designation for all benefits under the Plan. To the extent that Awardee has completed a designation of beneficiary while employed with the Company, such beneficiary designation shall remain in effect with respect to any Award hereunder until changed by the Awardee to the extent enforceable under Applicable Law.

        (b)   Such designation of beneficiary may be changed by the Awardee at any time by written notice. In the event of the death of an Awardee and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Awardee's death, the Company shall allow the executor or administrator of the estate of the Awardee to exercise the Award, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may allow the spouse or one or more dependents or relatives of the Awardee to exercise the Award to the extent permissible under Applicable Law or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

23

        17.    No Right to Awards or to Employment.    

        No person shall have any claim or right to be granted an Award and the grant of any Award shall not be construed as giving an Awardee the right to continue in the employ of the Company or its Affiliates. Further, the Company and its Affiliates expressly reserve the right, at any time, to dismiss any Employee or Awardee at any time without liability or any claim under the Plan, except as provided herein or in any Award Agreement entered into hereunder.

        18.    Legal Compliance.    

        Shares shall not be issued pursuant to the exercise of an Option or Stock Award unless the exercise of such Option or Stock Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

        19.    Inability to Obtain Authority.    

        To the extent the Company is unable to or the Administrator deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company shall be relieved of any liability with respect to the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

        20.    Reservation of Shares.    

        The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

        21.    Notice.    

        Any written notice to the Company required by any provisions of this Plan shall be addressed to the Secretary of the Company and shall be effective when received.

24

        22.    Governing Law; Interpretation of Plan and Awards.    

        (a)   This Plan and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws, but not the choice of law rules, of the state of Delaware.

        (b)   In the event that any provision of the Plan or any Award granted under the Plan is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, such provision shall be reformed, if possible, to the extent necessary to render it legal, valid and enforceable, or otherwise deleted, and the remainder of the terms of the Plan and/or Award shall not be affected except to the extent necessary to reform or delete such illegal, invalid or unenforceable provision.

        (c)   The headings preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not constitute a part of the Plan, nor shall they affect its meaning, construction or effect.

        (d)   The terms of the Plan and any Award shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, beneficiaries, successors and assigns.

        (e)   All questions arising under the Plan or under any Award shall be decided by the Administrator in its total and absolute discretion. In the event the Participant believes that a decision by the Administrator with respect to such person was arbitrary or capricious, the Participant may request arbitration with respect to such decision. The review by the arbitrator shall be limited to determining whether the Administrator's decision was arbitrary or capricious. This arbitration shall be the sole and exclusive review permitted of the Administrator's decision, and the Awardee shall as a condition to the receipt of an Award be deemed to explicitly waive any right to judicial review.

        (f)    Notice of demand for arbitration shall be made in writing to the Administrator within thirty (30) days after the applicable decision by the Administrator. The arbitrator shall be selected from amongst those members of the Board who are neither Administrators nor Employees. If there are no such members of the Board, the arbitrator shall be selected by the Board. The arbitrator shall be an individual who is an attorney licensed to practice law in the State of Delaware. Such arbitrator shall be neutral within the meaning of the Commercial Rules of Dispute Resolution of the American Arbitration Association; provided, however, that the arbitration shall not be administered by the American Arbitration Association. Any challenge to the neutrality of the arbitrator shall be resolved by the arbitrator whose decision shall be final and conclusive. The arbitration shall be administered and conducted by the arbitrator pursuant to the Commercial Rules of Dispute Resolution of the American Arbitration Association. The decision of the arbitrator on the issue(s) presented for arbitration shall be final and conclusive and may be enforced in any court of competent jurisdiction.

25

        23.    Limitation on Liability.    

        The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, an Employee, an Awardee or any other persons as to:

(a)    The Non-Issuance of Shares.    The non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and

(b)    Tax Consequences.    Any tax consequence realized by any Participant, Employee, Awardee or other person due to the receipt, vesting, exercise or settlement of any Option or other Award granted hereunder or due to the transfer of any Shares issued hereunder. The Participant is responsible for, and by accepting an Award under the Plan agrees to bear, all taxes of any nature that are legally imposed upon the Participant in connection with an Award, and the Company does not assume, and will not be liable to any party for, any cost or liability arising in connection with such tax liability legally imposed on the Participant. In particular, Awards issued under the Plan may be characterized by the Internal Revenue Service (the “IRS”) as “deferred compensation” under the Code resulting in additional taxes, including in some cases interest and penalties. In the event the IRS determines that an Award constitutes deferred compensation under the Code or challenges any good faith characterization made by the Company or any other party of the tax treatment applicable to an Award, the Participant will be responsible for the additional taxes, and interest and penalties, if any, that are determined to apply if such challenge succeeds, and the Company will not reimburse the Participant for the amount of any additional taxes, penalties or interest that result.

        24.    Unfunded Plan.    

        Insofar as it provides for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Awardees who are granted Stock Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience. The Company shall not be required to segregate any assets which may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation, nor shall the Company nor the Administrator be deemed to be a trustee of stock or cash to be awarded under the Plan. Any liability of the Company to any Participant with respect to an Award shall be based solely upon any contractual obligations which may be created by the Plan; no such obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Administrator shall be required to give any security or bond for the performance of any obligation which may be created by this Plan.

26

EX-10.7.1

EXHIBIT 10.7.1

CATHAY GENERAL BANCORP

2005 INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

THIS RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”), dated between Cathay General Bancorp, a Delaware corporation (the “Company”), and (the “Executive”), is entered into as follows:

WITNESSETH:

WHEREAS, the continued employment of the Executive is considered by the Company to be important for the Company’s continued growth; and

WHEREAS, in order to give the Executive an incentive to continue in the employ of the Company and to assure his or her continued commitment to the success of the Company, the Executive Compensation Committee of the Board of Directors of the Company (the “Committee”) has determined that the Executive shall be granted a stock award (“Stock Award”) covering shares of the Company’s common stock (the “Shares”), subject to the restrictions stated below and in accordance with the terms and conditions of the 2005 Incentive Plan (the “Plan”). Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Plan.

THEREFORE, the parties agree as follows:

1. Grant of Stock Award. Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Executive the Stock Award covering Shares and hereby issues such Shares to the Executive.

2. Vesting Schedule. Subject to Executive not experiencing a Termination of Employment during the following vesting term, the interest of the Executive in the Shares shall vest as follows: .

3. Termination. In the event of the Termination of Employment of the Executive, all of the Shares held by the Executive which have not vested and which remain forfeitable as of the date of Termination of Employment shall be forfeited to the Company as of such date, without payment by the Company of any amount with respect thereto. Any forfeiture will be effected by the Company in such manner and to such degree as the Administrator, in its sole discretion, determines, and will in all events (including as to the provisions of this Section 3) be subject to Applicable Laws. To enforce any restrictions on the Shares, the Administrator may require the Executive to deposit the certificates representing the Shares, with stock powers or other transfer instruments approved by the Administrator endorsed in blank, with the Company or an agent of the Company to hold in escrow until the restrictions have lapsed or terminated. The Administrator may also cause a legend or legends referencing the restrictions be placed on the certificates.

4. Transfer Restrictions. Except as otherwise provided for in this Agreement, the Shares or rights granted hereunder may not be sold, pledged or otherwise transferred until the Shares become vested and nonforfeitable in accordance with Sections 2 and 3.

5. Stockholder Rights. The Executive shall be entitled to all of the rights and benefits generally accorded to stockholders with respect to the Shares. All dividends on Shares that are subject to any restrictions, including vesting, shall be subject to the same restrictions, including those set forth in Section 2, as the Shares on which the dividends were paid.

6. Taxes.

(a) The Executive shall be liable for any and all taxes, including withholding taxes, arising out of this grant or the vesting of Shares hereunder. In the event that the Company or the Employer (as defined below) is required to withhold taxes as a result of the grant or vesting of the Shares, or subsequent sale of the Shares, the Executive shall surrender a sufficient number of whole Shares or make a cash payment as necessary to cover all applicable required withholding taxes and required social security insurance contributions at the time the restrictions on the Shares lapse (or at such other time as required by Applicable Law), unless alternative procedures for such payment are established by the Company. The Executive will receive a cash refund for any fraction of a surrendered Share not necessary for required withholding taxes and required social security insurance contributions. To the extent that any surrender of Shares or payment of cash or alternative procedure for such payment is insufficient, the Executive authorizes the Company, its Affiliates and Subsidiaries, which are qualified to deduct tax at source, to deduct all applicable required withholding taxes and social security insurance contributions from the Executive’s compensation. The Executive agrees to pay any amounts that cannot be satisfied from wages or other cash compensation, to the extent permitted by law.

(b) The Executive understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the amount paid for the Shares and the fair market value of the Shares as of the date any forfeiture restrictions on the Shares lapse. In this context, “restrictions” mean the forfeiture obligation in the event of the Termination of Employment of the Executive as set forth in Section 3 of this Agreement and the restriction on transferability as set forth in Section 4 of this Agreement. The Executive understands that the Executive may elect to be taxed at the time the Shares are issued, based on the value of the Shares at the issuance date rather than when and as the forfeiture restrictions lapse (on the vesting dates), by filing an election under Section 83(b) (an “83(b) Election”) of the Code with the Internal Revenue Service within 30 days from the date of issuance. The Executive acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to issuance and vesting of the Shares hereunder, and does not purport to be complete. The Company has directed the Executive to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which Executive may reside, the tax consequences of the Executive’s death, and the decision as to whether or not to file an 83(b) Election (as well as appropriate advice and assistance with the actual filing of any such 83(b) Election) in connection with the issuance of the Shares.

(c) Regardless of any action the Company or the Executive’s employer (the “Employer”) takes with respect to any or all income tax, social security insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Executive acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by him or her is and remains the Executive’s responsibility and that the Company and/or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this issuance of Shares, including the vesting of the Shares or the subsequent sale of the Shares; and (ii) do not commit to structure the terms or any aspect of this issuance of Shares to reduce or eliminate the Executive’s liability for Tax-Related Items. Prior to the vesting of the Shares, the Executive shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Executive’s participation in the Plan or the Executive’s receipt of Shares that cannot be satisfied by the means previously described. The Company may refuse to deliver the Shares if the Executive fails to comply with the Executive’s obligations in connection with the Tax-Related Items.

7. Data Privacy Consent. The Executive hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Executive’s personal data as described in this document by and among, as applicable, the Employer, and the Company and its Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing the Executive’s participation in the Plan. The Executive understands that the Company, its Affiliates, its Subsidiaries and the Employer hold certain personal information about the Executive, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title, any Shares of stock or directorships held in the Company, details of all options or any other entitlement to Shares of stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in the Executive’s favor for the purpose of implementing, managing and administering the Plan (“Data”). The Executive understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Executive’s country or elsewhere and that the recipient country may have different data privacy laws and protections than the Executive’s country. The Executive understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting . The Executive authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Executive’s participation in the Plan, including any requisite transfer of such Data, as may be required to a broker or other third party with whom the Executive may elect to deposit any Shares acquired under the Plan. The Executive understands that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan. The Executive understands that he or she may, at any time, view Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting , in writing. The Executive understands that refusing or withdrawing consent may affect the Executive’s ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, the Executive understands that he or she may contact .

8. Plan Information. The Executive acknowledges that he or she has received copies of the Plan and the Plan prospectus from the Company and agrees to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the Company’s website at: http://www.cathaybank.com, then selecting “About Us” and “Investor Information.” The Executive acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to .

9. Acknowledgment and Waiver. By accepting this grant of a Stock Award, the Executive acknowledges and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;

(b) the grant of Stock Awards is voluntary and occasional and does not create any contractual or other right to receive future grants of Stock Awards or Shares, even if Stock Awards or Shares have been granted repeatedly in the past;

(c) the Executive’s participation in the Plan shall not create a right to further employment with Employer, shall not create an employment agreement between the Executive and his or her Employer and shall not interfere with the ability of Employer to terminate the Executive’s employment relationship at any time with or without cause and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;

(d) Stock Award grants, Shares and resulting benefits are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and is outside the scope of the Executive’s employment contract, if any; and Stock Award grants, Shares and resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments insofar as permitted by law;

(e) in consideration of this grant of a Stock Award, no claim or entitlement to compensation or damages shall arise from termination of this Stock Award or diminution in value of the Shares resulting from Termination of Employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and the Executive irrevocably releases the Company and the Executive from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, the Executive shall be deemed irrevocably to have waived any entitlement to pursue such claim; and

(f) notwithstanding any terms or conditions of the Plan to the contrary, in the event of involuntary Termination of Employment (whether or not in breach of local labor laws), the Executive’s right to receive benefits under this Agreement, if any, will terminate effective as of the date that the Executive is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of involuntary Termination of Employment (whether or not in breach of local labor laws), the Executive’s right to receive benefits under this Agreement after Termination of Employment, if any, will be measured by the date of termination of the Executive’s active employment and will not be extended by any notice period mandated under local law.

10. Miscellaneous.

(a) The Company shall not be required to treat as the owner of Shares, and associated benefits hereunder, any transferee to whom such Shares or benefits shall have been so transferred in violation of this Agreement.

(b) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

(c) Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to the Executive at his or her address then on file with the Company.

(d) The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Executive with respect to the subject matter hereof, and may not be modified adversely to the Executive’s interest except by means of a writing signed by the Company and the Executive. This Agreement is governed by the laws of the state of Delaware. In the event of any conflict between the terms and provisions of the Plan and this Agreement, the Plan terms and provisions shall govern. Certain other important terms governing this contract are contained in the Plan.

(e) If the Executive has received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.

(f) The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

	CATHAY GENERAL BANCORP
Accepted by Executive:
	By
		[Officer Name]
		[Title]

RETAIN THIS AGREEMENT FOR YOUR RECORDS

EX-10.7.2

EXHIBIT 10.7.2

CATHAY GENERAL BANCORP

2005 INCENTIVE PLAN

STOCK OPTION AGREEMENT (NONSTATUTORY)

THIS STOCK OPTION AGREEMENT (the “Agreement”), dated , (“Grant Date”) between Cathay General Bancorp, a Delaware corporation (the “Company”), and <EMPLOYEE NAME> (“Optionee”), is entered into as follows:

WITNESSETH:

WHEREAS, the Company has established the 2005 Incentive Plan (the “Plan”); and

WHEREAS, the Executive Compensation Committee or Equity Incentive Committee of the Board of Directors of the Company or its delegates (the “Committee”) has determined that Optionee shall be granted an option under the Plan as hereinafter set forth;

The parties hereby agree that the Company grants, effective as of the Grant Date, Optionee a nonstatutory (nonqualified) stock option (this “Option”) to purchase <SHARES> shares of its $0.01 par value Common Stock (the “Shares”) upon the terms and conditions set forth in this Agreement.

1. Plan Award. This Option is granted under and pursuant to the Plan and is subject to each and all of the provisions thereof. Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Plan.

2. Exercise Price. The exercise price applicable to this Option (meaning, the price Optionee must pay in order to purchase any Shares hereunder) shall be $ per Share.

3. Transferability. This Option is not transferable by Optionee otherwise than by will or the laws of descent and distribution, and is exercisable only by Optionee during his or her lifetime. This Option may not be transferred, assigned, pledged or hypothecated by Optionee during his or her lifetime, whether by operation of law or otherwise, and is not subject to execution, attachment or similar process.

4. Vesting and Exercise of Option. Subject to Optionee’s not experiencing a Termination of Employment during the following vesting term, Optionee shall vest and earn the right to exercise this Option on the following schedule: The Option shall become exercisable with respect to 20% of the number of Shares covered hereby on the first anniversary of the Grant Date, 20% of the number of Shares covered hereby on the second anniversary of the Grant Date, 20% of the Shares covered hereby on the third anniversary of the Grant Date, 20% of the Shares covered hereby on the fourth anniversary of the Grant Date, and 20% of the Shares covered hereby on the fifth anniversary of the Grant Date, so that this Option shall be fully exercisable on the fifth anniversary of the Grant Date.

5. Expiration. This Option will expire ten (10) years from the Grant Date, unless sooner terminated or canceled in accordance with the provisions of the Plan. This means that (subject to the continuing service requirement set forth in Section 4 above and subject to earlier termination upon certain other events as set forth in the Plan) this Option must be exercised, if at all, on or before (the “Expiration Date”). If this Option expires on a national holiday or weekend day, this Option will expire on the last trading day prior to the holiday or weekend. Optionee shall be solely responsible for exercising this Option, if at all, prior to its Expiration Date. The Company shall have no obligation to notify Optionee of this Option’s expiration.

6. Exercise Mechanics. This Option may be exercised by delivering to the Company at its principal executive office, to the attention of the officer of the Company designated by the Committee, a written or electronic notice stating the number of Shares as to which the Option is exercised or by any other method the Committee has approved. The notice must be accompanied by the payment of the full Option exercise price of such Shares. Exercise shall not be deemed to have occurred unless and until Optionee has delivered to the Company (or its authorized representative) an approved notice of exercise, full payment for the Shares with respect to which the Option is being exercised and payment of any applicable withholding taxes in accordance with Section 8 below. Payment of the Option exercise price may be in cash, cashier’s check, or wire transfer; provided, however, that any permitted method of payment shall be in strict compliance with all procedural rules established by the Committee.

7. Termination of Employment. All rights of Optionee in this Option, to the extent that it has not previously become vested and been exercised, shall terminate upon Optionee’s Termination of Employment except as set forth in this Section 7. The portion of the Option that relates to any Shares that were unvested and unexercisable as of the date of Optionee’s Termination of Employment shall terminate and expire effective immediately upon such date. With respect to the vested and exercisable portion of the Option, and subject to the following sentence:

(i) In the event of Termination of Employment other than as a result of Optionee’s death or disability, Optionee shall have ninety (90) days to exercise the Option as to the Shares subject to the Option that were vested and exercisable as of the date of Termination of Employment; and

(ii) In the event of Termination of Employment as a result of Optionee’s death or disability (including a Total and Permanent Disability), Optionee shall have one (1) year to exercise the Option as to the Shares subject to the Option that were vested and exercisable as of the date of Termination of Employment.

Notwithstanding the above, in no event may an Option be exercised, even as to vested and otherwise exercisable Shares, after the Expiration Date set forth in Section 5 above.

8. Tax Matters. Regardless of any action the Company or Optionee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), Optionee acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by him or her is and remains Optionee’s responsibility and that the Company and/or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and receipt of any dividends; and (ii) do not commit to structure the terms or the grant or any aspect of this Option to reduce or eliminate Optionee’s liability for Tax-Related Items. Prior to the exercise of this Option, Optionee shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by Optionee from Optionee’s wages or other cash compensation paid to Optionee by the Company and/or the Employer or from proceeds of the sale of Shares. In addition, Optionee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of Optionee’s participation in the Plan or Optionee’s purchase of Shares that cannot be satisfied by the means previously described. The Company may refuse to honor the exercise and refuse to deliver the Shares if Optionee fails to comply with Optionee’s obligations in connection with the Tax-Related Items. Although Optionee is being provided in the Plan prospectus a description of certain tax consequences of transactions related to the Option, Optionee remains responsible for all such tax consequences and the Company shall not be deemed to provide any individual tax advice with respect thereto.

9. Optionee Consents. By accepting the grant of this Option, Optionee acknowledges and agrees that:

(i) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;

(ii) the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if options have been granted repeatedly in the past;

(iii) Optionee’s participation in the Plan shall not create a right to further employment with Employer, shall not create an employment agreement between Optionee and his or her Employer and shall not interfere with the ability of Employer to terminate Optionee’s employment relationship at any time with or without cause and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;

(iv) this Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and is outside the scope of Optionee’s employment contract, if any; and this Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments insofar as permitted by law;

(v) in consideration of the grant of this Option, no claim or entitlement to compensation or damages shall arise from termination of this Option or diminution in value of this Option or Shares purchased through exercise of this Option resulting from Termination of Employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and Optionee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, Optionee shall be deemed irrevocably to have waived any entitlement to pursue such claim; and

(vi) notwithstanding any terms or conditions of the Plan to the contrary, in the event of involuntary Termination of Employment (whether or not in breach of local labor laws), Optionee’s right to vest in options under the Plan, if any, will terminate effective as of the date that Optionee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); furthermore, in the event of involuntary Termination of Employment (whether or not in breach of local labor laws), Optionee’s right to exercise this Option after Termination of Employment, if any, will be measured by the date of termination of Optionee’s active employment and will not be extended by any notice period mandated under local law.

10. Data Transfer. Optionee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal data as described in this document by and among, as applicable, the Employer and the Company and its Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands that the Company, its Affiliates, its Subsidiaries and the Employer hold certain personal information about Optionee, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number (or other identification number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in Optionee’s favor for the purpose of implementing, managing and administering the Plan (“Data”). Optionee understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Optionee’s country or elsewhere and that the recipient country may have different data privacy laws and protections than Optionee’s country. Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting . Optionee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Optionee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Optionee may elect to deposit any Shares acquired upon the exercise of this Option. Optionee understands that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan. Optionee may, at any time, view Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing. Optionee understands that refusing or withdrawing consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, Optionee may contact .

11. Copies of Plan Materials. Optionee acknowledges that Optionee has received copies of the Plan and the Plan prospectus from the Company and agrees to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the Company’s website at http://www.cathaybank.com then selecting “About Us” and “Investor Information.” Optionee acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to. If Optionee has received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control. The Optionee acknowledges that the Plan contains provisions that materially affect the rights and obligations of the Optionee.

12. Restrictions. Shares shall not be issued pursuant to the exercise of this Option unless the exercise of this Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. Stock certificates evidencing any Shares may bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable under Applicable Laws or pursuant to this Agreement or the Plan.

13. Entire Agreement; Plan Controls. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to Optionee’s interest except by means of a writing signed by the Company and Optionee. In the event of any conflict between the terms and provisions of the Plan and this Agreement, the Plan terms and provisions shall govern. Certain other important terms governing this Agreement are contained in the Plan.

CATHAY GENERAL BANCORP
By
	[Name]
	[Title]

Optionee hereby accepts and agrees to all of the terms and conditions of this Agreement and the Plan:

[Optionee Name] (“Optionee”)

RETAIN THIS AGREEMENT FOR YOUR RECORDS

EX-10.7.3

EXHIBIT 10.7.3

CATHAY GENERAL BANCORP

2005 INCENTIVE PLAN

STOCK OPTION AGREEMENT (NONSTATUTORY)

(NONEMPLOYEE DIRECTOR)

THIS STOCK OPTION AGREEMENT (the “Agreement”), dated, 20(“Grant Date”), between Cathay General Bancorp, a Delaware corporation (the “Company”), and <NONEMPLOYEE DIRECTOR> (“Optionee”), is entered into as follows:

WITNESSETH:

WHEREAS, the Company has established the 2005 Incentive Plan (the “Plan”); and

WHEREAS, the Executive Compensation Committee or Equity Incentive Committee of the Board of Directors of the Company or its delegates (the “Committee”) has determined that Optionee shall be granted an option under the Plan as hereinafter set forth;

The parties hereby agree that the Company grants, effective as of the Grant Date, Optionee a nonstatutory (nonqualified) stock option (this “Option”) to purchase <SHARES> shares of its $0.01 par value Common Stock (the “Shares”) upon the terms and conditions set forth in this Agreement.

1. Plan Award. This Option is granted under and pursuant to the Plan and is subject to each and all of the provisions thereof. Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Plan.

2. Exercise Price. The exercise price applicable to this Option (meaning, the price Optionee must pay in order to purchase any Shares hereunder) shall be $per Share.

3. Transferability. This Option is not transferable by Optionee otherwise than by will or the laws of descent and distribution, and is exercisable only by Optionee during his or her lifetime. This Option may not be transferred, assigned, pledged or hypothecated by Optionee during his or her lifetime, whether by operation of law or otherwise, and is not subject to execution, attachment or similar process.

4. Vesting and Exercise of Option. Subject to Optionee’s not experiencing a Cessation of Service during the following vesting term, Optionee shall vest and earn the right to exercise this Option on the following schedule: The Option shall become exercisable with respect to 20% of the number of Shares covered hereby on the first anniversary of the Grant Date, 20% of the number of Shares covered hereby on the second anniversary of the Grant Date, 20% of the Shares covered hereby on the third anniversary of the Grant Date, 20% of the Shares covered hereby on the fourth anniversary of the Grant Date, and 20% of the Shares covered hereby on the fifth anniversary of the Grant Date, so that this Option shall be fully exercisable on the fifth anniversary of the Grant Date.

5. Expiration. This Option will expire ten (10) years from the Grant Date, unless sooner terminated or canceled in accordance with the provisions of the Plan. This means that (subject to the continuing service requirement set forth in Section 4 above and subject to earlier termination upon certain other events as set forth in the Plan) this Option must be exercised, if at all, on or before , 20(the “Expiration Date”). If this Option expires on a national holiday or weekend day, this Option will expire on the last trading day prior to the holiday or weekend. Optionee shall be solely responsible for exercising this Option, if at all, prior to its Expiration Date. The Company shall have no obligation to notify Optionee of this Option’s expiration.

1

6. Exercise Mechanics. This Option may be exercised by delivering to the Company at its principal executive office, to the attention of the officer of the Company designated by the Committee, a written or electronic notice stating the number of Shares as to which the Option is exercised or by any other method the Committee has approved. The notice must be accompanied by the payment of the full Option exercise price of such Shares. Exercise shall not be deemed to have occurred unless and until Optionee has delivered to the Company (or its authorized representative) an approved notice of exercise, full payment for the Shares with respect to which the Option is being exercised and payment of any applicable withholding taxes in accordance with Section 8 below. Payment of the Option exercise price may be in cash, cashier’s check, or wire transfer; provided, however, that any permitted method of payment shall be in strict compliance with all procedural rules established by the Committee.

7. Cessation of Service. All rights of Optionee in this Option, to the extent that it has not previously become vested and been exercised, shall terminate upon Optionee’s ceasing to be a Director (“Cessation of Service”) except as set forth in this Section 7. The portion of the Option that relates to any Shares that were unvested and unexercisable as of the date of Optionee’s Cessation of Service shall terminate and expire effective immediately upon such date. With respect to the vested and exercisable portion of the Option, and subject to the following sentence:

(i) In the event of Cessation of Service other than as a result of Optionee’s death or disability, Optionee shall have ninety (90) days to exercise the Option as to the Shares subject to the Option that were vested and exercisable as of the date of Cessation of Service; and

(ii) In the event of Cessation of Service as a result of Optionee’s death or disability (including a Total and Permanent Disability), Optionee shall have one (1) year to exercise the Option as to the Shares subject to the Option that were vested and exercisable as of the date of Cessation of Service.

Notwithstanding the above, in no event may an Option be exercised, even as to vested and otherwise exercisable Shares, after the Expiration Date set forth in Section 5 above.

8. Tax Matters. Optionee acknowledges and agrees that liability for all income tax, social insurance, payroll tax, payment on account or other tax-related items (“Tax-Related Items”) legally due by him or her is and remains Optionee’s responsibility and that the Company and/or the Affiliate (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option, including the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to such exercise and receipt of any dividends; and (ii) do not commit to structure the terms or the grant or any aspect of this Option to reduce or eliminate Optionee’s liability for Tax-Related Items. Although Optionee is being provided in the Plan prospectus a description of certain tax consequences of transactions related to the Option, Optionee remains responsible for all such tax consequences and the Company shall not be deemed to provide any individual tax advice with respect thereto.

2

9. Optionee Consents. By accepting the grant of this Option, Optionee acknowledges and agrees that:

(i) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time unless otherwise provided in the Plan or this Agreement;

(ii) the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if options have been granted repeatedly in the past; or any right of Optionee to continue as a Director;

(iii) Optionee’s right to exercise this Option pursuant to the vesting schedule in Section 4 is dependent upon Optionee continuing to serve as a Director, and that service as a Director could cease for a variety of reasons, some of which may be involuntary such as a failure to be nominated or elected as a Director or in connection with a Change in Control, which could result in the loss of benefits available to Optionee under this Agreement including the right to exercise Options; and

(iv) in consideration of the grant of this Option, no claim or entitlement to compensation or damages shall arise from termination of this Option or diminution in value of this Option or Shares purchased through exercise of this Option resulting from Cessation of Service for any reason whatsoever, and Optionee irrevocably releases the Company and its Affiliates from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, Optionee shall be deemed irrevocably to have waived any entitlement to pursue such claim.

10. Data Transfer. Optionee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Optionee’s personal data as described in this document by and among, as applicable, the Employer and the Company and its Affiliates for the exclusive purpose of implementing, administering and managing Optionee’s participation in the Plan. Optionee understands that the Company and its Affiliates hold certain personal information about Optionee, including, but not limited to, name, home address and telephone number, date of birth, social security or insurance number (or other identification number), salary, nationality, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in Optionee’s favor for the purpose of implementing, managing and administering the Plan (“Data”). Optionee understands that the Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Optionee’s country or elsewhere and that the recipient country may have different data privacy laws and protections than Optionee’s country. Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting the Cathay Bank Director of Human Resources. Optionee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Optionee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Optionee may elect to deposit any Shares acquired upon the exercise of this Option. Optionee understands that Data will be held only as long as is necessary to implement, administer and manage participation in the Plan. Optionee may, at any time, view Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Cathay Bank Director of Human Resources in writing. Optionee understands that refusing or withdrawing consent may affect Optionee’s ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, Optionee may contact the Cathay Bank Director of Human Resources.

3

11. Copies of Plan Materials. Optionee acknowledges that Optionee has received copies of the Plan and the Plan prospectus from the Company and agrees to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the Company’s website at http://www.cathaybank.com then selecting “About Us” and “Investor Information.” Optionee acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Cathay Bank Director of Human Resources. If Optionee has received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control. Optionee acknowledges that the Plan contains provisions that materially affect the rights and obligations of the Optionee.

12. Restrictions. Shares shall not be issued pursuant to the exercise of this Option unless the exercise of this Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. Stock certificates evidencing any Shares may bear such restrictive legends as the Company and the Company’s counsel deem necessary or advisable under Applicable Laws or pursuant to this Agreement or the Plan.

13. Entire Agreement; Plan Controls. The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to Optionee’s interest except by means of a writing signed by the Company and Optionee. In the event of any conflict between the terms and provisions of the Plan and this Agreement, the Plan terms and provisions shall govern. Certain other important terms governing this Agreement are contained in the Plan.

CATHAY GENERAL BANCORP
By
	[Name] [Title]

Optionee hereby accepts and agrees to all of the terms and conditions of this Agreement and the Plan:

[Optionee’s Signature]

RETAIN A COPY OF THIS AGREEMENT FOR YOUR RECORDS

4

NOTICE OF EXERCISE

To the Plan Administrator of CATHAY GENERAL BANCORP:

The undersigned Optionee hereby notifies CATHAY GENERAL BANCORP (the “Company”) that Optionee is exercising a nonstatutory (nonqualified) stock option to purchaseshares of Common Stock of the Company, which was granted to Optionee on , 20, pursuant to the Company’s 2005 Incentive Plan (the “Plan”), at an exercise price of $per share for aggregate consideration of $.

Payment of the exercise price and all applicable withholding or employment taxes is being delivered to the Company together with this Notice of Exercise.

Optionee hereby confirms the acknowledgements and agreements made in Section 9 and other sections of the Stock Option Agreement (Nonstatutory) (Nonemployee Director) between the Company and the Optionee dated as of, 20.

Date: , 20
	Signature

Please issue the stock as follows:

Print Name:

Sign Name:

Social Security Number:

Office Phone:

Home Address:

City, State, Zip Code:

For Administrator’s use only:

Date of receipt of Notice of Exercise 

Date Confirmation of Stock Exercise sent to Optionee  

Date Instruction Letter sent to Transfer Agent  

5

EX-10.7.4

EXHIBIT 10.7.4

CATHAY GENERAL BANCORP

2005 INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

THIS RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”), dated ‹GRANT DATE›, (the “Grant Date”) between Cathay General Bancorp, a Delaware corporation (“Company”), and ‹EMPLOYEE›‹NAME› (the “Employee”), is entered into as follows:

WITNESSETH:

WHEREAS, the Company established the 2005 Incentive Plan, which it amended by corporate resolution on January 21, 2010 (the “Plan”); and

WHEREAS, the Compensation Committee of the Board of Directors of the Company or its delegates (the “Committee”) has determined that the Employee shall be granted restricted stock units representing hypothetical shares of the Company’s common stock (“Restricted Stock Units”), with each Restricted Stock Unit representing one share of the Company’s common stock (the “Stock”), subject to the restrictions stated below and in accordance with the terms and conditions of the Plan. Capitalized terms used but not defined in this Agreement have the meanings assigned to them in the Plan.

THEREFORE, the parties agree as follows:

1. Grant of Restricted Stock Units. Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee Restricted Stock Units covering ‹SHARES› shares of Stock (the “Shares”). The value of any Restricted Stock Units that are granted to Employee shall not exceed one-third of Employee’s total “annual compensation” as determined for 2011 pursuant to, and within the meaning of, the Emergency Economic Stabilization Act of 2008, as amended by the American Recovery Reinvestment Act of 2009, and as amended from time to time, and the rules and regulations promulgated thereunder (“EESA”) (the “Maximum Amount”). To the extent the value of any grant of Restricted Stock Units exceeds the Maximum Amount, as determined for 2011, the number of shares covering Restricted Stock Units shall be automatically reduced to equal the Maximum Amount.

2. Vesting Schedule. Subject to Employee’s not experiencing a Cessation of Employment (as defined in Section 4(b)) the interest of the Employee in the Restricted Stock Units shall vest on the second anniversary of the Grant Date, provided however, that if the NASDAQ stock market is not open for trading on such date, then the interest of the Employee in the Restricted Stock Units shall vest on the first date thereafter that the NASDAQ stock market is open for trading (the “Vesting Date”). Therefore, provided the Employee has not experienced a Cessation of Employment prior to the close of business on the Vesting Date, the interest of the Employee in the Restricted Stock Units shall become vested on that date.

3. Benefit Upon Vesting. Upon the vesting of the Restricted Stock Units, the Employee shall be entitled to receive, as soon as administratively practicable, the Shares equal to the number of Restricted Stock Units that have vested, unless the Company is restricted from issuing such Shares pursuant to the EESA or any other applicable law, rule, regulation, order, directive, or interpretive guidance from a governmental agency or authority. The Shares issued under this Section 3 may not be transferred during the Restriction Period as defined in Section 4(a) below, except to the extent permitted under the EESA.

4. Restrictions.

(a) Except as otherwise provided for in this Agreement, the Restricted Stock Units or rights granted hereunder may not be sold, pledged, assigned,, hypothecated, transferred, or disposed of in any manner until the Restricted Stock Units become vested in accordance with Section 2 and the Shares are issued under Section 3. Any Shares issued by the Company pursuant to the grant of Restricted Stock Units under this Agreement shall not be transferable (within the meaning of the EESA), except to the extent permitted under the EESA. The period of time between the date hereof and the date the Restricted Stock Units become fully vested and transferable is referred to herein as the “Restriction Period.” To enforce any restrictions on the Shares, the Administrator may require the Employee to deposit the certificates representing the Shares, with stock powers or other transfer instruments approved by the Administrator endorsed in blank, with the Company or an agent of the Company to hold in escrow until the transfer restrictions have lapsed or terminated. The Administrator may also cause a legend or legends referencing the transfer restrictions be placed on the certificates.

(b) If the Employee’s employment with the Company is terminated at any time for any reason other than as a result of the Employee’s death or “disability,” as defined in the EESA, prior to the Vesting Date (“Cessation of Employment”), all Restricted Stock Units granted hereunder shall, with no further action by the Company required, be forfeited by, and no further rights shall accrue to, the Employee. In the event Employee’s employment with the Company terminates prior to the Vesting Date due to the Employee’s death or “disability,” as defined in the EESA, and provided Employee’s rights in respect of the Restricted Stock Units have not previously terminated, the vesting of Employee’s Restricted Stock Units shall be accelerated, but the Shares shall not become transferable until the Restriction Period has lapsed, except to the extent permitted under the EESA.

(c) Employee shall be required to return to the Company the Restricted Stock Units or, where applicable, the fair market value of the Shares as of the date they became transferable (without reduction for any Shares applied to satisfy tax withholding or other obligations in respect of such Shares), to the extent the Company determines that they were granted or issued based on materially inaccurate financial statements, including, but not limited to, statements of earnings, revenues, gains or other performance metric criteria that are later found to be materially inaccurate, to the extent provided in the EESA, notwithstanding any vesting schedule herein.

5. No Stockholder Rights. Restricted Stock Units represent hypothetical shares of Stock. Until the Shares are issued, at which time the Shares shall be subject to the transfer restrictions contained herein, the Employee shall not be entitled to any of the rights or benefits generally accorded to stockholders. In particular, Employee shall not be entitled to accrue or receive any dividends.

6. Taxes.

(a) The Employee shall be liable for any and all taxes, including withholding taxes, arising out of this grant or the vesting of Restricted Stock Units hereunder. In the event that the Company or the Employer (as defined below) is required to withhold taxes as a result of the grant or vesting of Restricted Stock Units, or subsequent sale of Stock acquired pursuant to such Restricted Stock Units, the Employee shall surrender a sufficient number of whole shares of such Stock or make a cash payment as necessary to cover all applicable required withholding taxes and required social insurance contributions on the Vesting Date, unless alternative procedures for such payment are established by the Company, to the extent permitted under the EESA. Without any obligation to do so, the Company, in its sole and absolute discretion, may withhold from the Shares otherwise issuable on the Vesting Date, a number of Shares (rounded down to the nearest whole Share) sufficient to cover the applicable required withholding taxes, to the extent permitted under the EESA. The Shares will be valued for this purpose at the closing price on the Vesting Date. The Employee will receive a cash refund for any fraction of a surrendered Share not necessary for required withholding taxes and required social insurance contributions. To the extent that any surrender of Shares or payment of cash or alternative procedure for such payment is insufficient, the Employee authorizes the Company, its Affiliates, and Subsidiaries, which are qualified to deduct tax at source, to deduct all applicable required withholding taxes and social insurance contributions from the Employee’s compensation to the extent permitted by law. The Employee agrees to pay any amounts that cannot be satisfied from wages or other cash compensation, to the extent permitted by law.

(b) Regardless of any action the Company or the Employee’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Employee acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by him or her is and remains the Employee’s responsibility and that the Company and or the Employer (i) make no representations nor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this grant of Restricted Stock Units, including the vesting of Restricted Stock Units, subsequent issuance of Shares or payment of Stock and/or cash related to such Restricted Stock Units or the subsequent sale of any Stock acquired pursuant to such Restricted Stock Units; and (ii) do not commit to structure the terms or any aspect of this grant of Restricted Stock Units to reduce or eliminate the Employee’s liability for Tax-Related Items. Prior to the vesting of the Restricted Stock Units, the Employee shall pay the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Employee’s participation in the Plan or the Employee’s receipt of Restricted Stock Units that cannot be satisfied by the means previously described. The Company may refuse to deliver the benefit described in Section 3 if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.

(c) Shares issued under this Agreement are intended to be exempt from Section 409A of the Internal Revenue Code (“Section 409A”). This Agreement shall be interpreted, administered, and to the extent necessary, amended as the Company deems reasonably necessary to comply with Section 409A. In no event, however, shall the Company be liable for any damages suffered by, or tax, interest, or penalties that may be imposed upon, Employee relating to Section 409A.

7. Data Privacy Consent. The Employee hereby explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of the Employee’s personal data as described in this document by and among, as applicable, the Employer, and the Company and its Subsidiaries and Affiliates for the exclusive purpose of implementing, administering, and managing the Employee’s participation in the Plan. The Employee understands that the Company, its Affiliates, its Subsidiaries and the Employer hold certain personal information about the Employee, including, but not limited to, name, home address, and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, purchased, exercised, vested, unvested or outstanding in the Employee’s favor for the purpose of implementing, managing and administering the Plan (“Data”). The Employee understands that the Data may be transferred to any third parties assisting in the implementation, administration, and management of the Plan, that these recipients may be located in the Employee’s country or elsewhere and that the recipient country may have different data privacy laws and protections than the Employee’s country. The Employee understands that Employee may request a list with the names and addresses of any potential recipients of the Data by contacting Cathay Bank Director of Human Resources. The Employee authorizes the recipients to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the purposes of implementing, administering, and managing the Employee’s participation in the Plan, including any requisite transfer of such Data, as may be required to a broker or other third party with whom the Employee may elect to deposit any Stock acquired under the Plan. The Employee understands that Data will be held only as long as is necessary to implement, administer, and manage participation in the Plan. The Employee understands that Employee may, at any time, view Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Cathay Bank Director of Human Resources in writing. The Employee understands that refusing or withdrawing consent may affect the Employee’s ability to participate in the Plan. For more information on the consequences of refusing to consent or withdrawing consent, the Employee understands that Employee may contact the Cathay Bank Director of Human Resources.

8. Plan Information. The Employee acknowledges that the Employee has received copies of the Plan and the Plan prospectus from the Company and agrees to receive stockholder information, including copies of any annual report, proxy statement and periodic report, from the Company’s website at: http://www.cathaygeneralbancorp.com. The Employee acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder information are available upon written or telephonic request to the Cathay Bank Director of Human Resources.

9. Acknowledgment and Waiver. By accepting this grant of Restricted Stock Units, the Employee acknowledges and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Company at any time pursuant to the terms of the Plan, including without limitation to the extent the Company reasonably deems it required by the EESA or any other applicable law, rule, regulation, order, directive, or interpretive guidance from a governmental agency or authority, unless otherwise provided in the Plan or this Agreement;

(b) this Agreement, including without limitation, the terms of this grant of Restricted Stock Units, may be modified, amended, suspended, or terminated by the Company at any time, in its sole discretion, to the extent the Company reasonably deems it required by the EESA or any other applicable law, rule, regulation, order, directive, or interpretive guidance from a governmental agency or authority;

(c) the grant of Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Shares, Stock, or Restricted Stock Units, or benefits in lieu of Shares, Stock, or Restricted Stock Units, even if Shares, Stock, or Restricted Stock Units have been granted repeatedly in the past;

(d) the Employee’s participation in the Plan shall not create a right to further employment with Employer, shall not create an employment agreement between the Employee and the Employer and shall not interfere with the ability of Employer to terminate the Employee’s employment relationship at any time with or without cause and it is expressly agreed and understood that employment is terminable at the will of either party, insofar as permitted by law;

(e) restricted stock units, restricted stock unit grants, and resulting benefits are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and is outside the scope of the Employee’s employment contract, if any; and restricted stock units, restricted stock unit grants, and resulting benefits are not part of normal or expected compensation or salary for any purposes, including, but not limited to calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits, or similar payments insofar as permitted by law;

(f) in consideration of this grant of Restricted Stock Units, no claim or entitlement to compensation or damages shall arise from termination of this grant of Restricted Stock Units or diminution in value of this grant of Restricted Stock Units resulting from Cessation of Employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) or from modification, amendment, suspension, or termination of the Plan or this Agreement pursuant to Section 9(a) or 9(b) and the Employee irrevocably releases the Company and the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the terms of this Agreement, the Employee shall be deemed irrevocably to have waived any entitlement to pursue such claim; and

(g) notwithstanding any terms or conditions of the Plan to the contrary, in the event of Cessation of Employment (whether or not in breach of local labor laws), the Employee’s right to receive benefits under this Agreement, if any, will terminate effective as of the date that the Employee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law). In the event of termination of the Employee’s employment due to death or “disability” (as defined in the EESA), the Employee’s right to receive benefits under this Agreement after such termination, if any, will be determined as of the Employee’s last day worked.

10. Miscellaneous.

(a) The Company shall not be required to treat as the owner of Restricted Stock Units, and associated benefits hereunder, any transferee to whom such Restricted Stock Units or benefits shall have been so transferred in violation of this Agreement.

(b) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement or as required by applicable law, rule, regulation, order, directive, or interpretive guidance from a governmental agency or authority, including, but not limited to, the EESA.

(c) Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to the Employee at Employee’s address then on file with the Company.

(d) The Plan is incorporated herein by reference. The Plan and this Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Employer and the Employee with respect to the subject matter hereof, and may not be modified adversely to the Employee’s interest except by means of a writing signed by the Company and the Employee or to the extent reasonably necessary to comply with any applicable law, rule, regulation, order, directive, or interpretive guidance from a governmental agency or authority, including, but not limited to, the EESA. This Agreement is governed by the laws of the state of Delaware to the extent not governed by applicable federal law. In the event of any conflict between the terms and provisions of the Plan and this Agreement, the Plan terms and provisions shall govern. Certain other important terms governing this contract are contained in the Plan.

(e) If the Employee has received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.

(f) If the Employee is employed overseas and is not a resident of the United States, the Employee is advised to consider the following: This offer of Restricted Stock Units and the shares covered by Restricted Stock Units is not a public offer of securities and is available only to employees of the Company or any Affiliate participating in the Plan. The contents of this Agreement and the Plan have not been reviewed by any regulatory authority outside of the United States. Employee is advised to exercise caution in regard to this offer. If Employee is in any doubt as to the contents of this Agreement and the Plan, Employee should obtain independent professional advice.

(g) The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

	CATHAY GENERAL BANCORP
Accepted by Employee:
	By
		[Officer Name] [Title]

RETAIN A COPY OF THIS AGREEMENT FOR YOUR RECORDS

EX-12.1

Exhibit 12.1

CATHAY GENERAL BANCORP AND SUBSIDIARIES

 Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends

	For the Years Ended December 31,
(Dollars in thousands, except ratios)	2012		2011		2010			2009			2008
Income before income tax expense	$	183,567	$	151,411	$	(3,064	)	$	(129,302	)	$	70,075
Plus fixed charges		111,156		142,533		194,102			247,540			299,477
Earnings		294,723		293,944		191,038			118,238			369,552
Fixed charges		111,156		142,533		194,102			247,540			299,477
Preferred stock dividends		17,093		17,042		16,998			16,948			1,750
Fixed charges and preferred stock dividends	$	128,249	$	159,575	$	211,100		$	264,488		$	301,227
Ratio of earnings to fixed charges		2.65		2.06		0.98			0.48			1.23
Ratio of earnings to fixed charges and preferred stock dividends		2.30		1.84		0.90			0.45			1.23

EX-21.1

EXHIBIT 21.1

Subsidiaries of Cathay General Bancorp	State of Incorporation
Cathay Bank	California
Cathay Capital Trust I	Delaware
Cathay Capital Trust II	Delaware
Cathay Capital Trust III	Delaware
Cathay Capital Trust IV	Delaware
Cathay Statutory Trust I	Connecticut
GBC Venture Capital, Inc.	California
Subsidiaries of Cathay Bank
Cathay Community Development Corporation	California
Cathay Real Estate Investment Trust	Maryland
GBC Real Estate Investments, Inc.	California
Cathay Holdings LLC	Texas
Cathay Holdings 2, LLC	Texas
Cathay Holding 3, LLC	Texas

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Cathay General Bancorp:

We consent to the incorporation by reference in the registration statements (Nos. 33-33767, 333-133570, 333-156552, 333-161591, 333-162445, and 333-163070) on Form S-3 and the registration statements (Nos. 333-87225, 333-110008, 333-110009, and 333-127762) on Form S-8 of Cathay General Bancorp and subsidiaries (the Company) of our reports dated March 1, 2013, with respect to the consolidated balance sheets of the Company as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012, and the effectiveness of internal control over financial reporting as of December 31, 2012, which reports appear in the December 31, 2012 annual report on Form 10-K of Cathay General Bancorp.

/s/ KPMG LLP

Los Angeles, California

March 1, 2013

EX-24.1

EXHIBIT 24.1

POWER OF ATTORNEY

The undersigned directors and officers of Cathay General Bancorp, a Delaware corporation (the Company), hereby constitute and appoint Dunson K. Cheng and Heng W. Chen, and each of them, with full power to act without the other, as the undersigned’s true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the undersigned and in the undersigned’s name, place and stead in the undersigned’s capacity as an officer and/or director of the Company, to execute in the name and on behalf of the undersigned an annual report of the Company on Form 10-K for the fiscal year ended December 31, 2012, (the Report), under the Securities Exchange Act of 1934, as amended, and to file such Report, with exhibits thereto and other documents in connection therewith and any and all amendments thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done and to take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required of, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact’s discretion.

     IN WITNESS WHEREOF, we have hereunto set our hands this 21st day of February, 2013.

Signature	Title
/s/ Dunson K. Cheng	President, Chairman of the Board, Director, and Chief Executive Officer
Dunson K. Cheng
/s/ Peter Wu	Director
Peter Wu
/s/ Anthony M. Tang	Director
Anthony M. Tang
/s/ Kelly L. Chan	Director
Kelly L. Chan
/s/ Michael M.Y. Chang	Director
Michael M.Y. Chang
/s/ Thomas C.T. Chiu	Director
Thomas C.T. Chiu
/s/ Nelson Chung	Director
Nelson Chung
/s/ Felix S. Fernandez	Director
Felix S. Fernandez
/s/ Jane Jelenko	Director
Jane Jelenko
/s/ Patrick S.D. Lee	Director
Patrick S.D. Lee
/s/ Ting Liu	Director
Ting Liu
/s/ Joseph C.H. Poon	Director
Joseph C.H. Poon

EX-31.1

Exhibit 31.1

I, Dunson K. Cheng, certify that:

1.I have reviewed this annual report on Form 10-K of Cathay General Bancorp;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Dunson K. Cheng
	Dunson K. Cheng
	President and
	Chief Executive Officer
Date: March 1, 2013

EX-31.2

Exhibit 31.2

I, Heng W. Chen, certify that:

1.I have reviewed this annual report on Form 10-K of Cathay General Bancorp;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Heng W. Chen
	Heng W. Chen
	Executive Vice President
	and Chief Financial Officer
Date: March 1, 2013

EX-32.1

Exhibit 32.1

CEO CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Cathay General Bancorp (the “Company”) on Form 10-K for the period ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dunson K. Cheng, chief executive officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Dunson K. Cheng
	Dunson K. Cheng
	President and
	Chief Executive Officer
Date: March 1, 2013

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CFO CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Cathay General Bancorp (the “Company”) on Form 10-K for the period ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Heng W. Chen, chief financial officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

    (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Heng W. Chen
	Heng W. Chen
	Executive Vice President
	and Chief Financial Officer
Date: March 1, 2013

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

Certification for Years following First Fiscal Year

I, Dunson K. Cheng, certify, based on my knowledge, that:

(i) The compensation committee of Cathay General Bancorp has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to Cathay General Bancorp;  

(ii) The compensation committee of Cathay General Bancorp has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Cathay General Bancorp and has identified any features of the employee compensation plans that pose risks to Cathay General Bancorp and has limited those features to ensure that Cathay General Bancorp is not unnecessarily exposed to risks;

(iii) The compensation committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Cathay General Bancorp to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of Cathay General Bancorp will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;  

(v) The compensation committee of Cathay General Bancorp will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Cathay General Bancorp;  

(B) Employee compensation plans that unnecessarily expose Cathay General Bancorp to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of Cathay General Bancorp to enhance the compensation of an employee;  

(vi) Cathay General Bancorp has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) Cathay General Bancorp has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(viii) Cathay General Bancorp has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period except as reported to Treasury;

(ix) Cathay General Bancorp and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

(x) Cathay General Bancorp will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi) Cathay General Bancorp will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii) Cathay General Bancorp will disclose whether Cathay General Bancorp, the board of directors of Cathay General Bancorp, or the compensation committee of Cathay General Bancorp has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) Cathay General Bancorp has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(xiv) Cathay General Bancorp has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Cathay General Bancorp and Treasury, including any amendments;

(xv) Cathay General Bancorp has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001.)

Date: March 1, 2013	/s/ Dunson K. Cheng
	Dunson K. Cheng
	Chairman, President, and
	Chief Executive Officer

EX-99.2

Exhibit 99.2

Certification for Years following First Fiscal Year

I, Heng W. Chen, certify, based on my knowledge, that:

 (i) The compensation committee of Cathay General Bancorp has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to Cathay General Bancorp;  

(ii) The compensation committee of Cathay General Bancorp has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Cathay General Bancorp and has identified any features of the employee compensation plans that pose risks to Cathay General Bancorp and has limited those features to ensure that Cathay General Bancorp is not unnecessarily exposed to risks;

                (iii) The compensation committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of Cathay General Bancorp to enhance the compensation of an employee, and has limited any such features;

(iv) The compensation committee of Cathay General Bancorp will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;  

(v) The compensation committee of Cathay General Bancorp will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of Cathay General Bancorp;  

(B) Employee compensation plans that unnecessarily expose Cathay General Bancorp to risks; and

(C) Employee compensation plans that could encourage the manipulation of reported earnings of Cathay General Bancorp to enhance the compensation of an employee;  

(vi) Cathay General Bancorp has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) Cathay General Bancorp has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(viii) Cathay General Bancorp has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period except as reported to Treasury;

(ix) Cathay General Bancorp and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

(x) Cathay General Bancorp will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi) Cathay General Bancorp will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

(xii) Cathay General Bancorp will disclose whether Cathay General Bancorp, the board of directors of Cathay General Bancorp, or the compensation committee of Cathay General Bancorp has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) Cathay General Bancorp has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

(xiv) Cathay General Bancorp has substantially complied with all other requirements related to employee compensation that are provided in the agreement between Cathay General Bancorp and Treasury, including any amendments;

(xv) Cathay General Bancorp has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001.)

Date: March 1, 2013	/s/ Heng W. Chen
	Heng W. Chen
	Executive Vice President, and Chief
	Financial Officer

XML

Note 10 - Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of Long Term Securities Sold Under Agreements To Repurchase [Table Text Block]

(Dollars in millions)	Fixed-to-floating																		Floating-to-fixed						Total
Rate type	Float Rate																		Fixed Rate
Rate index	8% minus 3 month LIBOR
Maximum rate		3.79	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%
Minimum rate		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
No. of agreements		3			1			4			3			1			1			3			4			20
Amount	$	150.0		$	50.0		$	200.0		$	150.0		$	50.0		$	50.0		$	200.0		$	200.0		$	1,050.0
Weighted average rate		3.78	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%		4.69	%		5.00	%		4.04	%
Final maturity		2014			2014			2014			2015			2015			2015			2014			2017

Schedule of Repurchase Agreements [Table Text Block]

Maturity	No. of Agreements		Amount (In thousands)		Weighted Average Interest Rate
3 years to 5 years		2	$	100,000		2.71	%
Over 5 years		2		100,000		2.86	%
Total		4	$	200,000		2.78	%

Summary Of Comparative Data Of Securities Sold Under Agreements To Repurchase [Table Text Block]

	2012			2011			2010
	(Dollars in thousands)
Average amount outstanding during the year (1)	$	1,361,475		$	1,448,363		$	1,560,215
Maximum amount outstanding at month-end (2)		1,400,000			1,559,000			1,566,000
Balance, December 31		1,250,000			1,400,000			1,561,000
Rate, December 31		3.84	%		4.14	%		4.18	%
Weighted average interest rate for the year		4.09	%		4.19	%		4.24	%

Schedule of Federal Home Loan Bank, Advances, by Branch of FHLB Bank [Table Text Block]

	2012					2011
Maturity	Amount (In thousands)		Weighted Average Interest Rate			Amount (In thousands)		Weighted Average Interest Rate
Within 90 days	$	125,000		0.28	%	$	-		0.00	%
91 days through 365 days		-		0.00	%		225,000		2.08	%
4 - 5 years		21,200		1.38	%		-		-
	$	146,200		0.44	%	$	225,000		2.08	%

XML

Note 19 - Equity Incentive Plans (Detail) - Restricted Stock Units	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Granted	125,133	147,661
Restricted Stock Units (RSUs) [Member]
Balance at December 31, 2009				60,021
Vested	(11,814)	(12,633)	(15,006)
Cancelled or forfeited	(28,113)	(2,578)	(6,055)
Balance	256,616	171,410	38,960
Granted	125,133	147,661

XML

Note 3 - Securities Purchased Under Agreements to Resell (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest Income, Securities Purchased under Agreements to Resell	$ 18,000	$ 83,000	$ 14,000

XML

Note 22 - Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

	As of December 31, 2012										As of December 31, 2011
	Company					Bank					Company					Bank
	Balance		Percentage			Balance		Percentage			Balance		Percentage			Balance		Percentage
	(Dollars in thousands)
Tier I Capital (to risk-weighted assets)	$	1,426,566		17.36	%	$	1,259,005		15.33	%	$	1,318,948		15.97	%	$	1,289,747		15.64	%
Tier I Capital minimum requirement		328,713		4.00			328,440		4.00			330,355		4.00			329,928		4.00
Excess	$	1,097,853		13.36	%	$	930,565		11.33	%	$	988,593		11.97	%	$	959,819		11.64	%
Total Capital (to risk-weighted assets)	$	1,571,060		19.12	%	$	1,402,691		17.08	%	$	1,474,496		17.85	%	$	1,444,165		17.51	%
Total Capital minimum requirement		657,426		8.00			656,880		8.00			660,710		8.00			659,855		8.00
Excess	$	913,634		11.12	%	$	745,811		9.08	%	$	813,786		9.85	%	$	784,310		9.51	%
Tier I Capital (to average assets)Leverage ratio	$	1,426,566		13.82	%	$	1,259,005		12.22	%	$	1,318,948		12.93	%	$	1,289,747		12.66	%
Minimum leverage requirement		412,844		4.00			412,272		4.00			408,146		4.00			407,643		4.00
Excess	$	1,013,722		9.82	%	$	846,733		8.22	%	$	910,802		8.93	%	$	882,104		8.66	%
Total average assets (1)	$	10,321,104				$	10,306,790				$	10,203,647				$	10,191,078
Risk-weighted assets	$	8,217,821				$	8,211,004				$	8,258,878				$	8,248,190

XML

Note 23 - Quarterly Results of Operations (Unaudited) (Detail) - Selected Unaudited Quarterly Financial Data (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest income	$ 105,281	$ 106,747	$ 107,581	$ 110,135	$ 111,076	$ 114,379	$ 114,339	$ 113,777
Interest expense	24,216	26,330	28,461	29,484	31,759	33,426	36,024	38,672	108,491	139,881	191,688
Net interest income	81,065	80,417	79,120	80,651	79,317	80,953	78,315	75,105	321,253	313,690	297,906
(Reversal)/provision for credit losses			(5,000)	(4,000)	2,000	9,000	10,000	6,000	(9,000)	27,000	156,900
Net-interest income after provision for loan losses	81,065	80,417	84,120	84,651	77,317	71,953	68,315	69,105	330,253	286,690	141,006
Non-interest income	12,202	15,622	9,852	8,831	8,986	16,827	12,453	12,626	46,507	50,892	32,251
Non-interest expense	49,532	47,844	47,342	47,871	43,990	48,383	45,410	47,783	192,589	185,566	175,711
Income before income tax expense	43,735	48,195	46,630	45,611	42,313	40,397	35,358	33,948	184,171	152,016	(2,454)
Income tax expense	15,276	17,686	16,619	16,547	14,459	14,162	10,906	11,734	66,128	51,261	(14,629)
Net income	28,459	30,509	30,011	29,064	27,854	26,235	24,452	22,214	117,438	100,150	11,565
Less: net income attributable to noncontrolling interest	153	151	150	151	153	151	150	151	605	605	610
Net income attributable to Cathay General Bancorp	28,306	30,358	29,861	28,913	27,701	26,084	24,302	22,063	118,043	100,755	12,175
Dividends on preferred stock	(4,127)	(4,123)	(4,121)	(4,117)	(4,114)	(4,111)	(4,107)	(4,105)	16,488	16,437	16,388
Net income available to common stockholders	$ 24,179	$ 26,235	$ 25,740	$ 24,796	$ 23,587	$ 21,973	$ 20,195	$ 17,958	$ 100,950	$ 83,713	$ (4,823)
Basic net income attributable to common stockholders per common share (in Dollars per share)	$ 0.31	$ 0.33	$ 0.33	$ 0.32	$ 0.30	$ 0.28	$ 0.26	$ 0.23	$ 1.28	$ 1.06	$ (0.06)
Diluted net income attributable to commonstockholders per common share (in Dollars per share)	$ 0.31	$ 0.33	$ 0.33	$ 0.32	$ 0.30	$ 0.28	$ 0.26	$ 0.23	$ 1.28	$ 1.06	$ (0.06)

XML

Note 5 - Loans (Detail) - Activity Within the Troubled Debt Resturing Loans (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
New restructurings	$ 24,700,000
Charge-offs	46,000
Accruing Troubled Debt Restructuring Member
Beginning balance	120,016,000	136,800,000
New restructurings	53,958,000	60,863,000
Restructured loans restored to accrual status	8,356,000	709,000
Charge-offs	(251,000)	(2,341,000)
Payments	(5,159,000)	(46,313,000)
Restructured loans placed on nonaccrual	(32,225,000)	(28,969,000)
Expiration of loan concession		(733,000)
Ending balance	144,695,000	120,016,000
Non Accruing Troubled Debt Restructuring Member
Beginning balance	50,870,000	28,146,000
New restructurings	12,304,000	13,269,000
Restructured loans restored to accrual status	(8,356,000)	(709,000)
Charge-offs	(4,182,000)	(7,303,000)
Payments	(33,931,000)	(3,355,000)
Foreclosures	(1,199,000)	(8,147,000)
Restructured loans placed on nonaccrual	32,225,000	28,969,000
Ending balance	$ 47,731,000	$ 50,870,000

XML

Note 3 - Securities Purchased Under Agreements to Resell (Detail) - Securities Purchased under Agreements to Resell (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Balance, December 31	$ 0	$ 0
Annualized weighted-average interest rate, December 31	0.00%	0.00%
Daily average amount outstanding during the year	14,986	84,493
Weighted-average interest rate for the year	0.12%	0.10%
Maximum amount outstanding at any month end	$ 50,000	$ 255,000

XML

Note 7 - Investments in Affordable Housing (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Affordable Housing Investments	$ 85,037,000	$ 78,358,000
Number of Limited Partnerships in Housing Investments	6
Increase In Total Assets And Liabilities From Consolidating Affordable Housing Equity Interest	22,900,000	22,800,000
Other Borrowings From Consolidating Affordable Housing Equity Interest	18,700,000	18,900,000
Other Liabilities From Affordable Housing Unfunded Commitments	10,600,000	1,500,000
Minimum Compliance Period, Tax Credits, Investments In Affordable Housing	15 years
Income Tax Reconciliation, Tax Credits, Investment	9,200,000	9,500,000	10,500,000
PreTaxLossesInvestmentsInAffordableHousing	6,300,000	8,200,000	7,600,000
Federal Tax [Member] | Affordable Housing Limited Partnerships [Member]
Tax Credit Carryforward, Amount	45,300,000
State and Local Jurisdiction [Member] | Affordable Housing Limited Partnerships [Member]
Tax Credit Carryforward, Amount	$ 1,700,000

XML

Note 16 - Fair Value Measurements (Detail) - Assets and Liabilities Measured at Fair Value on a Recurring Basis (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Securities available-for-sale
Securities Available-for-Sale	$ 1,291,480	$ 1,294,478
US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	509,971
US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0
US Treasury Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	509,971
US Treasury Securities [Member]
Securities available-for-sale
Securities Available-for-Sale	509,971
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	416,694	337,631
Collateralized Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Collateralized Mortgage Backed Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	416,694	337,631
Collateralized Mortgage Backed Securities [Member]
Securities available-for-sale
Securities Available-for-Sale	416,694	337,631
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	10,168	16,486
Collateralized Mortgage Obligations [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Collateralized Mortgage Obligations [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	10,168	16,486
Collateralized Mortgage Obligations [Member]
Securities available-for-sale
Securities Available-for-Sale	10,168	16,486
Asset-backed Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	141	166
Asset-backed Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Asset-backed Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	141	166
Asset-backed Securities [Member]
Securities available-for-sale
Securities Available-for-Sale	141	166
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	335,977	380,429
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Corporate Debt Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	335,977	380,429
Corporate Debt Securities [Member]
Securities available-for-sale
Securities Available-for-Sale	335,977	380,429
Mutual Funds Member | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	6,079	6,035
Mutual Funds Member | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Mutual Funds Member | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Mutual Funds Member | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	6,079	6,035
Mutual Funds Member
Securities available-for-sale
Securities Available-for-Sale	6,079	6,035
Preferred Stock Of Government Sponsored Entities Member | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Preferred Stock Of Government Sponsored Entities Member | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	2,335	1,654
Preferred Stock Of Government Sponsored Entities Member | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Preferred Stock Of Government Sponsored Entities Member | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	2,335	1,654
Preferred Stock Of Government Sponsored Entities Member
Securities available-for-sale
Securities Available-for-Sale	2,335	1,654
Trust Preferred Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	10,115	45,963
Trust Preferred Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Trust Preferred Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Trust Preferred Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	10,115	45,963
Trust Preferred Securities [Member]
Securities available-for-sale
Securities Available-for-Sale	10,115	45,963
Trading Securities Member | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Total Assets	0	2
Trading Securities Member | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Total Assets	4,703	4,540
Trading Securities Member | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Total Assets	0	0
Trading Securities Member | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Total Assets	4,703	4,542
Warrant [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Total Assets	0	0
Warrant [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Total Assets	0	0
Warrant [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Total Assets	104	218
Warrant [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Total Assets	104	218
Option Contracts Member | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Total Assets	0	0
Liabilities
Total Liabilities	0	0
Option Contracts Member | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Total Assets	0	34
Liabilities
Total Liabilities	2	5
Option Contracts Member | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Total Assets	0	0
Liabilities
Total Liabilities	0	0
Option Contracts Member | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Total Assets	0	34
Liabilities
Total Liabilities	2	5
Foreign Exchange Contract [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Total Assets	0	0
Liabilities
Total Liabilities	0	0
Foreign Exchange Contract [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Total Assets	2,924	2,151
Liabilities
Total Liabilities	1,586	486
Foreign Exchange Contract [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Total Assets	0	0
Liabilities
Total Liabilities	0	0
Foreign Exchange Contract [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Total Assets	2,924	2,151
Liabilities
Total Liabilities	1,586	486
U.S. Government Sponsored Entities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale		0
U.S. Government Sponsored Entities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale		501,226
U.S. Government Sponsored Entities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale		0
U.S. Government Sponsored Entities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale		501,226
U.S. Government Sponsored Entities [Member]
Securities available-for-sale
Securities Available-for-Sale		501,226
State and Municipal Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale		0
State and Municipal Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale		1,928
State and Municipal Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale		0
State and Municipal Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale		1,928
State and Municipal Securities [Member]
Securities available-for-sale
Securities Available-for-Sale		1,928
Other Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale		2,960
Other Equity Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale		0
Other Equity Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale		0
Other Equity Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale		2,960
Other Equity Securities [Member]
Securities available-for-sale
Securities Available-for-Sale		2,960
Interest Rate Swap [Member] | Fair Value, Inputs, Level 1 [Member]
Liabilities
Total Liabilities		0
Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Liabilities
Total Liabilities		2,634
Interest Rate Swap [Member] | Fair Value, Inputs, Level 3 [Member]
Liabilities
Total Liabilities		0
Interest Rate Swap [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Liabilities
Total Liabilities		2,634
Fair Value, Inputs, Level 1 [Member]
Securities available-for-sale
Securities Available-for-Sale	526,165	54,958
Total Assets	16,194	54,960
Liabilities
Total Liabilities	0	0
Fair Value, Inputs, Level 2 [Member]
Securities available-for-sale
Securities Available-for-Sale	765,315	1,239,520
Total Assets	1,282,913	1,246,245
Liabilities
Total Liabilities	1,588	3,125
Fair Value, Inputs, Level 3 [Member]
Securities available-for-sale
Securities Available-for-Sale	0	0
Total Assets	104	218
Liabilities
Total Liabilities	0	0
Estimate of Fair Value, Fair Value Disclosure [Member]
Securities available-for-sale
Securities Available-for-Sale	1,291,480	1,294,478
Total Assets	1,299,211	1,301,423
Liabilities
Total Liabilities	$ 1,588	$ 3,125

XML

Note 19 - Equity Incentive Plans (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2009		5,169,653		$	27.71		4.6	$	-
Forfeited		(222,305	)		23.23
Balance, December 31, 2010		4,947,348			27.93		3.7	$	334
Exercised		(86,860	)	$	15.05
Forfeited		(503,503	)		22.72
Balance, December 31, 2011		4,356,985			28.86		3.0	$	37
Exercised		(50,024	)	$	15.27
Forfeited		(310,331	)		23.75
Balance, December 31, 2012		3,996,630			29.45		2.2	$	-
Exercisable, December 31, 2012		3,889,514		$	29.61		2.2	$	-

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

		Outstanding
Exercise Price		Shares		Weighted-Average Remaining Contractual Life (in Years)		Exercisable Shares
$	19.93		319,240		0.1		319,240
	23.37		637,680		5.1		530,564
	24.80		811,956		0.9		811,956
	28.70		453,000		1.1		453,000
	32.26		10,000		1.5		10,000
	32.47		245,060		2.2		245,060
	33.54		264,694		2.4		264,694
	37.00		582,650		2.1		582,650
	38.38		15,000		1.9		15,000
	36.90		231,120		3.1		231,120
	36.24		414,230		3.0		414,230
	38.26		12,000		3.3		12,000
			3,996,630		2.2		3,889,514

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Units
Balance at December 31, 2009		60,021
Vested		(15,006	)
Cancelled or forfeited		(6,055	)
Balance at December 31, 2010		38,960
Granted		147,661
Vested		(12,633	)
Cancelled or forfeited		(2,578	)
Balance at December 31, 2011		171,410
Granted		125,133
Vested		(11,814	)
Cancelled or forfeited		(28,113	)
Balance at December 31, 2012		256,616

	2012			2011			2010
	(In thousands)
(Short-fall)/benefit of tax deductions in excess of grant-date fair value	$	(620	)	$	(290	)	$	(539	)
Benefit of tax deductions on grant-date fair value		747			362			539
Total benefit of tax deductions	$	127		$	72		$	-

XML

Note 3 - Securities Purchased Under Agreements to Resell (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of Securities Purchased Under Agreements To Resell [Table Text Block]

	2012			2011
	(In thousands)
Balance, December 31	$	-		$	-
Annualized weighted-average interest rate, December 31		0.00	%		0.00	%
Daily average amount outstanding during the year	$	14,986		$	84,493
Weighted-average interest rate for the year		0.12	%		0.10	%
Maximum amount outstanding at any month end	$	50,000		$	255,000

XML

Note 8 - Premises and Equipment (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Depreciation, Amortization and Accretion, Net	$ 5.9	$ 6.1	$ 4.6

XML

Note 21 - Dividend Reinvestment Plan (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Stock Issued During Period, Shares, Dividend Reinvestment Plan	17,956	21,281	28,778
Stock Issued During Period, Value, Dividend Reinvestment Plan (in Dollars)	$ 291,000	$ 287,000	$ 310,000

XML

Note 5 - Loans (Detail) - Allowance for Loan Losses by Portfolio Segment (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Provision for possible credit losses	$ 10,668	$ 10,385	$ 20,139
Charge-offs	(32,791)	(77,626)	(138,755)
Recoveries	18,127	11,407	12,327
Commercial Loans Member
Beginning Balance	65,658	63,918
Provision for possible credit losses	16,201	11,711
Charge-offs	(17,707)	(11,745)
Recoveries	1,949	1,774
Net charge-offs	(15,758)	(9,971)
Ending Balance	66,101	65,658
Reserve for impaired loans	1,467	3,336
Reserve for non-impaired loans	64,634	62,322
Reserve for off-balance sheet credit commitments	837	816
Real Estate Construction Loans [Member]
Beginning Balance	21,749	43,262
Provision for possible credit losses	(3,720)	11,514
Charge-offs	(1,165)	(37,500)
Recoveries	6,153	4,473
Net charge-offs	4,988	(33,027)
Ending Balance	23,017	21,749
Reserve for impaired loans	8,158
Reserve for non-impaired loans	14,859	21,749
Reserve for off-balance sheet credit commitments	390	1,103
Commercial Mortgage Loans [Member]
Beginning Balance	108,021	128,348
Provision for possible credit losses	(23,128)	1,454
Charge-offs	(11,762)	(26,750)
Recoveries	9,342	4,969
Net charge-offs	(2,420)	(21,781)
Ending Balance	82,473	108,021
Reserve for impaired loans	1,336	2,969
Reserve for non-impaired loans	81,137	105,052
Reserve for off-balance sheet credit commitments	98	113
Residential Mortgage And Equity Lines Member
Beginning Balance	10,795	9,668
Provision for possible credit losses	2,360	2,392
Charge-offs	(2,132)	(1,456)
Recoveries	680	191
Net charge-offs	(1,452)	(1,265)
Ending Balance	11,703	10,795
Reserve for impaired loans	1,222	1,247
Reserve for non-impaired loans	10,481	9,548
Reserve for off-balance sheet credit commitments	34	34
Installment And Other Loans Member
Beginning Balance	57	35
Provision for possible credit losses	(7)	197
Charge-offs	(25)	(175)
Recoveries	3
Net charge-offs	(22)	(175)
Ending Balance	28	57
Reserve for impaired loans	0
Reserve for non-impaired loans	28	57
Reserve for off-balance sheet credit commitments	3	3
Total [Member]
Beginning Balance	206,280	245,231
Provision for possible credit losses	(8,294)	27,268
Charge-offs	(32,791)	(77,626)
Recoveries	18,127	11,407
Net charge-offs	(14,664)	(66,219)
Ending Balance	183,322	206,280
Reserve for impaired loans	12,183	7,552
Reserve for non-impaired loans	171,139	198,728
Reserve for off-balance sheet credit commitments	$ 1,362	$ 2,069

XML

Note 10 - Borrowed Funds (Detail) - Outstanding Advances (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Within 90 days (in Dollars)	$ 125,000
Within 90 days	0.28%	0.00%
91 days through 365 days (in Dollars)		225,000
91 days through 365 days	0.00%	2.08%
4 - 5 years (in Dollars)	21,200
4 - 5 years	1.38%
(in Dollars)	$ 146,200	$ 225,000
	0.44%	2.08%

XML

Note 4 - Investment Securities (Detail) - Investment Securities (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Securities Held-to-Maturity
Securities Held-to-Maturity, Amortized Cost	$ 773,768	$ 1,153,504
Securities Held-to-Maturity, Gross Unrealized Gains	50,138	50,810
Securities Held-to-Maturity, Gross Unrealized Losses	0	337
Securities Held-to-Maturity, Fair Value	823,906	1,203,977
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	1,290,676	1,309,521
Securities Available-for-sale, Gross Unrealized Gains	14,954	17,410
Securities Available-for-sale, Gross Unrealized Losses	14,150	32,453
Securities Available-for-sale, Fair Value	1,291,480	1,294,478
Total investment securities - Amortized Cost	2,064,444	2,463,025
Total investment securities - Gross Unrealized Gains	65,092	68,220
Total investment securities - Gross Unrealized Losses	14,150	32,790
Total investment securities - Fair Value	2,115,386	2,498,455
State and Municipal Securities [Member]
Securities Held-to-Maturity
Securities Held-to-Maturity, Amortized Cost	129,037	129,577
Securities Held-to-Maturity, Gross Unrealized Gains	9,268	7,053
Securities Held-to-Maturity, Gross Unrealized Losses	0	0
Securities Held-to-Maturity, Fair Value	138,305	136,630
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost		1,869
Securities Available-for-sale, Gross Unrealized Gains		59
Securities Available-for-sale, Gross Unrealized Losses		0
Securities Available-for-sale, Fair Value		1,928
Collateralized Mortgage Backed Securities [Member]
Securities Held-to-Maturity
Securities Held-to-Maturity, Amortized Cost	634,757	913,990
Securities Held-to-Maturity, Gross Unrealized Gains	40,801	42,351
Securities Held-to-Maturity, Gross Unrealized Losses	0	0
Securities Held-to-Maturity, Fair Value	675,558	956,341
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	404,505	325,706
Securities Available-for-sale, Gross Unrealized Gains	12,194	12,361
Securities Available-for-sale, Gross Unrealized Losses	5	436
Securities Available-for-sale, Fair Value	416,694	337,631
Corporate Debt Securities [Member]
Securities Held-to-Maturity
Securities Held-to-Maturity, Amortized Cost	9,974	9,971
Securities Held-to-Maturity, Gross Unrealized Gains	69	0
Securities Held-to-Maturity, Gross Unrealized Losses	0	337
Securities Held-to-Maturity, Fair Value	10,043	9,634
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	349,973	412,045
Securities Available-for-sale, Gross Unrealized Gains	106	113
Securities Available-for-sale, Gross Unrealized Losses	14,102	31,729
Securities Available-for-sale, Fair Value	335,977	380,429
US Treasury Securities [Member]
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	509,748
Securities Available-for-sale, Gross Unrealized Gains	228
Securities Available-for-sale, Gross Unrealized Losses	5
Securities Available-for-sale, Fair Value	509,971
Collateralized Mortgage Obligations [Member]
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	9,772	16,184
Securities Available-for-sale, Gross Unrealized Gains	430	540
Securities Available-for-sale, Gross Unrealized Losses	34	238
Securities Available-for-sale, Fair Value	10,168	16,486
Asset-backed Securities [Member]
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	145	172
Securities Available-for-sale, Gross Unrealized Gains	0	0
Securities Available-for-sale, Gross Unrealized Losses	4	6
Securities Available-for-sale, Fair Value	141	166
Mutual Funds Member
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	6,000	6,000
Securities Available-for-sale, Gross Unrealized Gains	79	48
Securities Available-for-sale, Gross Unrealized Losses	0	13
Securities Available-for-sale, Fair Value	6,079	6,035
Preferred Stock Of Government Sponsored Entities Member
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	569	569
Securities Available-for-sale, Gross Unrealized Gains	1,766	1,085
Securities Available-for-sale, Gross Unrealized Losses	0	0
Securities Available-for-sale, Fair Value	2,335	1,654
Trust Preferred Securities [Member]
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost	9,964	45,501
Securities Available-for-sale, Gross Unrealized Gains	151	486
Securities Available-for-sale, Gross Unrealized Losses	0	24
Securities Available-for-sale, Fair Value	10,115	45,963
U.S. Government Sponsored Entities [Member]
Securities Held-to-Maturity
Securities Held-to-Maturity, Amortized Cost		99,966
Securities Held-to-Maturity, Gross Unrealized Gains		1,406
Securities Held-to-Maturity, Gross Unrealized Losses		0
Securities Held-to-Maturity, Fair Value		101,372
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost		500,007
Securities Available-for-sale, Gross Unrealized Gains		1,226
Securities Available-for-sale, Gross Unrealized Losses		7
Securities Available-for-sale, Fair Value		501,226
Other Equity Securities [Member]
Securities Available-for-Sale
Securities Available-for-sale, Amortized Cost		1,468
Securities Available-for-sale, Gross Unrealized Gains		1,492
Securities Available-for-sale, Gross Unrealized Losses		0
Securities Available-for-sale, Fair Value		$ 2,960

XML

Note 19 - Equity Incentive Plans (Detail) (USD $)	1 Months Ended		3 Months Ended	12 Months Ended
	Feb. 21, 2011	Feb. 21, 2010	Mar. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized					1,188,741
Maximum Period Of Common Stock Granted				10
Annual Increments To Be Vested In Common Stock Units				20.00%
Employee Service Share-based Compensation, Cash Received from Exercise of Stock Options (in Dollars)				$ 764,000	$ 1,300,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period				50,024	86,860
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value (in Dollars)				745,000	2,600,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value (in Dollars)				103,000	172,000
Share Based Compensation Arrangement By Share Based Payment Award Options Vested And Expected To Vest Restricted Stock Granted			82,291
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		15,006
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value (in Dollars per share)		$ 9.64
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	12,633
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 18.79
				125,133	147,661
GrantSharesAveragePriceDuringPeriodRestrictedStockUnitAward (in Dollars per share)				$ 18.24	$ 14.78
Stock or Unit Option Plan Expense (in Dollars)				762,000	1,000,000	3,000,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized (in Dollars)				129,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition				2 months
Stock Shares Issued to Officers as Compensation				45,937
Average Per Share Stock Price Issued to Officers as Compensation (in Dollars per share)				$ 17.16
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				5 years
				125,133	147,661
Stock or Unit Option Plan Expense (in Dollars)				1,300,000	758,000	327,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized (in Dollars)				$ 2,700,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition				1 year 6 months
Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized				7,000,000
2005 Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized				3,131,854
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant				2,364,947

XML

Note 6 - Other Real Estate Owned (Detail) - Activity in the Valuation Allowance for Other Real Estate Losses (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Balance, beginning of year	$ 26,422	$ 25,310	$ 22,743
Provision for losses	10,668	10,385	20,139
OREO disposal	(17,534)	(9,273)	(17,572)
Balance, end of year	$ 19,556	$ 26,422	$ 25,310

XML

Note 10 - Borrowed Funds (Detail) - Callable Securities Sold Under Agreements to Repurchase (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
No. of agreements	4
Amount (in Dollars)	$ 200,000
Weighted average rate	2.78%
Fixed to Floating One Hundred and Fifty Million With Three Agreements At Three Point Seven Nine Percent [Member] | Callable [Member]
Maximum rate	3.79%
Minimum rate	0.00%
No. of agreements	3
Amount (in Dollars)	150,000
Weighted average rate	3.78%
Final maturity	2,014
Fixed To Floating Fifty Million With One Agreement At Three Point Five Three Percent Member | Callable [Member]
Maximum rate	3.53%
Minimum rate	0.00%
No. of agreements	1
Amount (in Dollars)	50,000
Weighted average rate	3.53%
Final maturity	2,014
Fixed to Floating 3.5% With Four Agreements [Member] | Callable [Member]
Maximum rate	3.50%
Minimum rate	0.00%
No. of agreements	4
Amount (in Dollars)	200,000
Weighted average rate	3.50%
Final maturity	2,014
Fixed To Floating One Hundred And Fifty Million With Three Agreements At Three Point Five Percent Member | Callable [Member]
Maximum rate	3.50%
Minimum rate	0.00%
No. of agreements	3
Amount (in Dollars)	150,000
Weighted average rate	3.50%
Final maturity	2,015
Fixed to Floating Fifty Million at Three Point Five Three Percent Maturing in 2015 [Member] | Callable [Member]
Maximum rate	3.53%
Minimum rate	0.00%
No. of agreements	1
Amount (in Dollars)	50,000
Weighted average rate	3.53%
Final maturity	2,015
Fixed to Floating At 3.25% [Member] | Callable [Member]
Maximum rate	3.25%
Minimum rate	0.00%
No. of agreements	1
Amount (in Dollars)	50,000
Weighted average rate	3.25%
Final maturity	2,015
Floating To Fixed Two Hundred Million Member | Callable [Member]
No. of agreements	3
Amount (in Dollars)	200,000
Weighted average rate	4.69%
Final maturity	2,014
Floating to Fixed Rate Two Hundred Million at 5% [Member] | Callable [Member]
No. of agreements	4
Amount (in Dollars)	200,000
Weighted average rate	5.00%
Final maturity	2,017
Callable [Member]
No. of agreements	20
Amount (in Dollars)	$ 1,050,000
Weighted average rate	4.04%

XML

Note 9 - Deposits (Detail) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Accrued Interest Payable on Customer Deposits	$ 2.1	$ 4.2	$ 5.2

XML

Note 10 - Borrowed Funds (Detail) - Securities Sold Under Agreements to Repurchase (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
No. of Agreements	4
Amount (in Dollars)	$ 200,000
Weighted Average Interest Rate	2.78%
Maturing in Three to Five Years [Member]
No. of Agreements	2
Amount (in Dollars)	100,000
Weighted Average Interest Rate	2.71%
Maturing in More Than Five Years [Member]
No. of Agreements	2
Amount (in Dollars)	$ 100,000
Weighted Average Interest Rate	2.86%

XML

Note 6 - Other Real Estate Owned (Detail) - Other Real Estate Owned Expense (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating expense	$ 4,817	$ 5,441	$ 5,849
Provision for losses	10,668	10,385	20,139
Net gain on transfer and disposal	(369)	(5,243)	(9,977)
Total other real estate owned expense	$ 15,116	$ 10,583	$ 16,011

XML

Note 5 - Loans (Detail) - Portfolio by Risk Rating (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Gross Loans	$ 7,429,147	$ 7,059,212
Loans held for sale		760
Pass [Member] | Commercial Loans Member
Gross Loans	1,944,989	1,689,842
Pass [Member] | Real Estate Construction Loans [Member]
Gross Loans	109,269	115,538
Pass [Member] | Commercial Mortgage Loans [Member]
Gross Loans	3,344,783	3,275,431
Pass [Member] | Residential Mortgage And Equity Lines Member
Gross Loans	1,322,768	1,149,225
Pass [Member] | Installment And Other Loans Member
Gross Loans	12,556	17,636
Pass [Member] | Total [Member]
Gross Loans	6,734,365	6,247,672
Pass [Member]
Loans held for sale		0
Special Mention [Member] | Commercial Loans Member
Gross Loans	76,776	64,290
Special Mention [Member] | Real Estate Construction Loans [Member]
Gross Loans	18,000	23,555
Special Mention [Member] | Commercial Mortgage Loans [Member]
Gross Loans	162,455	69,925
Special Mention [Member] | Residential Mortgage And Equity Lines Member
Gross Loans	816	4,439
Special Mention [Member] | Installment And Other Loans Member
Gross Loans	0	63
Special Mention [Member] | Total [Member]
Gross Loans	258,047	162,272
Special Mention [Member]
Loans held for sale		0
Substandard [Member] | Commercial Loans Member
Gross Loans	94,077	108,858
Substandard [Member] | Real Estate Construction Loans [Member]
Gross Loans	45,171	90,132
Substandard [Member] | Commercial Mortgage Loans [Member]
Gross Loans	261,214	403,541
Substandard [Member] | Residential Mortgage And Equity Lines Member
Gross Loans	16,084	33,160
Substandard [Member] | Installment And Other Loans Member
Gross Loans	0	0
Substandard [Member] | Total [Member]
Gross Loans	416,546	635,691
Substandard [Member]
Loans held for sale		260
Doubtful [Member] | Commercial Loans Member
Gross Loans	11,265	5,285
Doubtful [Member] | Real Estate Construction Loans [Member]
Gross Loans	8,510	8,147
Doubtful [Member] | Commercial Mortgage Loans [Member]
Gross Loans	0	0
Doubtful [Member] | Residential Mortgage And Equity Lines Member
Gross Loans	414	145
Doubtful [Member] | Installment And Other Loans Member
Gross Loans	0	0
Doubtful [Member] | Total [Member]
Gross Loans	20,189	13,577
Doubtful [Member]
Loans held for sale		500
Total [Member] | Commercial Loans Member
Gross Loans	2,127,107	1,868,275
Total [Member] | Real Estate Construction Loans [Member]
Gross Loans	180,950	237,372
Total [Member] | Commercial Mortgage Loans [Member]
Gross Loans	3,768,452	3,748,897
Total [Member] | Residential Mortgage And Equity Lines Member
Gross Loans	1,340,082	1,186,969
Total [Member] | Installment And Other Loans Member
Gross Loans	12,556	17,699
Total [Member] | Total [Member]
Gross Loans	7,429,147	7,059,212
Total [Member]
Loans held for sale		760
Commercial Loans Member
Gross Loans	2,127,107	1,868,275
Real Estate Construction Loans [Member]
Gross Loans	180,950	237,372
Commercial Mortgage Loans [Member]
Gross Loans	3,768,452	3,748,897
Residential Mortgage And Equity Lines Member
Gross Loans	1,340,082	1,186,969
Installment And Other Loans Member
Gross Loans	12,556	17,699
Total [Member]
Gross Loans	$ 7,429,147	$ 7,059,212

XML

Note 18 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation and Employee Benefit Plans [Text Block]

18.   Employee Benefit Plans

        Employee Stock Ownership Plan.  Under the Company’s Amended and Restated Cathay Bank Employee Stock Ownership Plan (“ESOP”), the Company can make annual contributions to a trust in the form of either cash or common stock of the Bancorp for the benefit of eligible employees.  Employees are eligible to participate in the ESOP after completing two years of service for salaried full-time employees or 1,000 hours for each of two consecutive years for salaried part-time employees.  The amount of the annual contribution is discretionary except that it must be sufficient to enable the trust to meet its current obligations.  The Company also pays for the administration of this plan and of the trust.  The Company has not made contributions to the trust since 2004 and does not expect to make any contributions in the future.  Effective June 17, 2004, the ESOP was amended to provide the participants the election either to reinvest the dividends on the Company stock allocated to their accounts or to have these dividends distributed to the participant.  The ESOP trust purchased 2,814 shares in 2012, 3,437 shares in 2011, and 4,881 shares in 2010, of the Bancorp’s common stock at an aggregate cost of $47,000 in 2012, $47,000 in 2011, and $51,000 in 2010.  All purchases after 2006 were through the Dividend Reinvestment Plan.  The distribution of benefits to participants totaled 116,124 shares in 2012, 83,020 shares in 2011, and 171,689 shares in 2010.  As of December 31, 2012, the ESOP owned 1,188,741 shares, or 1.5%, of the Company’s outstanding common stock.

401(k) Plan.  In 1997, the Board approved the Company’s 401(k) Profit Sharing Plan, which began on March 1, 1997.  Salaried employees who have completed three months of service and have attained the age of 21 are eligible to participate.  Enrollment dates are on January 1st, April 1st, July 1st, and October 1st of each year.  Participants may contribute up to 75% of their eligible compensation for the year but not to exceed the dollar limit set by the Internal Revenue Code.  Participants may change their contribution election on the enrollment dates.  Prior to April 1, 2010, the Company matched 100% on the first 5% of eligible compensation contributed per pay period by the participant, after one year of service.  The vesting schedule for the matching contribution is 0% for less than two years of service, 25% after two years of service and from then on, at an increment of 25% each year until 100% is vested after five years of service.  In February 2010, the Board revised and reduced the contribution match for the Company’s 401(k) Profit Sharing Plan.  Effective on April 1, 2010, the Company matches 100% on the first 2.5% of eligible compensation contributed per pay period by the participant, after one year of service.  The Company’s contribution amounted to $1.0 million in 2012, $0.9 million in 2011, and $0.9 million in 2010.  The Plan allows participants to withdraw all or part of their vested amount in the Plan due to certain financial hardship as set forth in the Internal Revenue Code and Treasury Regulations.  Participants may also borrow up to 50% of the vested amount, with a maximum of $50,000.  The minimum loan amount is $1,000.

XML

Note 1 - Summary of Significant Accounting Policies (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2014	Dec. 31, 2013
Number of Limited Partnerships in Housing Investments	6
Percentage Of Subsidiaries Common Securities Owned By Parent Company	100.00%
Gross Loans Comprised Of Commercial Mortgage Loans Percentage	50.70%
Gross Loans Comprised Of Commercial Loans Percentage	28.60%
Total Deposits Comprised Of Time Deposit Percentage	43.60%
Jumbo Cds Deposit With Company For Two Years Or More Percentage	67.40%
Federal Home Loan Bank Stock (in Dollars)	$ 41,272,000	$ 52,989,000
Minimum Stock Requirement On Outstanding Federal Home Loan Bank Borrowings Shares (in Shares)	68,714
Advances from Federal Home Loan Banks (in Dollars)	146,200,000	225,000,000
Company Owned Shares Of FHLB stock (in Shares)	412,716
Maximum Loan Size Portfolio Stratification Homogenous Portfolio (in Dollars)	500,000
Venture Capital Investments Limited Partnership Interests Represent Ownership Maximum Percentage	5.00%
Unamortized Core Deposit Premium (in Dollars)	4,900,000	10,600,000
Core Deposit Premium Accumulated Amortization (in Dollars)	55,300,000	49,800,000
Amortization of Intangible Assets (in Dollars)	5,663,000	5,859,000	5,958,000
Future Amortization Expense After Year Three (in Dollars)				400,000	4,500,000
Stock or Unit Option Plan Expense (in Dollars)	762,000	1,000,000	3,000,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized (in Dollars)	129,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	2 months
California [Member]
Residential Mortgages Properties Percentage	63.00%
Core Deposits [Member]
Amortization of Intangible Assets (in Dollars)	$ 5,700,000	$ 5,900,000	$ 6,000,000

XML

Note 13 - Stockholders' Equity and Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Year Ended December 31,
	2012							2011							2010
	Income (Numerator)			Shares (Denominator)		Per Share Amount		Income (Numerator)			Shares (Denominator)		Per Share Amount		Income (Numerator)			Shares (Denominator)		Per Share Amount
	(In thousands, except shares and per share data)
Net income	$	117,438						$	100,150						$	11,565
Dividends on preferred stock		(16,488	)						(16,437	)						(16,388	)
Basic EPS, income/(loss)	$	100,950			78,719,133	$	1.28	$	83,713			78,633,317	$	1.06	$	(4,823	)		77,073,954	$	(0.06	)
Effect of dilutive stock options					4,164							7,335							-
Diluted EPS, income/(loss)	$	100,950			78,723,297	$	1.28	$	83,713			78,640,652	$	1.06	$	(4,823	)		77,073,954	$	(0.06	)

XML

Note 6 - Other Real Estate Owned (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Other Real Estate, Period Increase (Decrease)	$ 46,300,000
Percentage Of Value Increased Other Real Estate Owned	50.00%
Real Estate Acquired Through Foreclosure	46,400,000	92,700,000
Number of Real Estate Properties		1
Residential Land [Member] | California [Member]
Real Estate Acquired Through Foreclosure	9,100,000	9,900,000
Number of Real Estate Properties	6	5
Residential Land [Member] | Texas Member
Real Estate Acquired Through Foreclosure	12,600,000	11,700,000
Number of Real Estate Properties	4	3
Residential Land [Member] | Washington State Member
Real Estate Acquired Through Foreclosure		1,200,000
Number of Real Estate Properties		3
Residential Land [Member] | Nevada [Member]
Real Estate Acquired Through Foreclosure		3,500,000
Office And Commercial Use Building Member | California [Member]
Real Estate Acquired Through Foreclosure	1,700,000	13,200,000
Number of Real Estate Properties	3	12
Office And Commercial Use Building Member | Texas Member
Real Estate Acquired Through Foreclosure	14,400,000
Number of Real Estate Properties	4
Commercial Construction Loans [Member] | California [Member]
Real Estate Acquired Through Foreclosure	740,000	3,500,000
Number of Real Estate Properties	1	2
Commercial Construction Loans [Member] | Texas Member
Real Estate Acquired Through Foreclosure	1,300,000	2,400,000
Number of Real Estate Properties	2	3
Commercial Construction Loans [Member] | Washington State Member
Real Estate Acquired Through Foreclosure	870,000	658,000
Number of Real Estate Properties	1
Residential Construction [Member] | California [Member]
Real Estate Acquired Through Foreclosure	530,000	588,000
Number of Real Estate Properties	1	1
Single Family Residential Loan Member | California [Member]
Real Estate Acquired Through Foreclosure	179,000	395,000
Number of Real Estate Properties	1	2
Single Family Residential Loan Member | Texas Member
Real Estate Acquired Through Foreclosure	169,000	959,000
Number of Real Estate Properties	1	3
Single Family Residential Loan Member | Washington State Member
Real Estate Acquired Through Foreclosure		531,000
Number of Real Estate Properties		3
Single Family Residential Loan Member | All Other States [Member]
Real Estate Acquired Through Foreclosure		878,000
Number of Real Estate Properties		4
Nonresidential Land [Member] | Texas Member
Real Estate Acquired Through Foreclosure	1,100,000
Number of Real Estate Properties	1
Nonresidential Land [Member] | Washington State Member
Real Estate Acquired Through Foreclosure	733,000
Number of Real Estate Properties	1
Commercial Use Building [Member] | Texas Member
Real Estate Acquired Through Foreclosure		33,500,000
Number of Real Estate Properties		8
Commercial Use Building [Member] | New York State Member
Real Estate Acquired Through Foreclosure	1,200,000
Commercial Use Building [Member] | Nevada [Member]
Real Estate Acquired Through Foreclosure	1,100,000	1,300,000
Number of Real Estate Properties		1
Commercial Use Building [Member] | All Other States [Member]
Real Estate Acquired Through Foreclosure		2,100,000
Number of Real Estate Properties		3
Commercial Land [Member] | California [Member]
Real Estate Acquired Through Foreclosure		4,800,000
Number of Real Estate Properties		4
Retail Site [Member] | Washington State Member
Real Estate Acquired Through Foreclosure		1,600,000
Number of Real Estate Properties		2
California [Member]
Real Estate Acquired Through Foreclosure	12,200,000	32,300,000
Texas Member
Real Estate Acquired Through Foreclosure	29,600,000	48,600,000
Washington State Member
Real Estate Acquired Through Foreclosure	1,600,000	3,900,000
Nevada [Member]
Real Estate Acquired Through Foreclosure		4,800,000
All Other States [Member]
Real Estate Acquired Through Foreclosure	$ 752,000	$ 3,000,000

XML

Note 13 - Stockholders' Equity and Earnings per Share (Detail) - Earnings per Share (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net income	$ 28,459	$ 30,509	$ 30,011	$ 29,064	$ 27,854	$ 26,235	$ 24,452	$ 22,214	$ 117,438	$ 100,150	$ 11,565
Dividends on preferred stock	4,127	4,123	4,121	4,117	4,114	4,111	4,107	4,105	(16,488)	(16,437)	(16,388)
Basic EPS, income/(loss)	24,179	26,235	25,740	24,796	23,587	21,973	20,195	17,958	100,950	83,713	(4,823)
Basic EPS, income/(loss) (in Shares)									78,719,133	78,633,317	77,073,954
Basic EPS, income/(loss) (in Dollars per share)	$ 0.31	$ 0.33	$ 0.33	$ 0.32	$ 0.30	$ 0.28	$ 0.26	$ 0.23	$ 1.28	$ 1.06	$ (0.06)
Effect of dilutive stock options (in Shares)									4,164	7,335
Diluted EPS, income/(loss)									$ 100,950	$ 83,713	$ (4,823)
Diluted EPS, income/(loss) (in Shares)									78,723,297	78,640,652	77,073,954
Diluted EPS, income/(loss) (in Dollars per share)	$ 0.31	$ 0.33	$ 0.33	$ 0.32	$ 0.30	$ 0.28	$ 0.26	$ 0.23	$ 1.28	$ 1.06	$ (0.06)

XML

Note 8 - Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Table Text Block]

	2012		2011
	(In thousands)
Land and land improvements	$	33,429	$	33,429
Building and building improvements		73,723		72,608
Furniture, fixtures and equipment		39,701		37,445
Leasehold improvement		12,391		12,494
Construction in process		38		1,314
		159,282		157,290
Less: Accumulated depreciation/amortization		56,669		51,329
Premises and equipment, net	$	102,613	$	105,961

XML

Note 1 - Summary of Significant Accounting Policies (Detail) - Goodwill Per Acquisition (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Carrying Amount	$ 1,363,057
Fair Value	1,449,670
Allocated Goodwill	316,340	316,340
Commercial Lending Unit [Member]
Carrying Amount	797,702
Fair Value	363,601
Retail Banking Unit [Member]
Carrying Amount	361,589
Fair Value	675,580
Fair Value in Excess of Carrying Amount	86.80%
Allocated Goodwill	235,195
East Coast Operations [Member]
Carrying Amount	203,766
Fair Value	410,489
Fair Value in Excess of Carrying Amount	101.50%
Allocated Goodwill	$ 81,145

XML

Note 5 - Loans (Detail) - Troubled Debt Restructurings Modified (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
No. of Loans	61	32
Specific Reserve	$ 12,183,000	$ 7,554,000
Charge-off	46,000
Commercial Loans Member | Accruing Troubled Debt Restructuring Member
No. of Loans	9	7
Pre-Modification Recorded Investment	3,646,000	15,025,000
Post-Modification Recorded Investment	3,646,000	15,025,000
Specific Reserve	1,213,000	104,000
Commercial Mortgage Loans [Member] | Accruing Troubled Debt Restructuring Member
No. of Loans	20	6
Pre-Modification Recorded Investment	62,118,000	17,343,000
Post-Modification Recorded Investment	58,393,000	14,294,000
Specific Reserve	27,000	1,000
Charge-off	3,725,000	3,049,000
Residential Mortgage Loans [Member] | Accruing Troubled Debt Restructuring Member
No. of Loans	14	3
Pre-Modification Recorded Investment	4,305,000	1,574,000
Post-Modification Recorded Investment	4,223,000	1,574,000
Specific Reserve	162,000	114,000
Charge-off	82,000
Total [Member] | Accruing Troubled Debt Restructuring Member
No. of Loans	43	19
Pre-Modification Recorded Investment	70,069,000	67,611,000
Post-Modification Recorded Investment	66,262,000	52,415,000
Specific Reserve	1,402,000	219,000
Charge-off	3,807,000	15,196,000
Real Estate Construction Loans [Member] | Accruing Troubled Debt Restructuring Member
No. of Loans		3
Pre-Modification Recorded Investment		33,669,000
Post-Modification Recorded Investment		21,522,000
Charge-off		12,147,000
Accruing Troubled Debt Restructuring Member
Post-Modification Recorded Investment	144,695,000	120,016,000	136,800,000
Charge-off	$ (251,000)	$ (2,341,000)

XML

Note 19 - Equity Incentive Plans (Detail) - Stock Options Outstanding and Exercisable (USD $)	0 Months Ended	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 29, 2009
Shares		3,996,630	4,356,985	4,947,348	5,169,653
Weighted-Average Remaining Contractual Life	4 years 219 days	2 years 73 days	3 years	3 years 255 days
Exercisable Shares		3,889,514
$19.93 [Member]
Exercise Price (in Dollars per share)		19.93
Shares		319,240
Weighted-Average Remaining Contractual Life		36 days
Exercisable Shares		319,240
$23.37 [Member]
Exercise Price (in Dollars per share)		23.37
Shares		637,680
Weighted-Average Remaining Contractual Life		5 years 36 days
Exercisable Shares		530,564
$24.80 [Member]
Exercise Price (in Dollars per share)		24.80
Shares		811,956
Weighted-Average Remaining Contractual Life		328 days
Exercisable Shares		811,956
$28.70 [Member]
Exercise Price (in Dollars per share)		28.70
Shares		453,000
Weighted-Average Remaining Contractual Life		1 year 36 days
Exercisable Shares		453,000
$32.26 [Member]
Exercise Price (in Dollars per share)		32.26
Shares		10,000
Weighted-Average Remaining Contractual Life		1 year 6 months
Exercisable Shares		10,000
$32.47 [Member]
Exercise Price (in Dollars per share)		32.47
Shares		245,060
Weighted-Average Remaining Contractual Life		2 years 73 days
Exercisable Shares		245,060
$33.54 [Member]
Exercise Price (in Dollars per share)		33.54
Shares		264,694
Weighted-Average Remaining Contractual Life		2 years 146 days
Exercisable Shares		264,694
$37.00 [Member]
Exercise Price (in Dollars per share)		37.00
Shares		582,650
Weighted-Average Remaining Contractual Life		2 years 36 days
Exercisable Shares		582,650
$38.38 [Member]
Exercise Price (in Dollars per share)		38.38
Shares		15,000
Weighted-Average Remaining Contractual Life		1 year 328 days
Exercisable Shares		15,000
$36.90 [Member]
Exercise Price (in Dollars per share)		36.90
Shares		231,120
Weighted-Average Remaining Contractual Life		3 years 36 days
Exercisable Shares		231,120
$36.24 [Member]
Exercise Price (in Dollars per share)		36.24
Shares		414,230
Weighted-Average Remaining Contractual Life		3 years
Exercisable Shares		414,230
$38.26 [Member]
Exercise Price (in Dollars per share)		38.26
Shares		12,000
Weighted-Average Remaining Contractual Life		3 years 109 days
Exercisable Shares		12,000

XML

Note 5 - Loans (Detail) - Components of Loans in Consolidated Balance Sheets (USD $)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Type of Loans:
Gross Loans	$ 7,429,147,000	$ 7,059,212,000
Allowance for loan losses	(183,322,000)	(206,280,000)
Unamortized deferred loan fees	(10,238,000)	(8,449,000)
Total loans and leases, net	7,235,587,000	6,844,483,000
Loans held for sale	0	760,000	2,900,000
Commercial Loans Member
Type of Loans:
Gross Loans	2,127,107,000	1,868,275,000
Real Estate Construction Loans [Member]
Type of Loans:
Gross Loans	180,950,000	237,372,000
Commercial Mortgage Loans [Member]
Type of Loans:
Gross Loans	3,768,452,000	3,748,897,000
Residential Mortgage Loans [Member]
Type of Loans:
Gross Loans	1,146,230,000	972,262,000
Loans held for sale		260,000
Equity Lines [Member]
Type of Loans:
Gross Loans	193,852,000	214,707,000
Installment And Other Loans Member
Type of Loans:
Gross Loans	$ 12,556,000	$ 17,699,000

XML

Note 20 - Condensed Financial Information of Cathay General Bancorp (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Condensed Balance Sheet [Table Text Block]

	Year Ended December 31,
	2012			2011
	(In thousands, except share and per share data)
Assets
Cash	$	639		$	809
Short-term certificates of deposit		161,300			19,000
Investment in bank subsidiaries		1,569,902			1,593,831
Investment in non-bank subsidiaries		2,598			2,615
Other assets		9,936			14,189
Total assets	$	1,744,375		$	1,630,444
Liabilities
Junior subordinated debt	$	121,136		$	121,136
Other liabilities		2,182			2,122
Total liabilities		123,318			123,258
Commitments and contingencies		-			-
Stockholders' equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding at December 31, 2012, and December 31, 2011		254,580			250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding    at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011		830			829
Additional paid-in-capital		768,925			765,641
Accumulated other comprehensive loss, net		465			(8,732	)
Retained earnings		721,993			624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011)		(125,736	)		(125,736	)
Total stockholders' equity		1,621,057			1,507,186
Total liabilities and stockholders' equity	$	1,744,375		$	1,630,444

Schedule of Condensed Income Statement [Table Text Block]

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash dividends from Cathay Bank	$	154,700		$	-		$	-
Interest income		196			259			227
Interest expense		3,228			3,038			3,075
Non-interest income/(loss)		3,718			286			(782	)
Non-interest expense		2,064			1,548			1,308
Income/(loss) before income tax benefit		153,322			(4,041	)		(4,938	)
Income tax benefit		(579	)		(1,699	)		(2,076	)
Loss before undistributed earnings of subsidiaries		153,901			(2,342	)		(2,862	)
Undistributed (loss)/earnings of subsidiaries		(36,463	)		102,492			14,427
Net income	$	117,438		$	100,150		$	11,565

Schedule of Condensed Cash Flow Statement [Table Text Block]

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash flows from Operating Activities
Net income/(loss)	$	117,438		$	100,150		$	11,565
Adjustments to reconcile net income to net cash provided by operating activities:
Dividends in excess of earnings of subsidiaries		36,463			-			-
Equity in undistributed earnings of subsidiaries		-			(102,492	)		(14,427	)
Gains on sale of securities		(3,380	)		-			-
Increase in accrued expense		12			24			3
Write-downs on venture capital and other investments		262			321			521
Write-downs on impaired securities		181			200			492
Loss/(gains) in fair value of warrants		114			(215	)		29
Excess tax short-fall from stock options		620			290			539
(Decrease)/increase in other assets		1,820			(121	)		1,040
Increase/(decrease) in other liabilities		59			(221	)		(607	)
Net cash used in operating activities		153,589			(2,064	)		(845	)
Cash flows from Investment Activities
Additional investment in subsidiary		-			-			(94,000	)
Decrease/(increase) in short-term investment		(142,300	)		17,500			(12,000	)
Proceeds from sale/(purchase) of available-for-sale securities		4,849			-			(418	)
Venture capital investments		(694	)		(671	)		(1,056	)
Net cash provided by/(used in) investment activities		(138,145	)		16,829			(107,474	)
Cash flows from Financing Activities
Cash dividends		(16,049	)		(16,046	)		(16,041	)
Issuance of common stock		-			-			124,928
Proceeds from shares issued under the Dividend Reinvestment Plan		291			287			310
Proceeds from exercise of stock options		764			1,306			-
Excess tax short-fall from share-based payment arrangements		(620	)		(290	)		(539	)
Net cash (used in)/provided by financing activities		(15,614	)		(14,743	)		108,658
Increase in cash and cash equivalents		(170	)		22			339
Cash and cash equivalents, beginning of year		809			787			448
Cash and cash equivalents, end of year	$	639		$	809		$	787

XML

Note 2 - Cash and Cash Equivalents

12 Months Ended

Dec. 31, 2012

Cash and Cash Equivalents Disclosure [Text Block]

2.     Cash and Cash Equivalents

       The Company manages its cash and cash equivalents, which consist of cash on hand, amounts due from banks, federal funds sold, and short-term investments with original maturity of three months or less, based upon the Company’s operating, investment, and financing activities.  For the purpose of reporting cash flows, these same accounts are included in cash and cash equivalents.

The Company is required to maintain reserves with the Federal Reserve Bank.  Reserve requirements are based on a percentage of deposit liabilities.  The average reserve balances required were $12.9 million for 2012 and $12.2 million for 2011.    There were no federal funds sold in 2012 or in 2011.

XML

Note 20 - Condensed Financial Information of Cathay General Bancorp (Detail) - Statements of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest income	$ 105,281	$ 106,747	$ 107,581	$ 110,135	$ 111,076	$ 114,379	$ 114,339	$ 113,777
Interest expense	24,216	26,330	28,461	29,484	31,759	33,426	36,024	38,672	108,491	139,881	191,688
Non-interest income/(loss)	12,202	15,622	9,852	8,831	8,986	16,827	12,453	12,626	46,507	50,892	32,251
Non-interest expense	49,532	47,844	47,342	47,871	43,990	48,383	45,410	47,783	192,589	185,566	175,711
Income tax benefit	15,276	17,686	16,619	16,547	14,459	14,162	10,906	11,734	66,128	51,261	(14,629)
Loss before undistributed earnings of subsidiaries	43,735	48,195	46,630	45,611	42,313	40,397	35,358	33,948	184,171	152,016	(2,454)
Net income	28,459	30,509	30,011	29,064	27,854	26,235	24,452	22,214	117,438	100,150	11,565
Parent Company [Member]
Cash dividends from Cathay Bank									154,700
Interest income									196	259	227
Interest expense									3,228	3,038	3,075
Non-interest income/(loss)									3,718	286	(782)
Non-interest expense									2,064	1,548	1,308
Income/(loss) before income tax benefit									153,322	(4,041)	(4,938)
Income tax benefit									(579)	(1,699)	(2,076)
Loss before undistributed earnings of subsidiaries									153,901	(2,342)	(2,862)
Undistributed (loss)/earnings of subsidiaries									(36,463)	102,492	14,427
Net income									$ 117,438	$ 100,150	$ 11,565

XML

Note 5 - Loans (Detail) - Loans to Related Parties (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Balance at beginning of year	$ 160,069	$ 134,161
Additional loans made	92,249	89,985
Payment received	(79,734)	(64,077)
Balance at end of year	$ 172,584	$ 160,069

XML

Note 14 - Commitments and Contingencies (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2012

Dec. 31, 2012

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

	2012		2011
	(In thousands)
Commitments to extend credit	$	1,740,463	$	1,626,523
Standby letters of credit		44,672		62,076
Commercial letters of credit		71,073		64,233
Bill of lading guarantees		77		187
Total	$	1,856,285	$	1,753,019

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Year Ending December 31,	Commitments
	(In thousands)
2013	$	6,084
2014		4,939
2015		3,009
2016		2,028
2017		617
Thereafter		661
Total minimum lease payments	$	17,338

Schedule Of Future Rental Payments To Be Received For Operating Leases [Table Text Block]

Year Ending December 31,	Commitments
	(In thousands)
2013	$	108
2014		60
2015		11
Thereafter		-
Total minimum lease payments to be received	$	179

XML

Note 22 - Regulatory Matters

12 Months Ended

Dec. 31, 2012

Regulatory Capital Requirements under Banking Regulations [Text Block]

22.   Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  See Note 11 for discussion of possible future disallowance of Capital Securities as Tier 1 capital.

        The Federal Deposit Insurance Corporation has established five capital ratio categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” A well capitalized institution must have a Tier 1 capital ratio of at least 6%, a total risk-based capital ratio of at least 10%, and a leverage ratio of at least 5%.  At December 31, 2011 and 2009, the Bank qualified as well capitalized under the regulatory framework for prompt corrective action.

        The Bancorp’s and the Bank’s capital and leverage ratios as of December 31, 2012, and December 31, 2011, are presented in the tables below:

	As of December 31, 2012										As of December 31, 2011
	Company					Bank					Company					Bank
	Balance		Percentage			Balance		Percentage			Balance		Percentage			Balance		Percentage
	(Dollars in thousands)
Tier I Capital (to risk-weighted assets)	$	1,426,566		17.36	%	$	1,259,005		15.33	%	$	1,318,948		15.97	%	$	1,289,747		15.64	%
Tier I Capital minimum requirement		328,713		4.00			328,440		4.00			330,355		4.00			329,928		4.00
Excess	$	1,097,853		13.36	%	$	930,565		11.33	%	$	988,593		11.97	%	$	959,819		11.64	%
Total Capital (to risk-weighted assets)	$	1,571,060		19.12	%	$	1,402,691		17.08	%	$	1,474,496		17.85	%	$	1,444,165		17.51	%
Total Capital minimum requirement		657,426		8.00			656,880		8.00			660,710		8.00			659,855		8.00
Excess	$	913,634		11.12	%	$	745,811		9.08	%	$	813,786		9.85	%	$	784,310		9.51	%
Tier I Capital (to average assets)Leverage ratio	$	1,426,566		13.82	%	$	1,259,005		12.22	%	$	1,318,948		12.93	%	$	1,289,747		12.66	%
Minimum leverage requirement		412,844		4.00			412,272		4.00			408,146		4.00			407,643		4.00
Excess	$	1,013,722		9.82	%	$	846,733		8.22	%	$	910,802		8.93	%	$	882,104		8.66	%
Total average assets (1)	$	10,321,104				$	10,306,790				$	10,203,647				$	10,191,078
Risk-weighted assets	$	8,217,821				$	8,211,004				$	8,258,878				$	8,248,190

(1) Average assets represent average balances for the fourth quarter of each year presented.

 On December 17, 2009, the Bancorp entered into a memorandum of understanding with Federal Reserve Bank of San Francisco (the “FRB SF”) under which it agreed that it will not, without the FRB SF’s prior written approval, (i) receive any dividends or any other form of payment or distribution representing a reduction of capital from the Bank, or (ii) declare or pay any dividends, make any payments on trust preferred securities, or make any other capital distributions.  Under the memorandum, the Bancorp agreed to submit to the FRB SF for review and approval a plan to maintain sufficient capital at the Bancorp on a consolidated basis and at the Bank, a dividend policy for the Bancorp, a plan to improve management of its liquidity position and funds management practices, and a liquidity policy and contingency funding plan for the Bancorp.  As part of its compliance with the memorandum, on January 22, 2010, the Bancorp submitted to the FRB SF a Three-Year Capital and Strategic Plan that updates a previously submitted plan and establishes, among other things, targets for its Tier 1 risk-based capital ratio, total risk-based capital ratio, Tier 1 leverage capital ratio and tangible common risk-based ratio, each of which, where applicable, are above the minimum requirements for a well-capitalized institution.  In addition, the Bancorp agreed to notify the FRB SF prior to effecting certain changes to its senior executive officers and board of directors and it is limited and/or prohibited, in certain circumstances, in its ability to enter into contracts to pay and to make golden parachute severance and indemnification payments.  The Bancorp also agreed in the memorandum that we will not, without the prior written approval of the FRB SF, directly or indirectly, (i) incur, renew, increase or guaranty any debt, (ii) issue any additional trust preferred securities, or (iii) purchase, redeem, or otherwise acquire any stock.

Until it was terminated as of November 7, 2012, the Bank was subject to a memorandum of understanding with the California Department of Financial Institutions (“DFI”) and the Federal Deposit Insurance Corporation (“FDIC’) that was entered into on March 1, 2010, by which the Bank agreed to undertake certain steps to strengthen its operations. The Bank was required to develop and implement, within specified time periods, plans satisfactory to the DFI and the FDIC to reduce commercial real estate concentrations, to enhance and to improve the quality of our stress testing of the Bank’s loan portfolio, and to revise our loan policy in connection therewith; to develop and adopt a strategic plan addressing improved profitability and capital ratios and to reduce the Bank’s overall risk profile; to develop and adopt a capital plan; to develop and implement a plan to improve asset quality, including the methodology for calculating the loss reserve allocation and evaluating its adequacy; and to develop and implement a plan to reduce dependence on wholesale funding. In addition, we were required to report our progress to the DFI and FDIC on a quarterly basis. As part of our compliance with the Bank memorandum, on April 30, 2010, we submitted to the DFI and the FDIC a Three-Year Capital Plan that updated the Three-Year Capital and Strategic Plan previously submitted to the FRB SF on January 22, 2010, and established, among other things, targets for our Tier 1 risk-based capital ratio and total risk-based capital ratio, each of which are above the minimum requirements for a well-capitalized institution and effective June 30, 2010, a target Tier 1 to total tangible assets ratio.  We were in compliance with the applicable target ratios through the date of termination of the memorandum.

XML

Note 21 - Dividend Reinvestment Plan

12 Months Ended

Dec. 31, 2012

Dividend Reinvestment Plan [Text Block]

21.   Dividend Reinvestment Plan

        The Company has a Dividend Reinvestment Plan which allows for participants’ reinvestment of cash dividends and certain optional additional investments in the Company’s common stock.  Shares issued under the plan and the consideration received were 17,956 shares for $291,000 in 2012, 21,281 shares for $287,000 in 2011, and 28,778 shares for $310,000 in 2010.

XML

Note 14 - Commitments and Contingencies (Detail) - Future Payments Under Operating Leases (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
2013	$ 6,084
2014	4,939
2015	3,009
2016	2,028
2017	617
Thereafter	661
Total minimum lease payments	$ 17,338

XML

Note 4 - Investment Securities (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Proceeds from Sale of Mortgage Backed Securities (MBS) categorized as Available-for-sale	$ 501,100,000	$ 759,700,000	$ 1,040,000,000
Proceeds from Maturities, Prepayments and Calls of Mortgage Backed Securities (MBS)	118,100,000	108,400,000	308,200,000
Proceeds From Sales and Repayments of Other Investment Securities	61,000,000	525,000,000	65,100,000
Proceeds From Maturities Repayments And Calls Of Held For Investment	552,100,000	435,000,000	2,880,000,000
Realized Gain From Sale and Call of Investment Securities	18,600,000	21,100,000	19,300,000
Realized Loss From Sale and Call of Investment Securities	607,000	0	67,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Other, Percentage of Nonperforming Assets	16.90%
Percentage of Unrealized Losses for Securities with Unrealized Losses for Less Than Twelve Months	2.40%
Percentage of Unrealized Losses for Securities with Unrealized Losses for Greater than Twelve Months	4.40%
Pledged Investment Securities	$ 1,450,000,000	$ 1,680,000,000
Twelve Months or Longer [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	34
Less than Twelve Months [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	7

XML

Note 16 - Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

As of December 31, 2012	Fair Value Measurements Using						Total at
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets
Securities available-for-sale
U.S. Treasury securities	$	509,971	$	-	$	-	$	509,971
Mortgage-backed securities		-		416,694		-		416,694
Collateralized mortgage obligations		-		10,168		-		10,168
Asset-backed securities		-		141		-		141
Corporate debt securities		-		335,977		-		335,977
Mutual funds		6,079		-		-		6,079
Preferred stock of government sponsored entities		-		2,335		-		2,335
Trust preferred securities		10,115		-		-		10,115
Total securities available-for-sale		526,165		765,315		-		1,291,480
Trading securities		-		4,703		-		4,703
Warrants		-		-		104		104
Option contracts		-		0		-		0
Foreign exchange contracts		-		2,924		-		2,924
Total assets	$	16,194	$	1,282,913	$	104	$	1,299,211
Liabilities
Option contracts	$	-	$	2	$	-	$	2
Foreign exchange contracts		-		1,586		-		1,586
Total liabilities	$	-	$	1,588	$	-	$	1,588

As of December 31, 2011	Fair Value Measurements Using						Total at
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets
Securities available-for-sale
U.S. government sponsored entities	$	-	$	501,226	$	-	$	501,226
State and municipal securities		-		1,928		-		1,928
Mortgage-backed securities		-		337,631		-		337,631
Collateralized mortgage obligations		-		16,486		-		16,486
Asset-backed securities		-		166		-		166
Corporate debt securities		-		380,429		-		380,429
Mutual funds		6,035		-		-		6,035
Preferred stock of government sponsored entities		-		1,654		-		1,654
Trust preferred securities		45,963		-		-		45,963
Other equity securities		2,960		-		-		2,960
Total securities available-for-sale		54,958		1,239,520		-		1,294,478
Trading securities		2		4,540		-		4,542
Warrants		-		-		218		218
Option contracts		-		34		-		34
Foreign exchange contracts		-		2,151		-		2,151
Total assets	$	54,960	$	1,246,245	$	218	$	1,301,423
Liabilities
Interest rate swaps	$	-	$	2,634	$	-	$	2,634
Option contracts		-		5		-		5
Foreign exchange contracts		-		486		-		486
Total liabilities	$	-	$	3,125	$	-	$	3,125

Fair Value Measurements, Nonrecurring [Table Text Block]

	As of December 31, 2012								Total Losses
	Fair Value Measurements Using						Total at		For the Twelve Months Ended
	Level 1		Level 2		Level 3		Fair Value		December 31, 2012		December 31, 2011
Assets	(In thousands)
Impaired loans by type:
Commercial loans	$	-	$	-	$	3,492	$	3,492	$	-	$	877
Commercial mortgage loans		-		-		11,295		11,295		440		-
Construction- residential		-		-		500		500		-		-
Construction- other		-		-		46,153		46,153		65		-
Residential mortgage and equity lines		-		-		11,206		11,206		605		820
Land loans		-		-		297		297		162		46
Total impaired loans		-		-		72,943		72,943		1,272		1,743
Other real estate owned (1		-		27,149		4,841		31,990		10,904		7,003
Investments in venture capital		-		-		9,001		9,001		309		379
Equity investments		142		-		-		142		181		200
Total assets	$	142	$	27,149	$	86,785	$	114,076	$	12,666	$	9,325

	As of December 31, 2011								Total Losses
	Fair Value Measurements Using						Total at		For the Twelve Months Ended
	Level 1		Level 2		Level 3		Fair Value		December 31, 2011		December 31, 2010
Assets	(In thousands)
Impaired loans by type:
Commercial loans	$	-	$	-	$	4,251	$	4,251	$	877	$	3,411
Construction- residential		-		-		-		-		-		1,295
Real estate loans		-		-		35,576		35,576		820		1,407
Land loans		-		-		611		611		46		1,003
Total impaired loans		-		-		40,438		40,438		1,743		7,116
Loans held-for-sale		-		-		760		760		-		3,160
Other real estate owned (1		-		79,029		1,093		80,122		7,003		20,139
Investments in venture capital		-		-		8,693		8,693		379		760
Equity investments		323		-		-		323		200		304
Total assets	$	323	$	79,029	$	50,984	$	130,336	$	9,325	$	31,479

XML

Note 23 - Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information [Text Block]

23.   Quarterly Results of Operations (Unaudited)

        The following table sets forth selected unaudited quarterly financial data:

	Summary of Operations
	2012												2011
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
	(In thousands, except per share data)
Interest income	$	105,281		$	106,747		$	107,581		$	110,135		$	111,076		$	114,379		$	114,339		$	113,777
Interest expense		24,216			26,330			28,461			29,484			31,759			33,426			36,024			38,672
Net interest income		81,065			80,417			79,120			80,651			79,317			80,953			78,315			75,105
(Reversal)/provision for credit losses		-			-			(5,000	)		(4,000	)		2,000			9,000			10,000			6,000
Net-interest income after provision for loan losses		81,065			80,417			84,120			84,651			77,317			71,953			68,315			69,105
Non-interest income		12,202			15,622			9,852			8,831			8,986			16,827			12,453			12,626
Non-interest expense		49,532			47,844			47,342			47,871			43,990			48,383			45,410			47,783
Income before income tax expense		43,735			48,195			46,630			45,611			42,313			40,397			35,358			33,948
Income tax expense		15,276			17,686			16,619			16,547			14,459			14,162			10,906			11,734
Net income		28,459			30,509			30,011			29,064			27,854			26,235			24,452			22,214
Less: net income attributable to noncontrolling interest		153			151			150			151			153			151			150			151
Net income attributable to Cathay General Bancorp		28,306			30,358			29,861			28,913			27,701			26,084			24,302			22,063
Dividends on preferred stock		(4,127	)		(4,123	)		(4,121	)		(4,117	)		(4,114	)		(4,111	)		(4,107	)		(4,105	)
Net income available to common stockholders	$	24,179		$	26,235		$	25,740		$	24,796		$	23,587		$	21,973		$	20,195		$	17,958
Basic net income attributable to common stockholders per common share	$	0.31		$	0.33		$	0.33		$	0.32		$	0.30		$	0.28		$	0.26		$	0.23
Diluted net income attributable to commonstockholders per common share	$	0.31		$	0.33		$	0.33		$	0.32		$	0.30		$	0.28		$	0.26		$	0.23

XML

Accounting Policies, by Policy (Policies)

12 Months Ended

Dec. 31, 2012

Use of Estimates, Policy [Policy Text Block]

Use of Estimates.  The preparation of the Consolidated Financial Statements in accordance with GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the period.  Actual results could differ from those estimates.  The significant estimates subject to change relate to the allowance for loan losses, goodwill impairment assessment, other-than-temporary impairment analysis on investments, fair value disclosures, and the fair value of options granted.  The more significant of these policies are described below.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations. The Bank was incorporated in California and started its business from California. Therefore, loans originated and deposits solicited were mainly from California.  As of December 31, 2012, gross loans were primarily comprised of 50.7% of commercial mortgage loans and 28.6% of commercial loans.  As of December 31, 2012, approximately 63% of the Bank’s residential mortgages were for properties located in California.  Total deposits were comprised of 43.6% of time deposit of $100,000 or more (Jumbo CDs) at December 31, 2012, and approximately 67.4% of the Company’s Jumbo CDs have been on deposit with the Company for two years or more.

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

Allowance for Loan Losses.  The determination of the amount of the provision for loan losses charged to operations reflects management’s current judgment about the credit quality of the loan portfolio and takes into consideration changes in lending policies and procedures, changes in economic and business conditions, changes in the nature and volume of the portfolio and in the terms of loans, changes in the experience, ability and depth of lending management, changes in the volume and severity of past due, non-accrual and adversely classified or graded loans, changes in the quality of the loan review system, changes in the value of underlying collateral for collateral-dependent loans, the existence and effect of any concentrations of credit and the effect of competition, legal and regulatory requirements, and other external factors. The nature of the process by which loan losses is determined the appropriate allowance for loan losses requires the exercise of considerable judgment. The allowance is increased by the provision for loan losses and decreased by charge-offs when management believes the uncollectibility of a loan is confirmed.

Subsequent recoveries, if any, are credited to the allowance. A weakening of the economy or other factors that adversely affect asset quality could result in an increase in the number of delinquencies, bankruptcies, or defaults, and a higher level of non-performing assets, net charge-offs, and provision for loan losses in future periods.

The total allowance for loan losses consists of two components: specific allowances and general allowances. To determine the adequacy of the allowance in each of these two components, two primary methodologies are employed, the individual loan review analysis methodology and the classification migration methodology.  These methodologies support the basis for determining allocations between the various loan categories and the overall adequacy of our allowance to provide for probable losses inherent in the loan portfolio. These methodologies are further supported by additional analysis of relevant factors such as the historical losses in the portfolio, and environmental factors which include trends in  delinquency and non-accrual, and other significant factors, such as the national and local economy, the volume and composition of the portfolio,  strength of management and loan staff, underwriting standards,  and the concentration of credit.  

The Bank’s management allocates a specific allowance for “Impaired Credits,” in accordance with Accounting Standard Codification (“ASC”) Section 310-10-35.  For non-Impaired Credits, a general allowance is established for those loans internally classified and risk graded Pass, Minimally Acceptable, Special Mention, or Substandard based on historical losses in the specific loan portfolio and a reserve based on environmental factors determined for that loan group. The level of the general allowance is established to provide coverage for management’s estimate of the credit risk in the loan portfolio by various loan segments not covered by the specific allowance.

Resale Agreements, Securities Possession Policy

Securities Purchased Under Agreements to Resell. The Company purchases securities under agreements to resell with various terms.These agreements are collateralized by agency securities and mortgage backed securities that are generally held by a third party custodian.The purchases are over-collateralized to ensure against unfavorable market price movements.In the event that the fair market value of the securities decreases below the collateral requirements under the related repurchase agreements, the counterparty is required to deliver additional securities.The counterparties to these agreements are nationally recognized investment banking firms that meet credit eligibility criteria and with whom a master repurchase agreement has been duly executed.

Marketable Securities, Held-to-maturity Securities, Policy [Policy Text Block]

Securities.  Securities are classified as held-to-maturity when management has the ability and intent to hold these securities until maturity.  Securities are classified as available-for-sale when management intends to hold the securities for an indefinite period of time, or when the securities may be utilized for tactical asset/liability purposes, and may be sold from time to time to manage interest rate exposure and resultant prepayment risk and liquidity needs.  Securities are classified as trading securities when management intends to sell the securities in the near term.  Securities purchased are designated as held-to-maturity, available-for-sale, or trading securities at the time of acquisition.

      Securities held-to-maturity are stated at cost, adjusted for the amortization of premiums and the accretion of discounts on a level-yield basis.  The carrying value of these assets is not adjusted for temporary declines in fair value since the Company has the positive intent and ability to hold them to maturity.  Securities available-for-sale are carried at fair value, and any unrealized holding gains or losses are excluded from earnings and reported as a separate component of stockholders’ equity, net of tax, in accumulated other comprehensive income until realized.  Realized gains or losses are determined on the specific identification method.  Premiums and discounts are amortized or accreted as adjustment of yield on a level-yield basis.

ASC Topic 320 requires an entity to assess whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  If either of these conditions is met, an entity must recognize an other-than-temporary impairment (“OTTI”).  If an entity does not intend to sell the debt security and will not be required to sell the debt security, the entity must consider whether it will recover the amortized cost basis of the security.  If the present value of expected cash flows is less than the amortized cost basis of the security, OTTI shall have considered to have occurred.  OTTI is then separated into the amount of the total impairment related to credit losses and the amount of the total impairment related to all other factors.  An entity determines the impairment related to credit losses by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.  OTTI related to the credit loss is then recognized in earnings.  OTTI related to all other factors is recognized in other comprehensive income.  OTTI not related to the credit loss for a held-to-maturity security should be recognized separately in a new category of other comprehensive income and amortized over the remaining life of the debt security as an increase in the carrying value of the security only when the entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its remaining amortized cost basis.  The Company has both the ability and the intent to hold and it is not more likely than not that the Company will be required to sell those securities with unrealized losses before recovery of their amortized cost basis.

Trading securities are reported at fair value, with unrealized gains or losses included in income.

Investment In Federal Home Loan Bank Stock [Policy Text Block]

Investment in Federal Home Loan Bank (“FHLB”) Stock.   As a member of the FHLB system the Bank is required to maintain an investment in the capital stock of the FHLB.  The amount of investment is also affected by the outstanding advances under the line of credit the Bank maintains with the FHLB.  FHLB stock is carried at cost and is pledged as collateral to the FHLB.  FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value.  The carrying amount of the FHLB stock was $41.3 million at December 31, 2012, and $53.0 million at December 31, 2011.  As of December 31, 2012, 68,714 shares of FHLB stock was the minimum stock requirement based on outstanding FHLB borrowings of $146.2 million.  As of December 31, 2012, the Company owned 412,716 shares of FHLB stock.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Loans.  Loans are carried at amounts advanced, less principal payments collected and net deferred loan fees.  Interest is accrued and earned daily on an actual or 360-day basis.  Interest accruals on business loans and non-residential real estate loans are generally discontinued whenever the payment of interest or principal is 90 days or more past due, based on contractual terms.  Such loans are placed on non-accrual status, unless the loan is well secured, and there is a high probability of recovery in full, as determined by management.  When loans are placed on a non-accrual status, previously accrued but unpaid interest is reversed and charged against current income, and subsequent payments received are generally first applied toward the outstanding principal balance of the loan.  The loan is generally returned to accrual status when the borrower has brought the past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled.  A non-accrual loan may also be returned to accrual status if all principal and interest contractually due are reasonably assured of repayment within a reasonable period and there has been a sustained period of payment performance, generally six months. Loan origination fees and commitment fees, offset by certain direct loan origination costs, are deferred and recognized over the contractual life of the loan as a yield adjustment.  The amortization utilizes the interest method.  If a loan is placed on non-accrual status, the amortization of the loan fees and the accretion of discounts are discontinued until the loan is returned to accruing status.

        Loans held for sale are carried at the lower of aggregate cost or fair value. Gains and losses are recorded in non-interest income based on the difference between sales proceeds, net of sales commissions, and carrying value.

Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy [Policy Text Block]

Loans Acquired Through Transfer. Loans acquired through the completion of a transfer, including loans acquired in a business combination, that have evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payment receivables are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance.  The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan.  Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or a valuation allowance.  Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life.  Decreases in expected cash flows are recognized as impairment.  Valuation allowance on these impaired loans reflect only losses incurred after the acquisition.

Impaired Financing Receivable, Policy [Policy Text Block]

Impaired Loans.  A loan is considered impaired when it is probable that the Bank will be unable to collect all amounts due (i.e. both principal and interest) according to the contractual terms of the loan agreement.  The measurement of impairment may be based on (1) the present value of the expected future cash flows of the impaired loan discounted at the loan’s original effective interest rate, (2) the observable market price of the impaired loan or (3) the fair value of the collateral of a collateral-dependent loan.  The amount by which the recorded investment in the loan exceeds the measure of the impaired loan is recognized by recording a valuation allowance with a corresponding charge to the provision for loan losses.  The Company stratifies its loan portfolio by size and treats smaller non-performing loans with an outstanding balance based on the Company’s defined criteria, generally where the loan amount is $500,000 or less, as a homogenous portfolio.  Once a loan has been identified as a possible problem loan, the Company conducts a periodic review of such loan in order to test for impairment.  When loans are placed on an impaired status, previously accrued but unpaid interest is reversed against current income and subsequent payments received are generally first applied toward the outstanding principal balance of the loan.

Loans and Leases Receivable, Troubled Debt Restructuring Policy [Policy Text Block]

Troubled Debt Restructured Loan (“TDR”.) A TDR is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower.  The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the loan balance or accrued interest, or extension of the maturity date.  Although these loan modifications are considered TDRs, accruing TDR loans have, pursuant to the Bank’s policy, performed under the restructured terms and have demonstrated sustained performance under the modified terms for six months before being returned to accrual status.  The sustained performance considered by management pursuant to its policy includes the periods prior to the modification if the prior performance met or exceeded the modified terms.  This would include cash paid by the borrower prior to the restructure to set up interest reserves.  Loans classified as TDRs are reported as impaired loans.

Loan Commitments, Policy [Policy Text Block]

Unfunded Loan Commitments.  Unfunded loan commitments are generally related to providing credit facilities to clients of the Bank, and are not actively traded financial instruments.  These unfunded commitments are disclosed as off-balance sheet financial instruments in Note 14 in the Notes to Consolidated Financial Statements.

Letter Of Credit Fees [Policy Text Block]

Letter of Credit Fees.  Issuance and commitment fees received for the issuance of commercial or standby letters of credit are recognized over the term of the instruments.

Property, Plant and Equipment, Policy [Policy Text Block]

Premises and Equipment.  Premises and equipment are carried at cost, less accumulated depreciation.  Depreciation is computed on the straight-line method based on the following estimated useful lives of the assets:

Type	Estimated Useful Life
Buildings (years)	15	to	45
Building improvements (years)	5	to	20
Furniture, fixtures, and equipment (years)	3	to	25
Leasehold improvements	Shorter of useful lives or the terms of the leases

Improvements are capitalized and amortized to occupancy expense based on the above table. Construction in process is carried at cost and includes land acquisition cost, architectural fees, general contractor fees, capitalized interest and other costs related directly to the construction of a property.

Real Estate Owned, Valuation Allowance, Policy [Policy Text Block]

Other Real Estate Owned.  Real estate acquired in the settlement of loans is initially recorded at fair value, less estimated costs to sell.  Specific valuation allowances on other real estate owned are recorded through charges to operations to recognize declines in fair value subsequent to foreclosure.  Gains on sales are recognized when certain criteria relating to the buyer’s initial and continuing investment in the property are met.

Investments In Affordable Housing [Policy Text Block]

Investments in Affordable Housing.  The Company is a limited partner in limited partnerships that invest in low-income housing projects that qualify for Federal and/or State income tax credits.  As further discussed in Note 7, the partnership interests are accounted for utilizing the equity method of accounting.  As of December 31, 2012, six of the limited partnerships in which the Company has an equity interest were determined to be variable interest entities for which the Company is the primary beneficiary.  The Company therefore consolidated the financial statements of these six limited partnerships into its Consolidated Financial Statements.

Investments In Venture Capital [Policy Text Block]

Investments in Venture Capital.  The Company invests in limited partnerships that invest in nonpublic companies.  These partnerships are commonly referred to as venture capital investments.  These limited partnership interests represent ownership of less than 5% and are carried under the cost method with other-than-temporary impairment charged against net income.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Goodwill Impairment. Goodwill represents the excess of costs over fair value of assets of businesses acquired.  Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC Topic 350.  ASC Topic 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360, formerly, SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

The Company’s policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.  Accounting standards require management to estimate the fair value of each reporting unit in making the assessment of impairment at least annually.  

The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350.  The two-step impairment testing process conducted by us, if needed, begins by assigning net assets and goodwill to our three reporting units- Commercial Lending, Retail Banking, and East Coast Operations.  The Company then completes “step one” of the impairment test by comparing the fair value of each reporting unit (as determined based on the discussion below) with the recorded book value (or “carrying amount”) of its net assets, with goodwill included in the computation of the carrying amount.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired, and “step two” of the impairment test is not necessary.  If the carrying amount of a reporting unit exceeds its fair value, step two of the impairment test is performed to determine the amount of impairment.  Step two of the impairment test compares the carrying amount of the reporting unit’s goodwill to the “implied fair value” of that goodwill.  The implied fair value of goodwill is computed by assuming that all assets and liabilities of the reporting unit would be adjusted to the current fair value, with the offset as an adjustment to goodwill.  This adjusted goodwill balance is the implied fair value used in step two.  An impairment charge is recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value.

The Commercial Lending unit did not have any goodwill allocated to the unit and accordingly no goodwill impairment testing was performed for that unit.  The reporting unit fair values for the Retail Banking unit and the East Coast Operations were determined based on an equal weighting of (1) the fair value determined using a market approach using a combination of price to earnings multiples determined based on a representative peer group applied to 2012 and forecasted 2013 and 2014 earnings, and a price to book multiple and (2) the fair value determined using a dividend discount model with the discount rate determined using the same representative peer group.  A control premium was then applied to the unit fair values so determined as of December 31, 2012.

In determining the forecasted earnings for the Retail Banking unit and the East Coast Operations, the financial forecasts assume muted growth during the forecast period.  The principal driver of the Company’s negative operating results has been the Commercial Lending reporting unit where the vast majority of the Company’s loan losses have been incurred.  A summary of the respective unit fair value, carrying amounts and unit goodwill as well as the percentage by which fair value exceed carrying value of each reporting unit as of December 31, 2012, is shown below:

Reporting Units	Carrying Amount		Fair Value		Fair Value in Excess of Carrying Amount			Allocated Goodwill
	(Dollars in thousands)
Commercial Lending Unit	$	797,702	$	363,601		-			-
Retail Banking Unit		361,589		675,580		86.8	%		235,195
East Coast Operations		203,766		410,489		101.5	%		81,145
Total	$	1,363,057	$	1,449,670				$	316,340

If economic conditions were to worsen instead of improve as assumed in the key assumptions, then the forecasted earnings for the Retail Banking unit and the East Coast Operations could be significantly lower than projected.  In addition, a worsening of economic conditions could potentially reduce the price to earnings multiples and price to book multiples of peer groups for Retail Banking and East Coast Operations and result in a reduction in the fair value of these units even if the forecasted earnings were achieved.

       Core Deposit Premium.  Core deposit premium, which represents the purchase price over the fair value of the deposits acquired from other financial institutions, is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.  If a pattern of consumption cannot be reliably determined, straight-line amortization is used.  The Company assesses the recoverability of this intangible asset by determining whether the amortization of the premium balance over its remaining life can be recovered through the remaining deposit portfolio and amortizes core deposit premium over its estimated useful life.

        At December 31, 2012, the unamortized balance of core deposit premium was $4.9 million, which was net of accumulated amortization of $55.3 million.  Aggregate amortization expense for core deposit premium was $5.7 million for 2012, $5.9 million for 2011, and $6.0 million for 2010.  At December 31, 2012, the estimated aggregate amortization of core deposit premiums is $4.5 million for 2013 and $0.4 million for 2014.  At December 31, 2011, the unamortized balance of core deposit premium was $10.6 million, which was net of accumulated amortization of $49.8 million.

Repurchase Agreements, Valuation, Policy [Policy Text Block]

Securities Sold Under Agreements to Repurchase. The Company sells certain securities under agreements to repurchase.  The agreements are treated as collateralized financing transactions and the obligations to repurchase securities sold are reflected as a liability in the accompanying Consolidated Balance Sheets.  The securities underlying the agreements remain in the applicable asset accounts.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation.  Stock-based compensation expense for stock options is calculated based on the fair value of the award at the grant date for those options expected to vest, and is recognized as an expense over the vesting period of the grant using the straight-line method.  The Company uses the Black-Scholes option pricing model to estimate the value of granted options.  This model takes into account the option exercise price, the expected life, the current price of the underlying stock, the expected volatility of the Company’s stock, expected dividends on the stock and a risk-free interest rate.  The Company estimates the expected volatility based on the Company’s historical stock prices for the period corresponding to the expected life of the stock options. Option compensation expense totaled $762,000 in 2012, $1.0 million in 2011, and $3.0 million in 2010.  Stock-based compensation is recognized ratably over the requisite service period for all awards.  Unrecognized stock-based compensation expense related to stock options totaled $129,000 at December 31, 2012, and is expected to be recognized over the next 2 months.

Derivatives, Policy [Policy Text Block]

Foreign Exchange Forwards and Foreign Currency Option Contracts.  We enter into foreign exchange forward contracts and foreign currency option contracts with correspondent banks to mitigate the risk of fluctuations in foreign currency exchange rates for foreign currency certificates of deposit, foreign exchange contracts or foreign currency option contracts entered into with our clients. These contracts are not designated as hedging instruments and are recorded at fair value in our Consolidated Balance Sheets. Changes in the fair value of these contracts as well as the related foreign currency certificates of deposit, foreign exchange contracts or foreign currency option contracts, are recognized immediately in net income as a component of non-interest income. Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.

Income Tax, Policy [Policy Text Block]

Income Taxes.  The provision for income taxes is based on income reported for financial statement purposes, and differs from the amount of taxes currently payable, since certain income and expense items are reported for financial statement purposes in different periods than those for tax reporting purposes.  The Company accounts for income taxes using the asset and liability approach, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.  A valuation allowance is established for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income/(loss).  Comprehensive income/(loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.  Comprehensive income/(loss) generally includes net income/(loss), foreign currency translation adjustments, minimum pension liability adjustments, unrealized gains and losses on investments in securities available-for-sale, and cash flow hedges.  Comprehensive income/(loss) and its components are reported and displayed in the Company’s consolidated statements of operations and comprehensive income/(loss).

Earnings Per Share, Policy [Policy Text Block]

Net Income per Common Share.  Earnings per share (“EPS”) is computed on a basic and diluted basis.  Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shares in the earnings of the Company.  Potential dilution is excluded from computation of diluted per-share amounts when a net loss from operations exists.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation.  The Company considers the functional currency of its foreign operations to be the United States dollar.  Accordingly, the Company remeasures monetary assets and liabilities at year-end exchange rates, while nonmonetary items are remeasured at historical rates.  Income and expense accounts are remeasured at the average rates in effect during the year, except for depreciation, which is remeasured at historical rates.  Foreign currency transaction gains and losses are recognized in income in the period of occurrence.

Cash and Cash Equivalents, Policy [Policy Text Block]

Statement of Cash Flows.  Cash and cash equivalents include short-term highly-liquid investments that generally have an original maturity of three months or less.

Segment Reporting, Policy [Policy Text Block]

Segment Information and Disclosures.  Accounting principles generally accepted in the United States of America establish standards to report information about operating segments in annual financial statements and require reporting of selected information about operating segments in interim reports to stockholders.  It also establishes standards for related disclosures about products and services, geographic areas, and major customers.  The Company has concluded it has one operating segment.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standard Board (“FASB”) issued ASU 2011-04 “Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs.”     ASU 2011-04 amends Topic 820, “Fair Value Measurements and Disclosures,” to improve fair value measurement consistency in U.S. generally accepted accounting principles and International Financial Reporting Standards (“IFRS”).  The amendments also clarity the application of existing fair value measurement and disclosure requirements, change certain principles and requirements in Topic 820, and requires additional fair value disclosures.  ASU 2011-04 became effective on January 1, 2012.  Adoption of ASU 2011-04 did not have a significant impact on the Company’s Consolidated Financial Statements.

In September 2011, FASB issued ASU 2011-08 “Intangible- Goodwill and other.” ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. ASU 2011-08 became effective for interim and annual goodwill impairment tests performed after December 15, 2011.  Adoption of ASU 2011-08 did not have a significant impact on the Company’s Consolidated Financial Statements.

XML

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Significant Accounting Policies [Text Block]

1.     Summary of Significant Accounting Policies

       The accompanying Consolidated Financial Statements include the accounts of Cathay General Bancorp (the “Bancorp”), a Delaware corporation, its wholly-owned subsidiaries, Cathay Bank (the “Bank”), a California state-chartered bank, six limited partnerships investing in affordable housing projects, and GBC Venture Capital, Inc. (together, the “Company”).  All significant inter-company transactions and balances have been eliminated in consolidation.  The Consolidated Financial Statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and general practices within the banking industry.

        Organization and Background.  The business activities of the Bancorp consist primarily of the operations of the Bank, which owns 100% of the common securities of the following subsidiaries: Cathay Real Estate Investment Trust, GBC Real Estate Investments, Inc., Cathay Holdings LLC, Cathay Holdings 2, LLC, Cathay Holdings 3, LLC, Cathay Community Development Corporation and its wholly owned subsidiary, Cathay New Asia Community Development Corporation.

There are limited operating business activities currently at the Bancorp.  The Bank is a commercial bank, servicing primarily the individuals, professionals, and small to medium-sized businesses in the local markets in which its branches are located.  Its operations include the acceptance of checking, savings, and time deposits, and the making of commercial, real estate, and consumer loans.  The Bank also offers trade financing, letters of credit, wire transfer, foreign currency spot and forward contracts, Internet banking, investment services, and other customary banking services to its customers.

Use of Estimates.  The preparation of the Consolidated Financial Statements in accordance with GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the period.  Actual results could differ from those estimates.  The significant estimates subject to change relate to the allowance for loan losses, goodwill impairment assessment, other-than-temporary impairment analysis on investments, fair value disclosures, and the fair value of options granted.  The more significant of these policies are described below.

Concentrations. The Bank was incorporated in California and started its business from California. Therefore, loans originated and deposits solicited were mainly from California.  As of December 31, 2012, gross loans were primarily comprised of 50.7% of commercial mortgage loans and 28.6% of commercial loans.  As of December 31, 2012, approximately 63% of the Bank’s residential mortgages were for properties located in California.  Total deposits were comprised of 43.6% of time deposit of $100,000 or more (Jumbo CDs) at December 31, 2012, and approximately 67.4% of the Company’s Jumbo CDs have been on deposit with the Company for two years or more.

Allowance for Loan Losses.  The determination of the amount of the provision for loan losses charged to operations reflects management’s current judgment about the credit quality of the loan portfolio and takes into consideration changes in lending policies and procedures, changes in economic and business conditions, changes in the nature and volume of the portfolio and in the terms of loans, changes in the experience, ability and depth of lending management, changes in the volume and severity of past due, non-accrual and adversely classified or graded loans, changes in the quality of the loan review system, changes in the value of underlying collateral for collateral-dependent loans, the existence and effect of any concentrations of credit and the effect of competition, legal and regulatory requirements, and other external factors. The nature of the process by which loan losses is determined the appropriate allowance for loan losses requires the exercise of considerable judgment. The allowance is increased by the provision for loan losses and decreased by charge-offs when management believes the uncollectibility of a loan is confirmed.

Subsequent recoveries, if any, are credited to the allowance. A weakening of the economy or other factors that adversely affect asset quality could result in an increase in the number of delinquencies, bankruptcies, or defaults, and a higher level of non-performing assets, net charge-offs, and provision for loan losses in future periods.

The total allowance for loan losses consists of two components: specific allowances and general allowances. To determine the adequacy of the allowance in each of these two components, two primary methodologies are employed, the individual loan review analysis methodology and the classification migration methodology.  These methodologies support the basis for determining allocations between the various loan categories and the overall adequacy of our allowance to provide for probable losses inherent in the loan portfolio. These methodologies are further supported by additional analysis of relevant factors such as the historical losses in the portfolio, and environmental factors which include trends in  delinquency and non-accrual, and other significant factors, such as the national and local economy, the volume and composition of the portfolio,  strength of management and loan staff, underwriting standards,  and the concentration of credit.  

The Bank’s management allocates a specific allowance for “Impaired Credits,” in accordance with Accounting Standard Codification (“ASC”) Section 310-10-35.  For non-Impaired Credits, a general allowance is established for those loans internally classified and risk graded Pass, Minimally Acceptable, Special Mention, or Substandard based on historical losses in the specific loan portfolio and a reserve based on environmental factors determined for that loan group. The level of the general allowance is established to provide coverage for management’s estimate of the credit risk in the loan portfolio by various loan segments not covered by the specific allowance.

Securities Purchased Under Agreements to Resell.  The Company purchases securities under agreements to resell with various terms.  These agreements are collateralized by agency securities and mortgage backed securities that are generally held by a third party custodian.  The purchases are over-collateralized to ensure against unfavorable market price movements.  In the event that the fair market value of the securities decreases below the collateral requirements under the related repurchase agreements, the counterparty is required to deliver additional securities.  The counterparties to these agreements are nationally recognized investment banking firms that meet credit eligibility criteria and with whom a master repurchase agreement has been duly executed.

      Securities.  Securities are classified as held-to-maturity when management has the ability and intent to hold these securities until maturity.  Securities are classified as available-for-sale when management intends to hold the securities for an indefinite period of time, or when the securities may be utilized for tactical asset/liability purposes, and may be sold from time to time to manage interest rate exposure and resultant prepayment risk and liquidity needs.  Securities are classified as trading securities when management intends to sell the securities in the near term.  Securities purchased are designated as held-to-maturity, available-for-sale, or trading securities at the time of acquisition.

      Securities held-to-maturity are stated at cost, adjusted for the amortization of premiums and the accretion of discounts on a level-yield basis.  The carrying value of these assets is not adjusted for temporary declines in fair value since the Company has the positive intent and ability to hold them to maturity.  Securities available-for-sale are carried at fair value, and any unrealized holding gains or losses are excluded from earnings and reported as a separate component of stockholders’ equity, net of tax, in accumulated other comprehensive income until realized.  Realized gains or losses are determined on the specific identification method.  Premiums and discounts are amortized or accreted as adjustment of yield on a level-yield basis.

ASC Topic 320 requires an entity to assess whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.  If either of these conditions is met, an entity must recognize an other-than-temporary impairment (“OTTI”).  If an entity does not intend to sell the debt security and will not be required to sell the debt security, the entity must consider whether it will recover the amortized cost basis of the security.  If the present value of expected cash flows is less than the amortized cost basis of the security, OTTI shall have considered to have occurred.  OTTI is then separated into the amount of the total impairment related to credit losses and the amount of the total impairment related to all other factors.  An entity determines the impairment related to credit losses by comparing the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.  OTTI related to the credit loss is then recognized in earnings.  OTTI related to all other factors is recognized in other comprehensive income.  OTTI not related to the credit loss for a held-to-maturity security should be recognized separately in a new category of other comprehensive income and amortized over the remaining life of the debt security as an increase in the carrying value of the security only when the entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its remaining amortized cost basis.  The Company has both the ability and the intent to hold and it is not more likely than not that the Company will be required to sell those securities with unrealized losses before recovery of their amortized cost basis.

Trading securities are reported at fair value, with unrealized gains or losses included in income.

Investment in Federal Home Loan Bank (“FHLB”) Stock.   As a member of the FHLB system the Bank is required to maintain an investment in the capital stock of the FHLB.  The amount of investment is also affected by the outstanding advances under the line of credit the Bank maintains with the FHLB.  FHLB stock is carried at cost and is pledged as collateral to the FHLB.  FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value.  The carrying amount of the FHLB stock was $41.3 million at December 31, 2012, and $53.0 million at December 31, 2011.  As of December 31, 2012, 68,714 shares of FHLB stock was the minimum stock requirement based on outstanding FHLB borrowings of $146.2 million.  As of December 31, 2012, the Company owned 412,716 shares of FHLB stock.

      Loans.  Loans are carried at amounts advanced, less principal payments collected and net deferred loan fees.  Interest is accrued and earned daily on an actual or 360-day basis.  Interest accruals on business loans and non-residential real estate loans are generally discontinued whenever the payment of interest or principal is 90 days or more past due, based on contractual terms.  Such loans are placed on non-accrual status, unless the loan is well secured, and there is a high probability of recovery in full, as determined by management.  When loans are placed on a non-accrual status, previously accrued but unpaid interest is reversed and charged against current income, and subsequent payments received are generally first applied toward the outstanding principal balance of the loan.  The loan is generally returned to accrual status when the borrower has brought the past due principal and interest payments current and, in the opinion of management, the borrower has demonstrated the ability to make future payments of principal and interest as scheduled.  A non-accrual loan may also be returned to accrual status if all principal and interest contractually due are reasonably assured of repayment within a reasonable period and there has been a sustained period of payment performance, generally six months. Loan origination fees and commitment fees, offset by certain direct loan origination costs, are deferred and recognized over the contractual life of the loan as a yield adjustment.  The amortization utilizes the interest method.  If a loan is placed on non-accrual status, the amortization of the loan fees and the accretion of discounts are discontinued until the loan is returned to accruing status.

        Loans held for sale are carried at the lower of aggregate cost or fair value. Gains and losses are recorded in non-interest income based on the difference between sales proceeds, net of sales commissions, and carrying value.

        Loans Acquired Through Transfer. Loans acquired through the completion of a transfer, including loans acquired in a business combination, that have evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payment receivables are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance.  The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income on a level-yield method over the life of the loan.  Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment or as a loss accrual or a valuation allowance.  Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life.  Decreases in expected cash flows are recognized as impairment.  Valuation allowance on these impaired loans reflect only losses incurred after the acquisition.

Impaired Loans.  A loan is considered impaired when it is probable that the Bank will be unable to collect all amounts due (i.e. both principal and interest) according to the contractual terms of the loan agreement.  The measurement of impairment may be based on (1) the present value of the expected future cash flows of the impaired loan discounted at the loan’s original effective interest rate, (2) the observable market price of the impaired loan or (3) the fair value of the collateral of a collateral-dependent loan.  The amount by which the recorded investment in the loan exceeds the measure of the impaired loan is recognized by recording a valuation allowance with a corresponding charge to the provision for loan losses.  The Company stratifies its loan portfolio by size and treats smaller non-performing loans with an outstanding balance based on the Company’s defined criteria, generally where the loan amount is $500,000 or less, as a homogenous portfolio.  Once a loan has been identified as a possible problem loan, the Company conducts a periodic review of such loan in order to test for impairment.  When loans are placed on an impaired status, previously accrued but unpaid interest is reversed against current income and subsequent payments received are generally first applied toward the outstanding principal balance of the loan.

Troubled Debt Restructured Loan (“TDR”.) A TDR is a formal modification of the terms of a loan when the lender, for economic or legal reasons related to the borrower’s financial difficulties, grants a concession to the borrower.  The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the loan balance or accrued interest, or extension of the maturity date.  Although these loan modifications are considered TDRs, accruing TDR loans have, pursuant to the Bank’s policy, performed under the restructured terms and have demonstrated sustained performance under the modified terms for six months before being returned to accrual status.  The sustained performance considered by management pursuant to its policy includes the periods prior to the modification if the prior performance met or exceeded the modified terms.  This would include cash paid by the borrower prior to the restructure to set up interest reserves.  Loans classified as TDRs are reported as impaired loans.

Unfunded Loan Commitments.  Unfunded loan commitments are generally related to providing credit facilities to clients of the Bank, and are not actively traded financial instruments.  These unfunded commitments are disclosed as off-balance sheet financial instruments in Note 14 in the Notes to Consolidated Financial Statements.

        Letter of Credit Fees.  Issuance and commitment fees received for the issuance of commercial or standby letters of credit are recognized over the term of the instruments.

        Premises and Equipment.  Premises and equipment are carried at cost, less accumulated depreciation.  Depreciation is computed on the straight-line method based on the following estimated useful lives of the assets:

Type	Estimated Useful Life
Buildings (years)	15	to	45
Building improvements (years)	5	to	20
Furniture, fixtures, and equipment (years)	3	to	25
Leasehold improvements	Shorter of useful lives or the terms of the leases

Improvements are capitalized and amortized to occupancy expense based on the above table. Construction in process is carried at cost and includes land acquisition cost, architectural fees, general contractor fees, capitalized interest and other costs related directly to the construction of a property.

        Other Real Estate Owned.  Real estate acquired in the settlement of loans is initially recorded at fair value, less estimated costs to sell.  Specific valuation allowances on other real estate owned are recorded through charges to operations to recognize declines in fair value subsequent to foreclosure.  Gains on sales are recognized when certain criteria relating to the buyer’s initial and continuing investment in the property are met.

        Investments in Affordable Housing.  The Company is a limited partner in limited partnerships that invest in low-income housing projects that qualify for Federal and/or State income tax credits.  As further discussed in Note 7, the partnership interests are accounted for utilizing the equity method of accounting.  As of December 31, 2012, six of the limited partnerships in which the Company has an equity interest were determined to be variable interest entities for which the Company is the primary beneficiary.  The Company therefore consolidated the financial statements of these six limited partnerships into its Consolidated Financial Statements.

Investments in Venture Capital.  The Company invests in limited partnerships that invest in nonpublic companies.  These partnerships are commonly referred to as venture capital investments.  These limited partnership interests represent ownership of less than 5% and are carried under the cost method with other-than-temporary impairment charged against net income.

        Goodwill and Goodwill Impairment. Goodwill represents the excess of costs over fair value of assets of businesses acquired.  Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of ASC Topic 350.  ASC Topic 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC Topic 360, formerly, SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

The Company’s policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value.  Accounting standards require management to estimate the fair value of each reporting unit in making the assessment of impairment at least annually.  

The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350.  The two-step impairment testing process conducted by us, if needed, begins by assigning net assets and goodwill to our three reporting units- Commercial Lending, Retail Banking, and East Coast Operations.  The Company then completes “step one” of the impairment test by comparing the fair value of each reporting unit (as determined based on the discussion below) with the recorded book value (or “carrying amount”) of its net assets, with goodwill included in the computation of the carrying amount.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired, and “step two” of the impairment test is not necessary.  If the carrying amount of a reporting unit exceeds its fair value, step two of the impairment test is performed to determine the amount of impairment.  Step two of the impairment test compares the carrying amount of the reporting unit’s goodwill to the “implied fair value” of that goodwill.  The implied fair value of goodwill is computed by assuming that all assets and liabilities of the reporting unit would be adjusted to the current fair value, with the offset as an adjustment to goodwill.  This adjusted goodwill balance is the implied fair value used in step two.  An impairment charge is recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value.

The Commercial Lending unit did not have any goodwill allocated to the unit and accordingly no goodwill impairment testing was performed for that unit.  The reporting unit fair values for the Retail Banking unit and the East Coast Operations were determined based on an equal weighting of (1) the fair value determined using a market approach using a combination of price to earnings multiples determined based on a representative peer group applied to 2012 and forecasted 2013 and 2014 earnings, and a price to book multiple and (2) the fair value determined using a dividend discount model with the discount rate determined using the same representative peer group.  A control premium was then applied to the unit fair values so determined as of December 31, 2012.

In determining the forecasted earnings for the Retail Banking unit and the East Coast Operations, the financial forecasts assume muted growth during the forecast period.  The principal driver of the Company’s negative operating results has been the Commercial Lending reporting unit where the vast majority of the Company’s loan losses have been incurred.  A summary of the respective unit fair value, carrying amounts and unit goodwill as well as the percentage by which fair value exceed carrying value of each reporting unit as of December 31, 2012, is shown below:

Reporting Units	Carrying Amount		Fair Value		Fair Value in Excess of Carrying Amount			Allocated Goodwill
	(Dollars in thousands)
Commercial Lending Unit	$	797,702	$	363,601		-			-
Retail Banking Unit		361,589		675,580		86.8	%		235,195
East Coast Operations		203,766		410,489		101.5	%		81,145
Total	$	1,363,057	$	1,449,670				$	316,340

If economic conditions were to worsen instead of improve as assumed in the key assumptions, then the forecasted earnings for the Retail Banking unit and the East Coast Operations could be significantly lower than projected.  In addition, a worsening of economic conditions could potentially reduce the price to earnings multiples and price to book multiples of peer groups for Retail Banking and East Coast Operations and result in a reduction in the fair value of these units even if the forecasted earnings were achieved.

       Core Deposit Premium.  Core deposit premium, which represents the purchase price over the fair value of the deposits acquired from other financial institutions, is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.  If a pattern of consumption cannot be reliably determined, straight-line amortization is used.  The Company assesses the recoverability of this intangible asset by determining whether the amortization of the premium balance over its remaining life can be recovered through the remaining deposit portfolio and amortizes core deposit premium over its estimated useful life.

        At December 31, 2012, the unamortized balance of core deposit premium was $4.9 million, which was net of accumulated amortization of $55.3 million.  Aggregate amortization expense for core deposit premium was $5.7 million for 2012, $5.9 million for 2011, and $6.0 million for 2010.  At December 31, 2012, the estimated aggregate amortization of core deposit premiums is $4.5 million for 2013 and $0.4 million for 2014.  At December 31, 2011, the unamortized balance of core deposit premium was $10.6 million, which was net of accumulated amortization of $49.8 million.

Securities Sold Under Agreements to Repurchase. The Company sells certain securities under agreements to repurchase.  The agreements are treated as collateralized financing transactions and the obligations to repurchase securities sold are reflected as a liability in the accompanying Consolidated Balance Sheets.  The securities underlying the agreements remain in the applicable asset accounts.

Stock-Based Compensation.  Stock-based compensation expense for stock options is calculated based on the fair value of the award at the grant date for those options expected to vest, and is recognized as an expense over the vesting period of the grant using the straight-line method.  The Company uses the Black-Scholes option pricing model to estimate the value of granted options.  This model takes into account the option exercise price, the expected life, the current price of the underlying stock, the expected volatility of the Company’s stock, expected dividends on the stock and a risk-free interest rate.  The Company estimates the expected volatility based on the Company’s historical stock prices for the period corresponding to the expected life of the stock options. Option compensation expense totaled $762,000 in 2012, $1.0 million in 2011, and $3.0 million in 2010.  Stock-based compensation is recognized ratably over the requisite service period for all awards.  Unrecognized stock-based compensation expense related to stock options totaled $129,000 at December 31, 2012, and is expected to be recognized over the next 2 months.

Foreign Exchange Forwards and Foreign Currency Option Contracts.  We enter into foreign exchange forward contracts and foreign currency option contracts with correspondent banks to mitigate the risk of fluctuations in foreign currency exchange rates for foreign currency certificates of deposit, foreign exchange contracts or foreign currency option contracts entered into with our clients. These contracts are not designated as hedging instruments and are recorded at fair value in our Consolidated Balance Sheets. Changes in the fair value of these contracts as well as the related foreign currency certificates of deposit, foreign exchange contracts or foreign currency option contracts, are recognized immediately in net income as a component of non-interest income. Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.

Income Taxes.  The provision for income taxes is based on income reported for financial statement purposes, and differs from the amount of taxes currently payable, since certain income and expense items are reported for financial statement purposes in different periods than those for tax reporting purposes.  The Company accounts for income taxes using the asset and liability approach, the objective of which is to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.  A valuation allowance is established for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Comprehensive Income/(loss).  Comprehensive income/(loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources.  Comprehensive income/(loss) generally includes net income/(loss), foreign currency translation adjustments, minimum pension liability adjustments, unrealized gains and losses on investments in securities available-for-sale, and cash flow hedges.  Comprehensive income/(loss) and its components are reported and displayed in the Company’s consolidated statements of operations and comprehensive income/(loss).

        Net Income per Common Share.  Earnings per share (“EPS”) is computed on a basic and diluted basis.  Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shares in the earnings of the Company.  Potential dilution is excluded from computation of diluted per-share amounts when a net loss from operations exists.

Foreign Currency Translation.  The Company considers the functional currency of its foreign operations to be the United States dollar.  Accordingly, the Company remeasures monetary assets and liabilities at year-end exchange rates, while nonmonetary items are remeasured at historical rates.  Income and expense accounts are remeasured at the average rates in effect during the year, except for depreciation, which is remeasured at historical rates.  Foreign currency transaction gains and losses are recognized in income in the period of occurrence.

        Statement of Cash Flows.  Cash and cash equivalents include short-term highly-liquid investments that generally have an original maturity of three months or less.

       Segment Information and Disclosures.  Accounting principles generally accepted in the United States of America establish standards to report information about operating segments in annual financial statements and require reporting of selected information about operating segments in interim reports to stockholders.  It also establishes standards for related disclosures about products and services, geographic areas, and major customers.  The Company has concluded it has one operating segment.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standard Board (“FASB”) issued ASU 2011-04 “Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs.”     ASU 2011-04 amends Topic 820, “Fair Value Measurements and Disclosures,” to improve fair value measurement consistency in U.S. generally accepted accounting principles and International Financial Reporting Standards (“IFRS”).  The amendments also clarity the application of existing fair value measurement and disclosure requirements, change certain principles and requirements in Topic 820, and requires additional fair value disclosures.  ASU 2011-04 became effective on January 1, 2012.  Adoption of ASU 2011-04 did not have a significant impact on the Company’s Consolidated Financial Statements.

In September 2011, FASB issued ASU 2011-08 “Intangible- Goodwill and other.” ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. ASU 2011-08 became effective for interim and annual goodwill impairment tests performed after December 15, 2011.  Adoption of ASU 2011-08 did not have a significant impact on the Company’s Consolidated Financial Statements.

XML

Note 1 - Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Schedule Of Estimated Useful Lives Of Assets [Table Text Block]

Type	Estimated Useful Life
Buildings (years)	15	to	45
Building improvements (years)	5	to	20
Furniture, fixtures, and equipment (years)	3	to	25
Leasehold improvements	Shorter of useful lives or the terms of the leases

Schedule of Goodwill [Table Text Block]

Reporting Units	Carrying Amount		Fair Value		Fair Value in Excess of Carrying Amount			Allocated Goodwill
	(Dollars in thousands)
Commercial Lending Unit	$	797,702	$	363,601		-			-
Retail Banking Unit		361,589		675,580		86.8	%		235,195
East Coast Operations		203,766		410,489		101.5	%		81,145
Total	$	1,363,057	$	1,449,670				$	316,340

XML

Note 9 - Deposits (Detail) - Time Deposit Maturities (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Other Time Deposits [Member]
2013	$ 610,364
2014	25,011
2015	7,426
2016	155
2017	1,232
Thereafter	3
Total	644,191
Total Time Deposits [Member]
2013	3,506,076
2014	263,847
2015	67,735
2016	1,499
2017	20,901
Thereafter	3
Total	3,860,061
Time Deposits, $100,000 and Over [Member]
2013	2,895,712
2014	238,836
2015	60,309
2016	1,344
2017	19,669
Total	$ 3,215,870

XML

Note 20 - Condensed Financial Information of Cathay General Bancorp (Detail) - Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Assets
Cash	$ 144,909	$ 117,888	$ 87,347	$ 100,124
Other assets	166,595	206,768
Total assets	10,694,089	10,644,864
Liabilities
Junior subordinated debt	121,136
Other liabilities	54,040	46,864
Total liabilities	9,064,585	9,129,231
Stockholders' equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding at December 31, 2012, and December 31, 2011	254,580	250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011	830	829
Additional paid-in-capital	768,925	765,641
Accumulated other comprehensive loss, net	465	(8,732)
Retained earnings	721,993	624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011)	125,736	125,736
Total stockholders' equity	1,621,057	1,507,186
Total liabilities and stockholders' equity	10,694,089	10,644,864
Bank Subsidiaries [Member] | Parent Company [Member]
Assets
Investment in subsidiaries	1,569,902	1,593,831
Non-Bank Subsidiaries [Member] | Parent Company [Member]
Assets
Investment in subsidiaries	2,598	2,615
Parent Company [Member]
Assets
Cash	639	809
Short-term certificates of deposit	161,300	19,000
Other assets	9,936	14,189
Total assets	1,744,375	1,630,444
Liabilities
Junior subordinated debt	121,136	121,136
Other liabilities	2,182	2,122
Total liabilities	123,318	123,258
Stockholders' equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding at December 31, 2012, and December 31, 2011	254,580	250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011	830	829
Additional paid-in-capital	768,925	765,641
Accumulated other comprehensive loss, net	465	(8,732)
Retained earnings	721,993	624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011)	(125,736)	(125,736)
Total stockholders' equity	1,621,057	1,507,186
Total liabilities and stockholders' equity	$ 1,744,375	$ 1,630,444

XML

Note 11 - Capital Resources (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Subordinated Borrowing [Table Text Block]

Trust Name	Issuance Date	Principal Balance of Notes		Not Redeemable Until	Stated Maturity	Annualized Coupon Rate	Current Interest Rate			Date of Rate Change	Payable/ Distribution Date
	(Dollars in thousands)
Cathay Capital Trust I	June 26, 2003	$	20,619	June 30, 2008	June 30, 2033	3-month LIBOR + 3.15%		3.46	%	December 30, 2012	March 30 June 30 September 30 December 30
Cathay Statutory Trust I	September 17, 2003		20,619	September 17, 2008	September 17, 2033	3-month LIBOR + 3.00%		3.31	%	December 17, 2012	March 17 June 17 September 17 December 17
Cathay Capital Trust II	December 30, 2003		12,887	March 30, 2009	March 30, 2034	3-month LIBOR + 2.90%		3.21	%	December 30, 2012	March 30 June 30 September 30 December 30
Cathay Capital Trust III	March 28, 2007		46,392	June 15, 2012	June 15, 2037	3-month LIBOR + 1.48%		1.79	%	December 17, 2012	March 15 June 15 September 15 December 15
Cathay Capital Trust IV	May 31, 2007		20,619	September 6, 2012	September 6, 2037	3-month LIBOR 1.40%		1.71	%	December 6, 2012	March 6 June 6 September 6 December 6
Total Junior Subordinated Notes		$	121,136

XML

Note 2 - Cash and Cash Equivalents (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Average Reserve Balances Required To Be Maintained With Federal Bank	$ 12.9	$ 12.2

XML

Note 5 - Loans (Detail) - Allowance for Loan Losses by Portfolio Segment and Based on Impairment Method (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Loans individually evaluated for impairment
Allowance individually evaluated for impairment	$ 12,183	$ 198,728
Balance individually evaluated for impairment	248,597	6,737,239
Loans collectively evaluated for impairment
Allowance collectively evaluated for impairment	171,139	7,552
Balance collectively evaluated for impairment	7,180,550	321,973
Total allowance	183,322	206,280
Total balance	7,429,147	7,059,212
Commercial Portfolio Segment [Member]
Loans individually evaluated for impairment
Allowance individually evaluated for impairment	1,467	62,322
Balance individually evaluated for impairment	23,922	1,822,494
Loans collectively evaluated for impairment
Allowance collectively evaluated for impairment	64,634	3,336
Balance collectively evaluated for impairment	2,103,185	45,781
Total allowance	66,101	65,658
Total balance	2,127,107	1,868,275
Real Estate Construction Loans [Member]
Loans individually evaluated for impairment
Allowance individually evaluated for impairment	8,158	21,749
Balance individually evaluated for impairment	42,133	158,606
Loans collectively evaluated for impairment
Allowance collectively evaluated for impairment	14,859	0
Balance collectively evaluated for impairment	138,817	78,766
Total allowance	23,017	21,749
Total balance	180,950	237,372
Commercial Mortgage Loans [Member]
Loans individually evaluated for impairment
Allowance individually evaluated for impairment	1,336	105,052
Balance individually evaluated for impairment	165,885	3,571,839
Loans collectively evaluated for impairment
Allowance collectively evaluated for impairment	81,137	2,969
Balance collectively evaluated for impairment	3,602,567	177,058
Total allowance	82,473	108,021
Total balance	3,768,452	3,748,897
Residential Mortgage And Equity Lines Member
Loans individually evaluated for impairment
Allowance individually evaluated for impairment	1,222	9,548
Balance individually evaluated for impairment	16,657	1,166,601
Loans collectively evaluated for impairment
Allowance collectively evaluated for impairment	10,481	1,247
Balance collectively evaluated for impairment	1,323,425	20,368
Total allowance	11,703	10,795
Total balance	1,340,082	1,186,969
Consumer And Other Member
Loans individually evaluated for impairment
Allowance individually evaluated for impairment	0	57
Balance individually evaluated for impairment	0	17,699
Loans collectively evaluated for impairment
Allowance collectively evaluated for impairment	28	0
Balance collectively evaluated for impairment	12,556	0
Total allowance	28	57
Total balance	$ 12,556	$ 17,699

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 144,909	$ 117,888
Short-term investments and interest bearing deposits	411,983	294,956
Securities purchased under agreements to resell	0	0
Securities held-to-maturity (market value of $823,906 in 2012 and $1,203,977 in 2011	773,768	1,153,504
Securities available-for-sale (amortized cost of $1,290,676 in 2012 and $1,309,521 in 2011	1,291,480	1,294,478
Trading securities	4,703	4,542
Loans held for sale		760
Loans	7,429,147	7,059,212
Less: Allowance for loan losses	(183,322)	(206,280)
Unamortized deferred loan fees, net	(10,238)	(8,449)
Loans, net	7,235,587	6,844,483
Federal Home Loan Bank stock	41,272	52,989
Other real estate owned, net	46,384	92,713
Affordable housing investments, net	85,037	78,358
Premises and equipment, net	102,613	105,961
Customers’ liability on acceptances	41,271	37,300
Accrued interest receivable	26,015	32,226
Goodwill	316,340	316,340
Other intangible assets, net	6,132	11,598
Other assets	166,595	206,768
Total assets	10,694,089	10,644,864
Liabilities and Stockholders’ Equity
Non-interest-bearing demand deposits	1,269,455	1,074,718
NOW deposits	593,133	451,541
Money market deposits	1,186,771	951,516
Savings deposits	473,805	420,030
Time deposits under $100,000	644,191	832,997
Time deposits of $100,000 or more	3,215,870	3,498,329
Total deposits	7,383,225	7,229,131
Securities sold under agreements to repurchase	1,250,000	1,400,000
Advances from the Federal Home Loan Bank	146,200	225,000
Other borrowings from financial institutions		880
Other borrowings for affordable housing investments	18,713	18,920
Long-term debt	171,136	171,136
Acceptances outstanding	41,271	37,300
Other liabilities	54,040	46,864
Total liabilities	9,064,585	9,129,231
Commitments and contingencies	0	0
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding in 2012 and 2011	254,580	250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011	830	829
Additional paid-in-capital	768,925	765,641
Accumulated other comprehensive income/(loss), net	465	(8,732)
Retained earnings	721,993	624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011	(125,736)	(125,736)
Total Cathay General Bancorp stockholders' equity	1,621,057	1,507,186
Noncontrolling interest	8,447	8,447
Total equity	1,629,504	1,515,633
Total liabilities and equity	$ 10,694,089	$ 10,644,864

XML

Note 17 - Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value, by Balance Sheet Grouping [Table Text Block]

	As of December 31, 2012				As of December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Financial Assets
Cash and due from banks	$	144,909	$	144,909	$	117,888	$	117,888
Short-term investments		411,983		411,983		294,956		294,956
Securities held-to-maturity		773,768		823,906		1,153,504		1,203,977
Securities available-for-sale		1,291,480		1,291,480		1,294,478		1,294,478
Trading securities		4,703		4,703		4,542		4,542
Loans held-for-sale		-		-		760		760
Loans, net		7,235,587		7,169,732		6,844,483		6,825,571
Investment in Federal Home Loan Bank stock		41,272		41,272		52,989		52,989
Warrants		104		104		218		218

	Notional Amount		Fair Value		Notional Amount		Fair Value
Option contracts	$	105	$	-	$	3,026	$	34
Foreign exchange contracts		188,145		2,924		238,581		2,151

Financial Liabilities	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Deposits	$	7,383,225	$	7,389,015	$	7,229,131	$	7,240,857
Securities sold under agreement to repurchase		1,250,000		1,361,585		1,400,000		1,547,900
Advances from Federal Home Loan Bank		146,200		146,789		225,000		227,825
Other borrowings		18,713		14,573		19,800		19,801
Long-term debt		171,136		98,392		171,136		98,676

	Notional Amount		Fair Value		Notional Amount		Fair Value
Option contracts	$	104	$	2	$	1,282	$	5
Interest rate swaps		-		-		300,000		2,634
Foreign exchange contracts		133,669		1,586		128,215		486

	Notional Amount		Fair Value			Notional Amount		Fair Value
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	1,740,463	$	(1,875	)	$	1,626,523	$	(1,253	)
Standby letters of credit		44,672		(204	)		62,076		(367	)
Other letters of credit		71,073		(34	)		64,233		(38	)
Bill of lading guarantees		77		-			187		-

Schedule of Fair Value of Financial Instruments [Table Text Block]

	As of December 31, 2012
	Estimated Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	144,909	$	144,909	$	-	$	-
Short-term investments		411,983		411,983		-		-
Securities held-to-maturity		823,906		-		823,906		-
Securities available-for-sale		1,291,480		526,165		765,315		-
Trading securities		4,703		-		4,703		-
Loans, net		7,169,732		-		-		7,169,732
Investment in Federal Home Loan Bank stock		41,272		-		41,272		-
Warrants		104		-		-		104
Financial Liabilities
Deposits		7,389,015		-		-		7,389,015
Securities sold under agreement to repurchase		1,361,585		-		1,361,585		-
Advances from Federal Home Loan Bank		146,789		-		146,789		-
Other borrowings		14,573		-		-		14,573
Long-term debt		98,392		-		98,392		-

	As of December 31, 2011
	Estimated Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	117,888	$	117,888	$	-	$	-
Short-term investments		294,956		294,956		-		-
Securities held-to-maturity		1,203,977		-		1,203,977		-
Securities available-for-sale		1,294,478		54,958		1,239,520		-
Trading securities		4,542		2		4,540		-
Loans held-for-sale		760		-		760		.
Loans, net		6,825,571		-		-		6,825,571
Investment in Federal Home Loan Bank stock		52,989		-		52,989		-
Warrants		218		-		-		218
Financial Liabilities
Deposits		7,240,857		-		-		7,240,857
Securities sold under agreement to repurchase		1,547,900		-		1,547,900		-
Advances from Federal Home Loan Bank		227,825		-		227,825		-
Other borrowings		19,801		-		-		19,801
Long-term debt		98,676		-		98,676		-

XML

Note 13 - Stockholders' Equity and Earnings per Share (Detail) (USD $)	0 Months Ended	3 Months Ended								12 Months Ended			24 Months Ended	12 Months Ended
	Dec. 05, 2008	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2004	Dec. 31, 2012 Stock Options [Member]	Dec. 31, 2011 Stock Options [Member]	Dec. 31, 2012 Warrant [Member]	Dec. 31, 2011 Warrant [Member]	Dec. 31, 2011 Restricted Stock [Member]	Dec. 31, 2012 Series A Non-Cumulative Preferred Stock [Member]	Dec. 31, 2011 Series A Non-Cumulative Preferred Stock [Member]	Dec. 31, 2010 Series A Non-Cumulative Preferred Stock [Member]	Dec. 31, 2012 First Five Years [Member]	Dec. 31, 2012 After Five Years [Member]
Regulation Restricted On Amount Of Retained Earnings Available For Cash Dividends (in Dollars)		$ 80,800,000								$ 80,800,000
Proceeds from Issuance of Preferred Stock and Preference Stock (in Dollars)	258,000,000												8,600,000
Preferred Stock, Dividend Rate, Percentage													7.00%									5.00%	9.00%
Dividends, Preferred Stock (in Dollars)		$ (4,127,000)	$ (4,123,000)	$ (4,121,000)	$ (4,117,000)	$ (4,114,000)	$ (4,111,000)	$ (4,107,000)	$ (4,105,000)	$ 16,488,000	$ 16,437,000	$ 16,388,000							$ 605,000	$ 605,000	$ 611,000
Sale of Stock, Price Per Share (in Dollars per share)												$ 8.80									$ 200
Common Stock Aggregate Market Price Percentage Of Senior Preferred Stock		15.00%								15.00%
Preferred Stock, Shares Issued		258,000				258,000				258,000	258,000
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		1,846,374								1,846,374
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item)		20.96								20.96
Warrants Aggregate Market Price (in Dollars per share)		$ 38.7								$ 38.7
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount														4,000,000	4,400,000	1,800,000	1,800,000	103,000

XML

Note 19 - Equity Incentive Plans (Detail) - Tax Short-Fall From Share-Based Payment Arrangements (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
(Short-fall)/benefit of tax deductions in excess of grant-date fair value	$ (620)	$ (290)	$ (539)
Benefit of tax deductions on grant-date fair value	747	362	539
Total benefit of tax deductions	$ 127	$ 72

XML

Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Additional Paid-in Capital [Member]
Cash dividends per share (in Dollars per share)	$ 0.04	$ 0.04	$ 0.04
Parent [Member]
Cash dividends per share (in Dollars per share)	$ 0.04	$ 0.04	$ 0.04

XML

Note 12 - Income Taxes (Detail) - Deferred Tax Assets and Liabilities (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred Tax Assets
Loan loss allowance, due to differences in computation of bad debts	$ 100,774	$ 109,686
Write-down on equity securities	3,374	3,609
Stock option compensation expense	16,120	16,048
State tax	4,479	3,744
Non-accrual interest	3,208	2,048
Write-down on other real estate owned	10,302	14,148
Accural for litigation	2,415
Unrealized loss on interest rate swaps		1,097
Unrealized loss on securities available-for-sale, net		6,311
Other, net	3,544	3,536
Gross deferred tax assets	144,216	160,227
Deferred Tax Liabilities
Core deposit intangibles	(1,632)	(3,919)
Investment in aircraft financing trust and venture capital partnerships	(19,684)	(21,628)
Unrealized gain on securities available-for-sale, net	(338)
Dividends on Federal Home Loan Bank common stock	(3,071)	(2,788)
Other, net	(5,084)	(5,646)
Gross deferred tax liabilities	(29,809)	(33,981)
Valuation allowance	(2,125)	(2,533)
Net deferred tax assets	$ 112,282	$ 123,713

XML

Note 4 - Investment Securities (Detail) - Temporarily Impaired Securities (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Securities Available-for-Sale
Investment Securities - Less than 12 Months - Fair Value	$ 102,668	$ 253,430
Investment Securities - Less than 12 Months - Unrealized Losses	2,538	14,586
Investment Securities - Less than 12 Months - No of Issuances	7	30
Investment Securities - 12 Months or longer - Fair Value	254,276	180,347
Investment Securities- 12 Months or longer - Unrealized Losses	11,612	18,204
Investment Securities - 12 Months or longer - No. of Issuances	34	28
Investment Securities - Fair Value	356,944	433,777
Investment Securities - Unrealized Losses	14,150	32,790
Investment Securities - No. of Issuances	41	58
Total [Member]
Securities Held-to-Maturity
Securities Held-to-maturity - Less than 12 Months - Fair Value	0	9,635
Securities Held-to-maturity - Less than 12 Months - Unrealized Losses	0	337
Securities Held-to-maturity - Less than 12 Months - No. of Issuances	0	1
Securities Held-to-maturity - 12 Months or longer - Fair Value	0	0
Securities Held-to-maturity - 12 Months or longer - Unrealized Losses	0	0
Securities Held-to-maturity - 12 Months or longer - No. of Issuances	0	0
Securities Held-to-maturity - Fair Value	0	9,635
Securities Held-to-maturity - Unrealized Losses	0	337
Securities Held-to-maturity - No. of Issuances	0	1
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	102,668	243,795
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	2,538	14,249
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	7	29
Securities Available-for-Sale - 12 Months or longer - Fair Value	254,276	180,347
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	11,612	18,204
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	34	28
Securities Available-for-Sale - Fair Value	356,944	424,142
Securities Available-for-Sale - Unrealized Losses	14,150	32,453
Securities Available-for-Sale - No. of Issuances	41	57
US Treasury Securities [Member]
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	49,969
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	5
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	1
Securities Available-for-Sale - 12 Months or longer - Fair Value	0
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	0
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	0
Securities Available-for-Sale - Fair Value	49,969
Securities Available-for-Sale - Unrealized Losses	5
Securities Available-for-Sale - No. of Issuances	1
Collateralized Mortgage Backed Securities [Member]
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	231	564
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	1	4
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	2	8
Securities Available-for-Sale - 12 Months or longer - Fair Value	170	35
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	1	1
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	6	2
Securities Available-for-Sale - Fair Value	401	599
Securities Available-for-Sale - Unrealized Losses	2	5
Securities Available-for-Sale - No. of Issuances	8	10
Mortgage Backed Securities Non Agency Member
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	0	0
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	0	0
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	0	0
Securities Available-for-Sale - 12 Months or longer - Fair Value	96	6,719
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	2	431
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	1	2
Securities Available-for-Sale - Fair Value	96	6,719
Securities Available-for-Sale - Unrealized Losses	2	431
Securities Available-for-Sale - No. of Issuances	1	2
Collateralized Mortgage Obligations [Member]
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	0	0
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	0	0
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	0	0
Securities Available-for-Sale - 12 Months or longer - Fair Value	439	570
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	35	238
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	4	4
Securities Available-for-Sale - Fair Value	439	570
Securities Available-for-Sale - Unrealized Losses	35	238
Securities Available-for-Sale - No. of Issuances	4	4
Asset-backed Securities [Member]
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	0	0
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	0	0
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	0	0
Securities Available-for-Sale - 12 Months or longer - Fair Value	141	166
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	4	6
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	1	1
Securities Available-for-Sale - Fair Value	141	166
Securities Available-for-Sale - Unrealized Losses	4	6
Securities Available-for-Sale - No. of Issuances	1	1
Corporate Debt Securities [Member]
Securities Held-to-Maturity
Securities Held-to-maturity - Less than 12 Months - Fair Value		9,635
Securities Held-to-maturity - Less than 12 Months - Unrealized Losses		337
Securities Held-to-maturity - Less than 12 Months - No. of Issuances		1
Securities Held-to-maturity - 12 Months or longer - Fair Value		0
Securities Held-to-maturity - 12 Months or longer - Unrealized Losses		0
Securities Held-to-maturity - 12 Months or longer - No. of Issuances		0
Securities Held-to-maturity - Fair Value		9,635
Securities Held-to-maturity - Unrealized Losses		337
Securities Held-to-maturity - No. of Issuances		1
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value	52,468	185,577
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses	2,532	14,201
Securities Available-for-Sale - Less than 12 Months - No. of Issuances	4	17
Securities Available-for-Sale - 12 Months or longer - Fair Value	253,430	172,857
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses	11,570	17,528
Securities Available-for-Sale - 12 Months or longer - No. of Issuances	22	19
Securities Available-for-Sale - Fair Value	305,898	358,434
Securities Available-for-Sale - Unrealized Losses	14,102	31,729
Securities Available-for-Sale - No. of Issuances	26	36
U.S. Government Sponsored Entities [Member]
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value		49,993
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses		7
Securities Available-for-Sale - Less than 12 Months - No. of Issuances		1
Securities Available-for-Sale - 12 Months or longer - Fair Value		0
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses		0
Securities Available-for-Sale - 12 Months or longer - No. of Issuances		0
Securities Available-for-Sale - Fair Value		49,993
Securities Available-for-Sale - Unrealized Losses		7
Securities Available-for-Sale - No. of Issuances		1
Mutual Funds Member
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value		1,987
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses		13
Securities Available-for-Sale - Less than 12 Months - No. of Issuances		1
Securities Available-for-Sale - 12 Months or longer - Fair Value		0
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses		0
Securities Available-for-Sale - 12 Months or longer - No. of Issuances		0
Securities Available-for-Sale - Fair Value		1,987
Securities Available-for-Sale - Unrealized Losses		13
Securities Available-for-Sale - No. of Issuances		1
Trust Preferred Securities [Member]
Securities Available-for-Sale
Securities Available-for-Sale - Less than 12 Months - Fair Value		5,674
Securities Available-for-Sale - Less than 12 Months - Unrealized Losses		24
Securities Available-for-Sale - Less than 12 Months - No. of Issuances		2
Securities Available-for-Sale - 12 Months or longer - Fair Value		0
Securities Available-for-Sale - 12 Months or longer - Unrealized Losses		0
Securities Available-for-Sale - 12 Months or longer - No. of Issuances		0
Securities Available-for-Sale - Fair Value		5,674
Securities Available-for-Sale - Unrealized Losses		$ 24
Securities Available-for-Sale - No. of Issuances		2

XML

Note 14 - Commitments and Contingencies (Detail) - Financial Instruments with Off-Balance Sheet Risk (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Other Commitments	$ 1,856,285	$ 1,753,019
Commitments to Extend Credit [Member]
Other Commitments	1,740,463	1,626,523
Standby Letters of Credit [Member]
Other Commitments	44,672	62,076
Commercial Letters of Credit [Member]
Other Commitments	71,073	64,233
Bill Of Lading Guarantees Member
Other Commitments	$ 77	$ 187

XML

Note 5 - Loans (Tables)

12 Months Ended

Dec. 31, 2012

	2012			2011
	(In thousands)
Type of Loans:
Commercial loans	$	2,127,107		$	1,868,275
Real estate construction loans		180,950			237,372
Commercial mortgage loans		3,768,452			3,748,897
Residential mortgage loans		1,146,230			972,262
Equity lines		193,852			214,707
Installment and other loans		12,556			17,699
Gross loans		7,429,147			7,059,212
Less:
Allowance for loan losses		(183,322	)		(206,280	)
Unamortized deferred loan fees		(10,238	)		(8,449	)
Total loans and leases, net	$	7,235,587		$	6,844,483
Loans held for sale	$	-		$	760

Schedule of Related Party Transactions [Table Text Block]

	December 31,
	2012			2011
	(In thousands)
Balance at beginning of year	$	160,069		$	134,161
Additional loans made		92,249			89,985
Payment received		(79,734	)		(64,077	)
Balance at end of year	$	172,584		$	160,069

	Impaired Loans
	At December 31, 2012						At December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(Dollars in thousands)
With no allocated allowance
Commercial loans	$	29,359	$	18,963	$	-	$	46,671	$	38,194	$	-
Real estate construction loans		9,304		7,277		-		134,837		78,767		-
Commercial mortgage loans		189,871		152,957		-		187,580		149,034		-
Residential mortgage and equity lines		4,303		4,229		-		8,555		7,987		-
Subtotal	$	232,837	$	183,426	$	-	$	377,643	$	273,982	$	-
With allocated allowance
Commercial loans	$	7,804	$	4,959	$	1,467	$	11,795	$	7,587	$	3,336
Real estate construction loans		54,718		34,856		8,158		-		-		-
Commercial mortgage loans		14,163		12,928		1,336		29,722		28,023		2,969
Residential mortgage and equity lines		14,264		12,428		1,222		13,813		12,381		1,249
Subtotal	$	90,949	$	65,171	$	12,183	$	55,330	$	47,991	$	7,554
Total impaired loans	$	323,786	$	248,597	$	12,183	$	432,973	$	321,973	$	7,554

Impaired Financing Receivables [Table Text Block]

	For the year ended December 31,
	2012		2011		2012		2011
	Average Recorded Investment				Interest Income Recognized
	(In thousands)
Commercial loans	$	31,798	$	48,349	$	580	$	1,053
Real estate construction loans		49,094		82,529		265		940
Commercial mortgage loans		178,822		212,555		8,221		3,101
Residential mortgage and equity lines		18,062		17,920		239		236
Subtotal	$	277,776	$	361,353	$	9,305	$	5,330

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

	2012		2011		2010
	(In thousands)
Non-accrual portfolio loans	$	103,902	$	201,197	$	242,319
Non-accrual loans held-for-sale		-		760		2,873
Total non-accrual loans	$	103,902	$	201,957	$	245,192
Contractual interest due	$	6,621	$	13,049	$	17,304
Interest recognized		1,006		71		4,853
Net interest foregone	$	5,615	$	12,978	$	12,451

Past Due Financing Receivables [Table Text Block]

	As of December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	16,832	$	1,610	$	630	$	19,958	$	39,030	$	2,088,077	$	2,127,107
Real estate construction loans		-		1,471		-		36,299		37,770		143,180		180,950
Commercial mortgage loans		21,570		3,627		-		35,704		60,901		3,707,551		3,768,452
Residential mortgage loans		5,324		1,972		-		11,941		19,237		1,320,845		1,340,082
Installment and other loans		-		-		-		-		-		12,556		12,556
Total loans	$	43,726	$	8,680	$	630	$	103,902	$	156,938	$	7,272,209	$	7,429,147

	As of December 31, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	1,683	$	-	$	-	$	30,661	$	32,344	$	1,835,931	$	1,868,275
Real estate construction loans		20,326		-		-		46,012		66,338		171,034		237,372
Commercial mortgage loans		13,627		20,277		6,726		107,784		148,414		3,600,483		3,748,897
Residential mortgage loans		5,871		-		-		16,740		22,611		1,164,358		1,186,969
Installment and other loans		-		-		-		-		-		17,699		17,699
Total loans	$	41,507	$	20,277	$	6,726	$	201,197	$	269,707	$	6,789,505	$	7,059,212

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		9	$	3,646	$	3,646	$	1,213	$	-
Commercial mortgage loans		20		62,118		58,393		27		3,725
Residential mortgage and equity lines		14		4,305		4,223		162		82
Total		43	$	70,069	$	66,262	$	1,402	$	3,807

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		7	$	15,025	$	15,025	$	104	$	-
Real estate construction loans		3		33,669		21,522		-		12,147
Commercial mortgage loans		6		17,343		14,294		1		3,049
Residential mortgage and equity lines		3		1,574		1,574		114		-
Total		19	$	67,611	$	52,415	$	219	$	15,196

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

		December 31, 2012
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	531	$	3,020	$	-	$	413	$	3,964
Real estate construction loans			-		-		-		5,834		5,834
Commercial mortgage loans			27,003		16,656		739		85,783		130,181
Residential mortgage loans			1,461		1,024		-		2,231		4,716
Total accruing TDRs		$	28,995	$	20,700	$	739	$	94,261	$	144,695

	As of December 31, 2011
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	12,933	$	1,756	$	-	$	431	$	15,120
Real estate construction loans			16,820		9,659		-		5,776		32,255
Commercial mortgage loans			471		37,796		2,071		28,935		69,273
Residential mortgage loans			1,294		587		-		1,487		3,368
Total accruing TDRs		$	31,518	$	49,798	$	2,071	$	36,629	$	120,016

	December 31, 2012
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	912	$	-	$	1,518	$	-	$	2,430
Real estate construction loans		-		16,767		9,579		-		-		26,346
Commercial mortgage loans		1,685		2,817		5,746		-		5,076		15,324
Residential mortgage loans		275		2,010		586		-		760		3,631
Total non-accrual TDRs	$	1,960	$	22,506	$	15,911	$	1,518	$	5,836	$	47,731

	As of December 31, 2011
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	616	$	1,859	$	1,506	$	-	$	3,981
Real estate construction loans		-		13,579		12,376		-		-		25,955
Commercial mortgage loans		2,633		9,727		-		-		5,076		17,436
Residential mortgage loans		311		2,427		449		-		311		3,498
Total non-accrual TDRs	$	2,944	$	26,349	$	14,684	$	1,506	$	5,387	$	50,870

Activity Within The Troubled Debt Resturings [Table Text Block]

Accruing TDRs	2012			2011
	(In thousands)
Beginning balance	$	120,016		$	136,800
New restructurings		53,958			60,863
Restructured loans restored to accrual status		8,356			709
Charge-offs		(251	)		(2,341	)
Payments		(5,159	)		(46,313	)
Restructured loans placed on nonaccrual		(32,225	)		(28,969	)
Expiration of loan concession		-			(733	)
Ending balance	$	144,695		$	120,016

Non-accrual TDRs	2012			2011
	(In thousands)
Beginning balance	$	50,870		$	28,146
New restructurings		12,304			13,269
Restructured loans placed on non-accrual		32,225			28,969
Charge-offs		(4,182	)		(7,303	)
Payments		(33,931	)		(3,355	)
Foreclosures		(1,199	)		(8,147	)
Restructured loans restored to accrual status		(8,356	)		(709	)
Ending balance	$	47,731		$	50,870

Financing Receivable Credit Quality Indicators [Table Text Block]

	As of December 31, 2012
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	1,944,989	$	76,776	$	94,077	$	11,265	$	2,127,107
Real estate construction loans		109,269		18,000		45,171		8,510		180,950
Commercial mortgage loans		3,344,783		162,455		261,214		-		3,768,452
Residential mortgage and equity lines		1,322,768		816		16,084		414		1,340,082
Installment and other loans		12,556		-		-		-		12,556
Total gross loans	$	6,734,365	$	258,047	$	416,546	$	20,189	$	7,429,147

	As of December 31, 2011
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	1,689,842	$	64,290	$	108,858	$	5,285	$	1,868,275
Real estate construction loans		115,538		23,555		90,132		8,147		237,372
Commercial mortgage loans		3,275,431		69,925		403,541		-		3,748,897
Residential mortgage and equity lines		1,149,225		4,439		33,160		145		1,186,969
Installment and other loans		17,636		63		-		-		17,699
Total gross loans		6,247,672		162,272		635,691		13,577		7,059,212
Loans held for sale		-	$	-	$	260	$	500	$	760

	Commercial Loans		Real Estate Construction Loans		Commercial Mortgage Loans		Residential mortgage and equity line		Consumer and Other		Total
	(In thousands)
December 31, 2012
Loans individually evaluated for impairment
Allowance	$	1,467	$	8,158	$	1,336	$	1,222	$	-	$	12,183
Balance	$	23,922	$	42,133	$	165,885	$	16,657	$	-	$	248,597
Loans collectively evaluated for impairment
Allowance	$	64,634	$	14,859	$	81,137	$	10,481	$	28	$	171,139
Balance	$	2,103,185	$	138,817	$	3,602,567	$	1,323,425	$	12,556	$	7,180,550
Total allowance	$	66,101	$	23,017	$	82,473	$	11,703	$	28	$	183,322
Total balance	$	2,127,107	$	180,950	$	3,768,452	$	1,340,082	$	12,556	$	7,429,147
December 31, 2011
Loans individually evaluated for impairment
Allowance	$	3,336	$	-	$	2,969	$	1,247	$	-	$	7,552
Balance	$	45,781	$	78,766	$	177,058	$	20,368	$	-	$	321,973
Loans collectively evaluated for impairment
Allowance	$	62,322	$	21,749	$	105,052	$	9,548	$	57	$	198,728
Balance	$	1,822,494	$	158,606	$	3,571,839	$	1,166,601	$	17,699	$	6,737,239
Total allowance	$	65,658	$	21,749	$	108,021	$	10,795	$	57	$	206,280
Total balance	$	1,868,275	$	237,372	$	3,748,897	$	1,186,969	$	17,699	$	7,059,212

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Commercial Loans			Real Estate Construction Loans			Commercial Mortgage Loans			Residential mortgage and equity line			Installment and Other Loans			Total
	(In thousands)
2011 Beginning Balance	$	63,918		$	43,262		$	128,348		$	9,668		$	35		$	245,231
Provision for possible loan losses		11,711			11,514			1,454			2,392			197			27,268
Charge-offs		(11,745	)		(37,500	)		(26,750	)		(1,456	)		(175	)		(77,626	)
Recoveries		1,774			4,473			4,969			191			-			11,407
Net Charge-offs		(9,971	)		(33,027	)		(21,781	)		(1,265	)		(175	)		(66,219	)
2011 Ending Balance	$	65,658		$	21,749		$	108,021		$	10,795		$	57		$	206,280
Reserve to impaired loans	$	3,336		$	-		$	2,969		$	1,247		$	-		$	7,552
Reserve to non-impaired loans	$	62,322		$	21,749		$	105,052		$	9,548		$	57		$	198,728
Reserve for off-balance sheet credit commitments	$	816		$	1,103		$	113		$	34		$	3		$	2,069
2012 Beginning Balance	$	65,658		$	21,749		$	108,021		$	10,795		$	57		$	206,280
Provision/(reversal) for possible loan losses		16,201			(3,720	)		(23,128	)		2,360			(7	)		(8,294	)
Charge-offs		(17,707	)		(1,165	)		(11,762	)		(2,132	)		(25	)		(32,791	)
Recoveries		1,949			6,153			9,342			680			3			18,127
Net Charge-offs		(15,758	)		4,988			(2,420	)		(1,452	)		(22	)		(14,664	)
2012 Ending Balance	$	66,101		$	23,017		$	82,473		$	11,703		$	28		$	183,322
Reserve to impaired loans	$	1,467		$	8,158		$	1,336		$	1,222		$	-		$	12,183
Reserve to non-impaired loans	$	64,634		$	14,859		$	81,137		$	10,481		$	28		$	171,139
Reserve for off-balance sheet credit commitments	$	837		$	390		$	98		$	34		$	3		$	1,362

Schedule of Credit Losses for Financing Receivables, Current [Table Text Block]

	December 31,
	2012			2011			2010
Allowance for Loan Losses	(In thousands)
Balance at beginning of year	$	206,280		$	245,231		$	211,889
(Reversal)/provision for credit losses		(9,000	)		27,000			156,900
Transfers from reserve for off-balance sheet credit commitments		706			268			2,870
Loans charged off		(32,791	)		(77,626	)		(138,755	)
Recoveries of charged off loans		18,127			11,407			12,327
Balance at end of year	$	183,322		$	206,280		$	245,231
Reserve for Off-balance Sheet Credit Commitments
Balance at beginning of year	$	2,069		$	2,337		$	5,207
Provision for credit losses/transfers		(706	)		(268	)		(2,870	)
Balance at end of year	$	1,363		$	2,069		$	2,337

XML

Note 5 - Loans (Detail) - Non-Accrual Loans (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Non-accrual portfolio loans	$ 103,902	$ 201,197	$ 242,319
Non-accrual loans held-for-sale		760	2,873
Total non-accrual loans	103,902	201,957	245,192
Contractual interest due	9,305	5,330
Nonaccrual Loans [Member]
Contractual interest due	6,621	13,049	17,304
Interest recognized	1,006	71	4,853
Net interest foregone	$ 5,615	$ 12,978	$ 12,451

XML

Note 15 - Financial Derivatives

12 Months Ended

Dec. 31, 2012

Schedule of Derivative Instruments [Table Text Block]

15.   Financial Derivatives

It is the policy of the Company not to speculate on the future direction of interest rates.  However, the Company enters into financial derivatives in order to seek mitigation of exposure to interest rate risks related to its interest-earning assets and interest-bearing liabilities.  Management believes that these transactions, when properly structured and managed, may provide a hedge against inherent interest rate risk in the Company’s assets or liabilities and against risk in specific transactions.  In such instances, the Company may protect its position through the purchase or sale of interest rate futures contracts for a specific cash or interest rate risk position.  Other hedge transactions may be implemented using interest rate swaps, interest rate caps, floors, financial futures, forward rate agreements, and options on futures or bonds.  Prior to considering any hedging activities, we seek to analyze the costs and benefits of the hedge in comparison to other viable alternative strategies.  All hedges will require an assessment of basis risk and must be approved by the Bank’s Investment Committee.

The Company follows ASC Topic 815 which established accounting and reporting standards for financial derivatives, including certain financial derivatives embedded in other contracts, and hedging activities.  It requires the recognition of all financial derivatives as assets or liabilities in the Company’s Consolidated Balance Sheets and measurement of those financial derivatives at fair value.  The accounting treatment of changes in fair value is dependent upon whether or not a financial derivative is designated as a hedge and if so, the type of hedge.

As of December 31, 2011, we had five interest rate swap agreements with two major financial institutions in the notional amount of $300.0 million for a period of three years.  These interest rate swaps were not structured to hedge against inherent interest rate risks related to our interest-earning assets and interest-bearing liabilities.  These five interest rate swap agreements all matured in the third quarter of 2012.  The net amount accrued on these interest rate swaps and the changes in the market value of these interest rate swaps were recorded as a reduction to other non-interest income in the amount of $288,000 in 2012 compared to $4.9 million in the same period a year ago.

The Company enters into foreign exchange forward contracts and foreign currency option contracts with various counter parties to mitigate the risk of fluctuations in foreign currency exchange rates for foreign exchange certificates of deposit, foreign exchange contracts, or foreign currency option contracts entered into with our clients. These contracts are not designated as hedging instruments and are recorded at fair value in our condensed consolidated balance sheets. Changes in the fair value of these contracts as well as the related foreign exchange certificates of deposit, foreign exchange contracts or foreign currency option contracts are recognized immediately in net income as a component of non-interest income. Period end gross positive fair values are recorded in other assets and gross negative fair values are recorded in other liabilities.  At December 31, 2012, the notional amount of option contracts totaled $209,000 with a net negative fair value of $2,000. Spot and forward contracts in the total notional amount of $188.1 million had a positive fair value of $2.9 million at December 31, 2012.  Spot and forward contracts in the total notional amount of $133.7 million had a negative fair value of $1.6 million at December 31, 2012. At December 31, 2011, the notional amount of option contracts totaled $4.3 million with a net positive fair value of $29,000.  Spot and forward contracts in the total notional amount of $238.6 million had a positive fair value, in the amount of $2.2 million, at December 31, 2011.  Spot and forward contracts in the total notional amount of $128.2 million had a negative fair value, in the amount of $486,000, at December 31, 2011.

XML

Note 6 - Other Real Estate Owned (Tables)

12 Months Ended

Dec. 31, 2012

Other Real Estate, Roll Forward [Table Text Block]

	2012			2011			2010
	(In thousands)
Balance, beginning of year	$	26,422		$	25,310		$	22,743
Provision for losses		10,668			10,385			20,139
OREO disposal		(17,534	)		(9,273	)		(17,572	)
Balance, end of year	$	19,556		$	26,422		$	25,310

Schedule of Other Real Estate Owned Expense [Table Text Block]

	2012			2011			2010
	(In thousands)
Operating expense	$	4,817		$	5,441		$	5,849
Provision for losses		10,668			10,385			20,139
Net gain on transfer and disposal		(369	)		(5,243	)		(9,977	)
Total other real estate owned expense	$	15,116		$	10,583		$	16,011

XML

Note 14 - Commitments and Contingencies (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Commitments To Extend Credit	$ 1,700,000,000
CommitmentsToFundFixedRateLoans	115,400,000
Commitments To Fund Adjustable Rate Loans	1,600,000,000
Operating Lease Lease Term Minimum	1 year
Operating Lease Lease Term Maximum	50 years
Operating Leases, Rent Expense	7,400,000	6,700,000	6,600,000
Operating Leases, Income Statement, Sublease Revenue	$ 300,000	$ 200,000	$ 300,000

XML

Note 17 - Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Text Block]

17.   Fair Value of Financial Instruments

        The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

        Cash and Cash Equivalents.  For cash and cash equivalents, the carrying amount was assumed to be a reasonable estimate of fair value, a Level 1 measurement.

        Short-term Investments.  For short-term investments, the carrying amount was assumed to be a reasonable estimate of fair value, a Level 1 measurement.

Securities Purchased under Agreements to Resell. The fair value of securities purchased under agreements to resell is based on dealer quotes, a Level 2 measurement.

        Securities.  For securities, including securities held-to-maturity, available-for-sale and for trading, fair values were based on quoted market prices at the reporting date.  If a quoted market price was not available, fair value was estimated using quoted market prices for similar securities or dealer quotes.  For certain actively traded agency preferred stocks and U.S. Treasury securities, the Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement.  The Company also measures securities by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement.  This category generally includes U.S. Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, and corporate bonds.

Loans Held for Sale.  The Company records loans held for sale at fair value based on quoted prices from third party sources, or appraisal reports adjusted by sales commission assumptions, a Level 3 measurement.

       Loans.  Fair values were estimated for portfolios of loans with similar financial characteristics.  Each loan category was further segmented into fixed and adjustable rate interest terms and by performing and non-performing categories.

        The fair value of performing loans was calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 3 measurement.

The fair value of impaired loans was calculated based on the net realizable fair value of the collateral or the observable market price of the most recent sale or quoted price from loans held for sale.  The Company does not record loans at fair value on a recurring basis.  Nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on the current appraised value of the collateral, a Level 2 measurement.

        Deposit Liabilities.  The fair value of demand deposits, savings accounts, and certain money market deposits was assumed to be the amount payable on demand at the reporting date.  The fair value of fixed-maturity certificates of deposit was estimated using the rates currently offered for deposits with similar remaining maturities, a Level 3 measurement.

        Securities Sold under Agreements to Repurchase.  The fair value of securities sold under agreements to repurchase is based on dealer quotes, a Level 2 measurement.

        Advances from Federal Home Loan Bank.  The fair value of the advances is based on quotes from the FHLB to settle the advances, a Level 2 measurement.

Other Borrowings.  This category includes borrowings from other financial institutions.  The fair value of other borrowings is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement. 

Long-term Debt.  The fair value of long-term debt is estimated based on the quoted market prices or dealer quotes, a Level 2 measurement.

Currency Option and Foreign Exchange Contracts. The Company measures the fair value of currency option and foreign exchange contracts based on dealer quotes, a Level 2 measurement.

Interest Rate Swaps. Fair value of interest rate swaps was derived from observable market prices for similar assets, a Level 2 measurement.

Off-Balance-Sheet Financial Instruments.  The fair value of commitments to extend credit, standby letters of credit, and financial guarantees written were estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counter parties.  The fair value of guarantees and letters of credit was based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counter parties at the reporting date.  Off-balance-sheet financial instruments were fair valued based on the assumptions that a market participant would use, a Level 3 measurement.

        Fair value was estimated in accordance with ASC Topic 825, formerly SFAS 107.  Fair value estimates were made at specific points in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Bank’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Bank’s financial instruments, fair value estimates were based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates were subjective in nature and involved uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair Value of Financial Instruments

	As of December 31, 2012				As of December 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Financial Assets
Cash and due from banks	$	144,909	$	144,909	$	117,888	$	117,888
Short-term investments		411,983		411,983		294,956		294,956
Securities held-to-maturity		773,768		823,906		1,153,504		1,203,977
Securities available-for-sale		1,291,480		1,291,480		1,294,478		1,294,478
Trading securities		4,703		4,703		4,542		4,542
Loans held-for-sale		-		-		760		760
Loans, net		7,235,587		7,169,732		6,844,483		6,825,571
Investment in Federal Home Loan Bank stock		41,272		41,272		52,989		52,989
Warrants		104		104		218		218

	Notional Amount		Fair Value		Notional Amount		Fair Value
Option contracts	$	105	$	-	$	3,026	$	34
Foreign exchange contracts		188,145		2,924		238,581		2,151

Financial Liabilities	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Deposits	$	7,383,225	$	7,389,015	$	7,229,131	$	7,240,857
Securities sold under agreement to repurchase		1,250,000		1,361,585		1,400,000		1,547,900
Advances from Federal Home Loan Bank		146,200		146,789		225,000		227,825
Other borrowings		18,713		14,573		19,800		19,801
Long-term debt		171,136		98,392		171,136		98,676

	Notional Amount		Fair Value		Notional Amount		Fair Value
Option contracts	$	104	$	2	$	1,282	$	5
Interest rate swaps		-		-		300,000		2,634
Foreign exchange contracts		133,669		1,586		128,215		486

	Notional Amount		Fair Value			Notional Amount		Fair Value
Off-Balance Sheet Financial Instruments
Commitments to extend credit	$	1,740,463	$	(1,875	)	$	1,626,523	$	(1,253	)
Standby letters of credit		44,672		(204	)		62,076		(367	)
Other letters of credit		71,073		(34	)		64,233		(38	)
Bill of lading guarantees		77		-			187		-

The following table presents the level in the fair value hierarchy for the estimated fair values of only financial instruments that are not already on the Consolidated balance sheets at fair value at December 31, 2012, and December 31, 2011.

	As of December 31, 2012
	Estimated Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	144,909	$	144,909	$	-	$	-
Short-term investments		411,983		411,983		-		-
Securities held-to-maturity		823,906		-		823,906		-
Securities available-for-sale		1,291,480		526,165		765,315		-
Trading securities		4,703		-		4,703		-
Loans, net		7,169,732		-		-		7,169,732
Investment in Federal Home Loan Bank stock		41,272		-		41,272		-
Warrants		104		-		-		104
Financial Liabilities
Deposits		7,389,015		-		-		7,389,015
Securities sold under agreement to repurchase		1,361,585		-		1,361,585		-
Advances from Federal Home Loan Bank		146,789		-		146,789		-
Other borrowings		14,573		-		-		14,573
Long-term debt		98,392		-		98,392		-

	As of December 31, 2011
	Estimated Fair Value Measurements		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets
Cash and due from banks	$	117,888	$	117,888	$	-	$	-
Short-term investments		294,956		294,956		-		-
Securities held-to-maturity		1,203,977		-		1,203,977		-
Securities available-for-sale		1,294,478		54,958		1,239,520		-
Trading securities		4,542		2		4,540		-
Loans held-for-sale		760		-		760		.
Loans, net		6,825,571		-		-		6,825,571
Investment in Federal Home Loan Bank stock		52,989		-		52,989		-
Warrants		218		-		-		218
Financial Liabilities
Deposits		7,240,857		-		-		7,240,857
Securities sold under agreement to repurchase		1,547,900		-		1,547,900		-
Advances from Federal Home Loan Bank		227,825		-		227,825		-
Other borrowings		19,801		-		-		19,801
Long-term debt		98,676		-		98,676		-

XML

Note 5 - Loans (Detail) - Troubled Debt Restructuring by Type of Concession and Type of Loans (USD $)	Dec. 31, 2012	Dec. 31, 2011
Accruing TDRs	$ 144,695,000	$ 120,016,000
Accruing Troubled Debt Restructuring Member | Principal Deferral [Member] | Commercial Loans Member
Accruing TDRs	531,000	12,933,000
Accruing Troubled Debt Restructuring Member | Principal Deferral [Member] | Real Estate Construction Loans [Member]
Accruing TDRs		16,820,000
Accruing Troubled Debt Restructuring Member | Principal Deferral [Member] | Commercial Mortgage Loans [Member]
Accruing TDRs	27,003,000	471,000
Accruing Troubled Debt Restructuring Member | Principal Deferral [Member] | Residential Mortgage Loans [Member]
Accruing TDRs	1,461,000	1,294,000
Accruing Troubled Debt Restructuring Member | Principal Deferral [Member]
Accruing TDRs	28,995,000	31,518,000
Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Commercial Loans Member
Accruing TDRs	3,020,000	1,756,000
Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Real Estate Construction Loans [Member]
Accruing TDRs		9,659,000
Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Commercial Mortgage Loans [Member]
Accruing TDRs	16,656,000	37,796,000
Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Residential Mortgage Loans [Member]
Accruing TDRs	1,024,000	587,000
Accruing Troubled Debt Restructuring Member | Rate Reduction [Member]
Accruing TDRs	20,700,000	49,798,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Forgiveness of Principal [Member] | Commercial Mortgage Loans [Member]
Accruing TDRs	739,000	2,071,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Forgiveness of Principal [Member]
Accruing TDRs	739,000	2,071,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member] | Commercial Loans Member
Accruing TDRs	413,000	431,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member] | Real Estate Construction Loans [Member]
Accruing TDRs	5,834,000	5,776,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member] | Commercial Mortgage Loans [Member]
Accruing TDRs	85,783,000	28,935,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member] | Residential Mortgage Loans [Member]
Accruing TDRs	2,231,000	1,487,000
Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member]
Accruing TDRs	94,261,000	36,629,000
Commercial Loans Member
Accruing TDRs	3,964,000	15,120,000
Real Estate Construction Loans [Member]
Accruing TDRs	5,834,000	32,255,000
Commercial Mortgage Loans [Member]
Accruing TDRs	130,181,000	69,273,000
Residential Mortgage Loans [Member]
Accruing TDRs	$ 4,716,000	$ 3,368,000

XML

Note 18 - Employee Benefit Plans (Detail) (USD $)	12 Months Ended					3 Months Ended		12 Months Ended	3 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Maximum [Member]	Dec. 31, 2012 Minimum [Member]	Mar. 31, 2010 First Five Percent of Eligible Compensation [Member]	Mar. 31, 2010 Matched at 100% [Member]	Dec. 31, 2012 Matched at 100% [Member]	Mar. 31, 2010 Less Than Two Years of Service [Member]	Mar. 31, 2010 Yearly After Two Years of Service [Member]	Dec. 31, 2012 First Two and Half Percent of Eligible Compensation [Member]
Minimum Number Of Years Allowed To Participate In Employee Stock Ownership Plan	2 years
Minimum number of hours allowed to participate in employee stock ownership plan for part-time employees	1000 years
Stock Issued During Period, Shares, Employee Stock Purchase Plans (in Shares)	2,814	3,437	4,881
Stock Issued During Period, Value, Employee Stock Purchase Plan (in Dollars)	$ 47,000	$ 47,000	$ 51,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	116,124	83,020	171,689
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)		1,188,741
Percentage Of Outstanding Common Stock Under Employee Stock Ownership Plan		1.50%
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percent	75.00%						5.00%	2.50%
Defined Contribution Plan, Employer Matching Contribution, Percent						100.00%					100.00%
Defined Contribution Plan, Employers Matching Contribution, Annual Vesting Percentage									0.00%	25.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount (in Dollars)	1,000,000	900,000	900,000
Percentage of Participant Borrowing Capacity of Vested Amount	50.00%
Employee Stock Ownership Plan (ESOP), Debt Structure, Direct Loan, Employer Cash Payments Used for Debt Service (in Dollars)				$ 50,000	$ 1,000

XML

Condensed Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash Flows from Operating Activities
Net income	$ 118,043,000	$ 100,755,000	$ 12,175,000
(Reversal)/Provision for credit losses	(9,000,000)	27,000,000	156,900,000
Provision for losses on other real estate owned	10,668,000	10,385,000	20,139,000
Deferred tax liability/(benefit)	4,784,000	13,808,000	(38,504,000)
Depreciation	5,939,000	6,079,000	4,619,000
Net gains on sale and transfers of other real estate owned	(369,000)	(5,243,000)	(9,977,000)
Net gains on sale of loans	(633,000)	(3,354,000)	(149,000)
Net gains on sale of loans held for sale		(88,000)	(779,000)
Proceeds from sale of loans	59,589,000	46,377,000	7,481,000
Originations of loans held for sale	(58,930,000)	(14,027,000)	(7,332,000)
Write-downs on loans held for sale			3,160,000
(Decrease)/increase in unrealized loss from interest rate swaps	(2,634,000)	(3,874,000)	5,814,000
Purchase of trading securities	(163,000)	(745,000)	(3,795,000)
Write-down on venture capital and other investments	309,000	379,000	515,000
Write-down on impaired securities	181,000	200,000	492,000
Gain on sales and calls of securities	(18,025,000)	(21,131,000)	(19,253,000)
Other non-cash interest	(200,000)	(480,000)	(794,000)
Amortization of security premiums, net	5,306,000	4,233,000	6,667,000
Amortization of other intangible assets	5,798,000	5,965,000	6,034,000
Excess tax short-fall from stock options	620,000	290,000	539,000
Stock based compensation expense	2,062,000	1,758,000	3,337,000
Stock issued to officers as compensation	788,000
Decrease in accrued interest receivable	6,211,000	3,156,000	600,000
Noncontrolling interest	(605,000)	(605,000)	(610,000)
Decrease/(increase) in other assets, net	37,093,000	(534,000)	34,594,000
(Decrease)/increase in other liabilities	(2,256,000)	3,746,000	(13,368,000)
Net cash provided by operating activities	164,576,000	174,050,000	168,505,000
Cash Flows from Investing Activities
(Increase)/decrease in short-term investments	(117,027,000)	(88,634,000)	48,404,000
Decrease/(increase) in securities purchased under agreements to resell		110,000,000	(110,000,000)
Purchase of investment securities available-for-sale	(517,513,000)	(571,093,000)	(3,366,780,000)
Proceeds from maturity and call of investment securities available-for-sale	552,099,000	435,000,000	2,876,414,000
Proceeds from sale of investment securities available-for-sale	60,951,000	524,958,000	65,139,000
Purchase of mortgage-backed securities available-for-sale	(680,388,000)	(541,356,000)
Proceeds from repayment and sale of mortgage-backed securities available-for-sale	619,169,000	868,023,000	1,351,018,000
Purchase of investment securities held-to-maturity			(150,164,000)
Purchase of mortgage-backed securities held-to-maturity		(480,083,000)	(165,527,000)
Proceeds from maturity and call of investment securities held-to-maturity	376,981,000	163,855,000	108,067,000
Redemption of Federal Home Loan Bank stock	11,717,000	10,884,000	7,918,000
Net increase in loans	(395,743,000)	(362,054,000)	(151,054,000)
Purchase of premises and equipment	(3,108,000)	(2,888,000)	(4,979,000)
Proceeds from sales of other real estate owned	47,866,000	61,406,000	91,154,000
Net increase in investment in affordable housing	(1,540,000)	(968,000)	(3,015,000)
Net cash (used in)/provided by investing activities	(46,536,000)	127,050,000	596,595,000
Cash Flows from Financing Activities
Net increase in demand deposits, NOW accounts, money market and saving deposits	625,360,000	180,940,000	224,122,000
Net (decrease)/increase in time deposits	(471,085,000)	56,828,000	(736,549,000)
Net (decrease)/increase in federal funds purchased and securities sold under agreement to repurchase	(150,000,000)	(161,000,000)	4,000,000
Advances from Federal Home Loan Bank	531,200,000	4,734,000,000	528,000,000
Repayment of Federal Home Loan Bank borrowings	(610,000,000)	(5,059,000,000)	(907,362,000)
Cash dividends	(16,049,000)	(16,046,000)	(16,040,000)
Issuance of common stock			124,928,000
Proceeds from other borrowings			1,253,000
Repayment of other borrowings	(880,000)	(7,584,000)
Proceeds from shares issued to Dividend Reinvestment Plan	291,000	287,000	310,000
Proceeds from exercise of stock options	764,000	1,306,000
Excess tax short-fall from share-based payment arrangements	(620,000)	(290,000)	(539,000)
Net cash used in financing activities	(91,019,000)	(270,559,000)	(777,877,000)
Increase/(decrease) in cash and cash equivalents	27,021,000	30,541,000	(12,777,000)
Cash and cash equivalents, beginning of the year	117,888,000	87,347,000	100,124,000
Cash and cash equivalents, end of the year	144,909,000	117,888,000	87,347,000
Cash paid during the year for:
Interest	112,411,000	142,644,000	197,762,000
Income taxes	36,083,000	53,148,000	13,369,000
Non-cash investing and financing activities:
Net change in unrealized holding gain on securities available-for-sale, net of tax	9,197,000	(7,710,000)	(147,000)
Transfers to other real estate owned from loans held for investment	14,389,000	83,941,000	98,653,000
Transfers to other real estate owned from loans held for sale		2,874,000	21,473,000
Loans transferred to loans held for sale	15,986,000	4,399,000	4,332,000
Loans transferred to loans held for investment from held for sale	500,000
Loans to facilitate the sale of other real estate owned	1,785,000	7,472,000	12,204,000
Loans to facilitate the sale of loans		$ 6,094,000	$ 23,500,000

XML

Condensed Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Market value on securities held-to-maturity (in Dollars)	$ 823,906	$ 1,203,977
Amortized cost on securities available-for-sale (in Dollars)	$ 1,290,676	$ 1,309,521
Preferred stock shares authorized (in Shares)	10,000,000	10,000,000
Preferred stock shares issued (in Shares)	258,000	258,000
Preferred stock shares outstanding (in Shares)	258,000	258,000
Common stock par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock shares authorized (in Shares)	100,000,000	100,000,000
Common stock shares issued (in Shares)	82,985,853	82,860,122
Common stock shares outstanding (in Shares)	78,778,288	78,652,557
Treasury stock shares (in Shares)	4,207,565	4,207,565

XML

Note 10 - Borrowed Funds

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Text Block]

10.   Borrowed Funds

Federal Funds Purchased.  There were no Federal funds purchased at any time during 2010 or 2012.  The average amount of Federal funds purchased  during 2011 was $27,000 with a weighted average interest rate of 1.29%.

Securities Sold under Agreements to Repurchase.Securities sold under agreements to repurchase were $1.3 billion with a weighted average rate of 3.84% at December 31, 2012, compared to $1.4 billion with a weighted average rate of 4.14% at December 31, 2011.  In May 2011, the Company prepaid a security sold under an agreement to repurchase of $50 million with a rate of 4.83% and incurred a prepayment penalty of $1.7 million.  In 2012, the Company modified $200.0 million of securities sold under agreements to repurchase by extending the term by an additional four years on average, reducing the rate of these agreements by an average of 168 basis points and removing the callable feature of these borrowings.  In 2012, the Company prepaid three securities sold under an agreement to repurchase for the total of $150 million with a weighted average rate of 4.43% and incurred prepayment penalties of $9.4 million.   Seven floating-to-fixed rate agreements totaling $400.0 million have initial floating rates for a period of time ranging from six months to one year, with floating rates ranging from the three-month LIBOR minus 200 basis points to three-month LIBOR minus 340 basis points. Thereafter, the rates are fixed for the remainder of the term, with interest rates ranging from 4.52% to 5.07%.  After the initial floating rate term, the counter parties have the right to terminate the transaction at par at the fixed rate reset date and quarterly thereafter. Thirteen fixed-to-floating rate agreements totaling $650.0 million have initial fixed rates ranging from 1.00% to 3.50% with initial fixed rate terms ranging from six months to 18 months.  For the remainder of the seven year term, the rates float at 8% minus the three-month LIBOR rate with a maximum rate ranging from 3.25% to 3.79% and minimum rate of 0.0%.  After the initial fixed rate term, the counter parties have the right to terminate the transaction at par at the floating rate reset date and quarterly thereafter.  The table below provides summary data for the $1.05 billion of callable securities sold under agreements to repurchase as of December 31, 2012:

(Dollars in millions)	Fixed-to-floating																		Floating-to-fixed						Total
Rate type	Float Rate																		Fixed Rate
Rate index	8% minus 3 month LIBOR
Maximum rate		3.79	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%
Minimum rate		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%		0.0	%
No. of agreements		3			1			4			3			1			1			3			4			20
Amount	$	150.0		$	50.0		$	200.0		$	150.0		$	50.0		$	50.0		$	200.0		$	200.0		$	1,050.0
Weighted average rate		3.78	%		3.53	%		3.50	%		3.50	%		3.53	%		3.25	%		4.69	%		5.00	%		4.04	%
Final maturity		2014			2014			2014			2015			2015			2015			2014			2017

The table below provides summary data for non-callable fixed rate securities sold under agreements to repurchase as of December 31, 2012:

Maturity	No. of Agreements		Amount (In thousands)		Weighted Average Interest Rate
3 years to 5 years		2	$	100,000		2.71	%
Over 5 years		2		100,000		2.86	%
Total		4	$	200,000		2.78	%

These transactions are accounted for as collateralized financing transactions and recorded at the amount at which the securities were sold. We may have to provide additional collateral for the repurchase agreements, as necessary.  The underlying collateral pledged for the repurchase agreements consists of U.S. Treasury securities, U.S. government agency security debt, and mortgage-backed securities with a fair value of $1.4 billion as of December 31, 2012, and $1.6 billion as of December 31, 2011.

The table below provides comparative data for securities sold under agreements to repurchase for the years indicated:

	2012			2011			2010
	(Dollars in thousands)
Average amount outstanding during the year (1)	$	1,361,475		$	1,448,363		$	1,560,215
Maximum amount outstanding at month-end (2)		1,400,000			1,559,000			1,566,000
Balance, December 31		1,250,000			1,400,000			1,561,000
Rate, December 31		3.84	%		4.14	%		4.18	%
Weighted average interest rate for the year		4.09	%		4.19	%		4.24	%

(1) Average balances were computed using daily averages.

(2) Highest month-end balances were January 2012, January 2011, and September 2010.

Advances from the Federal Home Loan Bank.  Total advances from the FHLB were $146.2 million with weighted average rate of 0.44% at December 31, 2012, compared to $225.0 million with weighted average rate of 2.08% at December 31, 2011.  The Company prepaid advances from the FHLB totaling $100.0 million at a rate of 4.60% and incurred prepayment penalties of $2.8 million in 2012 and prepaid advances totaling  $450.0 million with a weighted rate of 4.39% and incurred prepayment penalties of $18.5 million in 2011.

 The following relates to the outstanding advances at December 31, 2012, and 2011:

	2012					2011
Maturity	Amount (In thousands)		Weighted Average Interest Rate			Amount (In thousands)		Weighted Average Interest Rate
Within 90 days	$	125,000		0.28	%	$	-		0.00	%
91 days through 365 days		-		0.00	%		225,000		2.08	%
4 - 5 years		21,200		1.38	%		-		-
	$	146,200		0.44	%	$	225,000		2.08	%

Other borrowings from financial institutions.At December 31, 2012, there were no other borrowings from financial institutions.  At December 31, 2011, other borrowings from a financial institution were $880,000 with a weighted average rate of 0.55%.

Other Liabilities.  On November 23, 2004, the Company entered into an agreement with its Chief Executive Officer (“CEO”) pursuant to which the CEO agreed to defer any bonus amounts in excess of $225,000 for the year ended December 31, 2005, until January 1 of the first year following such time as the CEO separates from the Company.  Accordingly, an amount equal to $610,000 was deferred in 2004 and was accrued in other liabilities in the consolidated balance sheet.  The Company agreed to accrue interest on the deferred portion of the bonus at 7.0% per annum compounded quarterly.  The deferred amount will be increased each quarter by the amount of interest computed for that quarter.  Beginning on the tenth anniversary of the agreement, the interest rate will equal 275 basis points above the prevailing interest rate on the ten-year Treasury Note.  Interest of $71,000 during 2012, $67,000 during 2011, and $62,000 during 2010 was accrued on this deferred bonus.  The balance was $1.1 million at December 31, 2012, and $995,000 at December 31, 2011.

XML

Note 16 - Fair Value Measurements (Detail) (USD $)					12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Accounts Receivable Collateral [Member]	Dec. 31, 2012 Inventory Collateral [Member]	Dec. 31, 2012 Warrants Outstanding [Member] Minimum [Member]	Dec. 31, 2012 Warrants Outstanding [Member] Maximum [Member]	Dec. 31, 2012 Minimum [Member]	Dec. 31, 2012 Maximum [Member]	Dec. 31, 2011 Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value Measurement With Unobservable Inputs Reconciliation Recurring Basis Warrants (in Dollars)	$ 104,000	$ 218,000
Other Real Estate, Foreclosed Assets, and Repossessed Assets (in Dollars)	$ 46,384,000	$ 92,713,000							$ 71,000,000
Collateral Discount Rates			45.00%	65.00%
Estimated Sales Cost Applied To Collateral							3.00%	6.00%
Expected Life of Warrants							1 year	4 years
Fair Value Assumptions, Risk Free Interest Rate					0.25%	0.54%
Fair Value Assumptions, Expected Volatility Rate					13.70%	18.60%

XML

Note 12 - Income Taxes (Detail) - Components of Income Tax Expense (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current:
Federal									$ 44,263	$ 26,548	$ 16,496
State									17,081	10,905	7,379
									61,344	37,453	23,875
Deferred:
Federal									3,755	10,133	(28,600)
State									1,029	3,675	(9,904)
									4,784	13,808	(38,504)
Total income tax expense/(benefit	$ 15,276	$ 17,686	$ 16,619	$ 16,547	$ 14,459	$ 14,162	$ 10,906	$ 11,734	$ 66,128	$ 51,261	$ (14,629)

XML

Note 11 - Capital Resources (Detail) - Outstanding Junior Subordinated Notes (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Principal Balance of Notes	$ 121,136
Cathay Capital Trust I [Member]
Issuance Date	Jun. 26, 2003
Principal Balance of Notes	20,619
Not Redeemable Until	Jun. 30, 2008
Stated Maturity	Jun. 30, 2033
Annualized Coupon Rate	3-month LIBOR + 3.15%
Current Interest Rate	3.46%
Date of Rate Change	Dec. 30, 2012
Payable/Distribution Date	March 30 June 30 September 30 December 30
Cathay Statutory Trust I [Member]
Issuance Date	Sep. 17, 2003
Principal Balance of Notes	20,619
Not Redeemable Until	Sep. 17, 2008
Stated Maturity	Sep. 17, 2033
Annualized Coupon Rate	3-month LIBOR + 3.00%
Current Interest Rate	3.31%
Date of Rate Change	Dec. 17, 2012
Payable/Distribution Date	March 17 June 17 September 17 December 17
Cathay Capital Trust II [Member]
Issuance Date	Dec. 30, 2003
Principal Balance of Notes	12,887
Not Redeemable Until	Mar. 30, 2009
Stated Maturity	Mar. 30, 2034
Annualized Coupon Rate	3-month LIBOR + 2.90%
Current Interest Rate	3.21%
Date of Rate Change	Dec. 30, 2012
Payable/Distribution Date	March 30 June 30 September 30 December 30
Cathay Capital Trust III [Member]
Issuance Date	Mar. 28, 2007
Principal Balance of Notes	46,392
Not Redeemable Until	Jun. 15, 2012
Stated Maturity	Jun. 15, 2037
Annualized Coupon Rate	3-month LIBOR + 1.48%
Current Interest Rate	1.79%
Date of Rate Change	Dec. 17, 2012
Payable/Distribution Date	March 15 June 15 September 15 December 15
Cathay Capital Trust IV [Member]
Issuance Date	May 31, 2007
Principal Balance of Notes	$ 20,619
Not Redeemable Until	Sep. 06, 2012
Stated Maturity	Sep. 06, 2037
Annualized Coupon Rate	3-month LIBOR 1.40%
Current Interest Rate	1.71%
Date of Rate Change	Dec. 06, 2012
Payable/Distribution Date	March 6 June 6 September 6 December 6

XML

Note 22 - Regulatory Matters (Detail)	Dec. 31, 2012
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	6.00%
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%

XML

Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 15, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	CATHAY GENERAL BANCORP
Document Type	10-K
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		78,785,472
Entity Public Float			$ 1,186,791,731
Amendment Flag	false
Entity Central Index Key	0000861842
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

XML

Note 11 - Capital Resources

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note Disclosure [Text Block]

11.   Capital Resources

In 2010, the Company sold $132.3 million of new common stock consisting of 15,028,409 shares at an average price of $8.80 per share.  Net of issuance costs and fees, this issuance added $124.9 million to common stockholders’ equity.  The Company did not sell any common stock in 2012 and in 2011.

The Company has participated in the U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program under the Emergency Economic Stabilization Act of 2008.  Upon the approval of participation, the U.S. Treasury purchased the Company’s senior preferred stock on December 5, 2008, in the amount of $258.0 million.  The senior preferred stock pays cumulative compounding dividends at a rate of 5% per year for the first five years, and thereafter at a rate of 9% per year.  The shares are non-voting, other than class voting rights on matters that could adversely affect the shares. They are callable at par after three years. Prior to the end of three years, the shares may only be redeemed with the proceeds from one or more qualified equity offerings.  In conjunction with the purchase of senior preferred shares, the U.S. Treasury received warrants to purchase 1,846,374 shares of common stock at the exercise price of $20.96 with an aggregate market price equal to $38.7 million, 15% of the senior preferred stock amount that U.S. Treasury invested.

On September 29, 2006, the Bank issued $50.0 million in subordinated debt in a private placement transaction.  The debt had an original maturity term of 10 years, was unsecured and bore interest at a rate of three-month LIBOR plus 110 basis points, payable on a quarterly basis.  In March 2011, the Company extended the debt for an additional year.  As part of the extension agreement, the rate was increased from LIBOR plus 110 basis points to LIBOR plus 330 basis points for 2012 and 2011, after which time it reverts back to LIBOR plus 110 basis points.  At December 31, 2012, the per annum interest rate on the subordinated debt was 3.61% compared to 3.88% at December 31, 2011.  The subordinated debt was issued through the Bank and qualifies as Tier 2 capital for regulatory reporting purposes and is included in long-term debt in the accompanying condensed Consolidated Balance Sheets.

The Bancorp established three special purpose trusts in 2003 and two in 2007 for the purpose of issuing trust preferred securities to outside investors (“Capital Securities”).  The trusts exist for the purpose of issuing the Capital Securities and investing the proceeds thereof, together with proceeds from the purchase of the common securities of the trusts by the Bancorp, in Junior Subordinated Notes issued by the Bancorp.  Subject to some limitations, payment of distributions out of the monies held by the trusts and payments on liquidation of the trusts or the redemption of the Capital Securities are guaranteed by the Bancorp to the extent the trusts have funds on hand at such time.  The obligations of the Bancorp under the guarantees and the Junior Subordinated Notes are subordinate and junior in right of payment to all indebtedness of the Bancorp and will be structurally subordinated to all liabilities and obligations of the Bancorp’s subsidiaries.  The Bancorp has the right to defer payments of interest on the Junior Subordinated Notes at any time or from time to time for a period of up to twenty consecutive quarterly periods with respect to each deferral period.  Under the terms of the Junior Subordinated Notes, the Bancorp may not, with certain exceptions, declare or pay any dividends or distributions on its capital stock or purchase or acquire any of its capital stock if the Bancorp has deferred payment of interest on the Junior Subordinated Notes.

The five special purpose trusts are considered variable interest entities under FIN 46R.  Because the Bancorp is not the primary beneficiary of the trusts, the financial statements of the trusts are not included in the Consolidated Financial Statements of the Company.

The Junior Subordinated Notes are currently included in the Tier 1 capital of the Bancorp for regulatory capital purposes. On March 1, 2005, the Federal Reserve adopted a final rule that retains trust preferred securities in the Tier I capital of bank holding companies, which after a five-year transition period, limited the aggregate amount of trust preferred securities and certain other capital elements to 25% of Tier 1 capital elements, net of goodwill, less any associated deferred tax liability. The amount of trust preferred securities and certain other elements in excess of the limit could be included in Tier 2 capital, subject to restrictions. This rule did not have a materially adverse effect on the Company’s capital positions.

Interest expense on the Junior Subordinated Notes was $3.2 million for 2012, $3.0 million for 2011, and $3.1 million for 2010.

The table below summarizes the outstanding Junior Subordinated Notes issued by the Company to each trust as of December 31, 2012:

Trust Name	Issuance Date	Principal Balance of Notes		Not Redeemable Until	Stated Maturity	Annualized Coupon Rate	Current Interest Rate			Date of Rate Change	Payable/ Distribution Date
	(Dollars in thousands)
Cathay Capital Trust I	June 26, 2003	$	20,619	June 30, 2008	June 30, 2033	3-month LIBOR + 3.15%		3.46	%	December 30, 2012	March 30 June 30 September 30 December 30
Cathay Statutory Trust I	September 17, 2003		20,619	September 17, 2008	September 17, 2033	3-month LIBOR + 3.00%		3.31	%	December 17, 2012	March 17 June 17 September 17 December 17
Cathay Capital Trust II	December 30, 2003		12,887	March 30, 2009	March 30, 2034	3-month LIBOR + 2.90%		3.21	%	December 30, 2012	March 30 June 30 September 30 December 30
Cathay Capital Trust III	March 28, 2007		46,392	June 15, 2012	June 15, 2037	3-month LIBOR + 1.48%		1.79	%	December 17, 2012	March 15 June 15 September 15 December 15
Cathay Capital Trust IV	May 31, 2007		20,619	September 6, 2012	September 6, 2037	3-month LIBOR 1.40%		1.71	%	December 6, 2012	March 6 June 6 September 6 December 6
Total Junior Subordinated Notes		$	121,136

XML

Note 8 - Premises and Equipment (Detail) - Premises and Equipment (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property plant and equipment gross	$ 159,282	$ 157,290
Less: Accumulated depreciation/amortization	56,669	51,329
Premises and equipment, net	102,613	105,961
Land and Land Improvements [Member]
Property plant and equipment gross	33,429	33,429
Building and Building Improvements [Member]
Property plant and equipment gross	73,723	72,608
Furniture, Fixtures, and Equipment [Member]
Property plant and equipment gross	39,701	37,445
Leasehold Improvements [Member]
Property plant and equipment gross	12,391	12,494
Construction in Progress [Member]
Property plant and equipment gross	$ 38	$ 1,314

XML

Note 11 - Capital Resources (Detail) (USD $)	0 Months Ended	12 Months Ended			24 Months Ended
	Dec. 05, 2008	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2004	Sep. 29, 2006
Proceeds from Issuance of Common Stock				$ 124,928,000
Stock Issued During Period, Shares, New Issues (in Shares)				15,028,409
Sale of Stock, Price Per Share (in Dollars per share)				$ 8.80
Proceeds from Issuance of Preferred Stock and Preference Stock (in Dollars)	258,000,000				8,600,000
Preferred Stock, Dividend Rate, Percentage					7.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares)		1,846,374
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item)		20.96
Warrants and Rights Outstanding		38,700,000
Subordinated Debt						50,000,000
Interest Expense, Subordinated Notes and Debentures		3,200,000	3,000,000	3,100,000
Gross Proceeds [Member]
Proceeds from Issuance of Common Stock				132,300,000
Net of Issuance Costs [Member]
Proceeds from Issuance of Common Stock				$ 124,900,000
Subordinated Debt Obligations [Member]
Debt, Weighted Average Interest Rate		3.61%	3.88%
First Five Years [Member]
Preferred Stock, Dividend Rate, Percentage	5.00%
After Five Years [Member]
Preferred Stock, Dividend Rate, Percentage	9.00%

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
INTEREST AND DIVIDEND INCOME
Loan receivable	$ 360,643	$ 364,580	$ 380,662
Investment securities- taxable	62,395	83,083	106,568
Investment securities- nontaxable	4,161	4,218	854
Federal Home Loan Bank stock	485	177	237
Federal funds sold and securities purchased under agreement to resell	18	83	14
Deposits with banks	2,042	1,430	1,259
Total interest and dividend income	429,744	453,571	489,594
INTEREST EXPENSE
Time deposits of $100,000 or more	33,441	42,204	54,219
Other deposits	13,932	20,010	29,943
Interest on securities sold under agreements to repurchase	55,699	60,733	66,141
Advances from the Federal Home Loan Bank	270	12,033	37,527
Long-term debt	5,149	4,890	3,852
Short-term borrowings		11	6
Total interest expense	108,491	139,881	191,688
Net interest income before provision for credit losses	321,253	313,690	297,906
(Reversal)/provision for credit losses	(9,000)	27,000	156,900
Net interest income/(loss) after provision for credit losses	330,253	286,690	141,006
NON-INTEREST INCOME
Securities gains, net	18,026	21,131	18,695
Letters of credit commissions	6,316	5,644	4,466
Depository service fees	5,453	5,420	5,220
Other operating income	16,712	18,697	3,870
Total non-interest income	46,507	50,892	32,251
NON-INTEREST EXPENSE
Salaries and employee benefits	78,377	71,849	58,835
Occupancy expense	14,608	14,225	12,188
Computer and equipment expense	9,591	8,508	8,230
Professional services expense	21,768	20,209	17,630
FDIC and State assessments	8,339	12,494	19,549
Marketing expense	4,607	3,175	3,160
Other real estate owned	15,116	10,583	16,011
Operations of investments in affordable housing	6,306	8,153	7,611
Amortization of core deposit premium	5,663	5,859	5,958
Cost associated with debt redemption	12,120	20,231	14,261
Other operating expense	16,094	10,280	12,278
Total non-interest expense	192,589	185,566	175,711
Income/(loss) before income tax (benefit)/expense	184,171	152,016	(2,454)
Income tax expense/(benefit)	66,128	51,261	(14,629)
Net income	118,043	100,755	12,175
Less: net income attributable to noncontrolling interest	605	605	610
Net income attributable to Cathay General Bancorp	117,438	100,150	11,565
Dividends on preferred stock	(16,488)	(16,437)	(16,388)
Net income/(loss) attributable to common stockholders	100,950	83,713	(4,823)
Other comprehensive loss, net of tax:
Unrealized holding gains arising during the year	19,645	4,538	7,714
Less: reclassification adjustment for gains included in net income	10,448	12,248	7,860
Total other comprehensive loss, net of tax	9,197	(7,710)	(146)
Total comprehensive income	$ 126,635	$ 92,440	$ 11,419
Net income/(loss) attributable to common stockholders per common share
Basic (in Dollars per share)	$ 1.28	$ 1.06	$ (0.06)
Diluted (in Dollars per share)	$ 1.28	$ 1.06	$ (0.06)
Basic average common shares outstanding (in Shares)	78,719,133	78,633,317	77,073,954
Diluted average common shares outstanding (in Shares)	78,723,297	78,640,652	77,073,954

XML

Note 5 - Loans

12 Months Ended

Dec. 31, 2012

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

5.      Loans

       Most of the Company’s business activity is predominately with Asian customers located in Southern and Northern California; New York City; Houston and Dallas, Texas; Seattle, Washington; Boston, Massachusetts; Chicago, Illinois; Edison, New Jersey; and Hong Kong.  The Company has no specific industry concentration, and generally its loans are collateralized with real property or other pledged collateral of the borrowers.  Loans are generally expected to be paid off from the operating profits of the borrowers, refinancing by another lender, or through sale by the borrowers of the secured collateral.

The components of loans in the Consolidated Balance Sheets as of December 31, 2012, and December 31, 2011, were as follows:

	2012			2011
	(In thousands)
Type of Loans:
Commercial loans	$	2,127,107		$	1,868,275
Real estate construction loans		180,950			237,372
Commercial mortgage loans		3,768,452			3,748,897
Residential mortgage loans		1,146,230			972,262
Equity lines		193,852			214,707
Installment and other loans		12,556			17,699
Gross loans		7,429,147			7,059,212
Less:
Allowance for loan losses		(183,322	)		(206,280	)
Unamortized deferred loan fees		(10,238	)		(8,449	)
Total loans and leases, net	$	7,235,587		$	6,844,483
Loans held for sale	$	-		$	760

No loans were held for sale at December 31, 2012, compared to $760,000 at December 31, 2011.  In 2012, we added three new loans of $16.0 million, sold four loans of $16.2 million for a net loss on sale of $26,000, and transferred a loan of $500,000 to held for investment. At December 31, 2011, non-accrual loans held for sale of $760,000 decreased $2.1 million from $2.9 million at December 31, 2010.  In 2011, we added six new loans of $4.4 million, transferred one loan of $2.9 million to OREO, and sold four loans of $3.6 million for a net gain on sale of $88,000.  At December 31, 2011, loans held for sale were comprised of a commercial construction loan of $500,000 and a residential mortgage loan of $260,000.

The Company pledged real estate loans of $1.6 billion at December 31, 2012, and $2.0 billion at December 31, 2011, to the Federal Home Loan Bank of San Francisco under its specific pledge program.  In addition, the Bank pledged $211.6 million at December 31, 2012, and $250.9 million at December 31, 2011, of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

Loans serviced for others as of December 31, 2012, totaled $201.4 million and were comprised of $42.1 million of commercial loans, $62.2 million of commercial real estate loans, $3.6 million in construction loans, and $93.5 million of residential mortgages.

      The Company has entered into transactions with its directors, executive officers, or principal holders of its equity securities, or the associates of such persons (“Related Parties”).  Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with customers who are not related parties.  In management’s opinion, these transactions did not involve more than normal credit risk or present other unfavorable features.  All loans to Related Parties were current as of December 31, 2012.  In July 2011, the Bank sold a participation in a substandard real estate loan to a Related Party for $24.5 million, which represented 98% of the contractual balance.  In March 2012, the Bank sold participations in two substandard real estate loans to the same Related Party for $7.9 million, which represented 92.5% of the contractual balance. An analysis of the activity with respect to loans to Related Parties for the years indicated is as follows:

	December 31,
	2012			2011
	(In thousands)
Balance at beginning of year	$	160,069		$	134,161
Additional loans made		92,249			89,985
Payment received		(79,734	)		(64,077	)
Balance at end of year	$	172,584		$	160,069

At December 31, 2012, recorded investment in impaired loans totaled $248.6 million and was comprised of nonaccrual loans of $103.9 million and accruing TDR’s of $144.7 million.  At December 31, 2011, recorded investment in impaired loans totaled $322.0 million and was comprised of nonaccrual loans of $201.2 million, nonaccrual loans held for sale of $760,000, and accruing TDR’s of $120.0 million.   The average balance of impaired loans was $277.8 million in 2012 and $361.4 million in 2011.  We considered all non-accrual loans and troubled debt restructurings ("TDR") to be impaired.  Interest recognized on impaired loans totaled $9.3 million in 2012 and $5.3 million in 2011.  The Bank recognizes interest income on impaired loans based on its existing method of recognizing interest income on non-accrual loans except accruing TDRs.  For impaired loans, the amounts previously charged off represent 23.2% at December 31, 2012, and 25.6% at December 31, 2011, of the contractual balances for impaired loans.  The following table presents impaired loans and the related allowance and charge-off as of the dates indicated:

	Impaired Loans
	At December 31, 2012						At December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance		Unpaid Principal Balance		Recorded Investment		Allowance
	(Dollars in thousands)
With no allocated allowance
Commercial loans	$	29,359	$	18,963	$	-	$	46,671	$	38,194	$	-
Real estate construction loans		9,304		7,277		-		134,837		78,767		-
Commercial mortgage loans		189,871		152,957		-		187,580		149,034		-
Residential mortgage and equity lines		4,303		4,229		-		8,555		7,987		-
Subtotal	$	232,837	$	183,426	$	-	$	377,643	$	273,982	$	-
With allocated allowance
Commercial loans	$	7,804	$	4,959	$	1,467	$	11,795	$	7,587	$	3,336
Real estate construction loans		54,718		34,856		8,158		-		-		-
Commercial mortgage loans		14,163		12,928		1,336		29,722		28,023		2,969
Residential mortgage and equity lines		14,264		12,428		1,222		13,813		12,381		1,249
Subtotal	$	90,949	$	65,171	$	12,183	$	55,330	$	47,991	$	7,554
Total impaired loans	$	323,786	$	248,597	$	12,183	$	432,973	$	321,973	$	7,554

The following table presents the average balance and interest income recognized related to impaired loans for the period indicated:

	For the year ended December 31,
	2012		2011		2012		2011
	Average Recorded Investment				Interest Income Recognized
	(In thousands)
Commercial loans	$	31,798	$	48,349	$	580	$	1,053
Real estate construction loans		49,094		82,529		265		940
Commercial mortgage loans		178,822		212,555		8,221		3,101
Residential mortgage and equity lines		18,062		17,920		239		236
Subtotal	$	277,776	$	361,353	$	9,305	$	5,330

The following is a summary of non-accrual loans as of December 31, 2012, 2011, and 2010 and the related net interest foregone for the years then ended:

	2012		2011		2010
	(In thousands)
Non-accrual portfolio loans	$	103,902	$	201,197	$	242,319
Non-accrual loans held-for-sale		-		760		2,873
Total non-accrual loans	$	103,902	$	201,957	$	245,192
Contractual interest due	$	6,621	$	13,049	$	17,304
Interest recognized		1,006		71		4,853
Net interest foregone	$	5,615	$	12,978	$	12,451

The following table presents the aging of the loan portfolio by type as of December 31, 2012, and as of December 31, 2011:

	As of December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	16,832	$	1,610	$	630	$	19,958	$	39,030	$	2,088,077	$	2,127,107
Real estate construction loans		-		1,471		-		36,299		37,770		143,180		180,950
Commercial mortgage loans		21,570		3,627		-		35,704		60,901		3,707,551		3,768,452
Residential mortgage loans		5,324		1,972		-		11,941		19,237		1,320,845		1,340,082
Installment and other loans		-		-		-		-		-		12,556		12,556
Total loans	$	43,726	$	8,680	$	630	$	103,902	$	156,938	$	7,272,209	$	7,429,147

	As of December 31, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Non-accrual Loans		Total Past Due		Loans Not Past Due		Total
Type of Loans:	(In thousands)
Commercial loans	$	1,683	$	-	$	-	$	30,661	$	32,344	$	1,835,931	$	1,868,275
Real estate construction loans		20,326		-		-		46,012		66,338		171,034		237,372
Commercial mortgage loans		13,627		20,277		6,726		107,784		148,414		3,600,483		3,748,897
Residential mortgage loans		5,871		-		-		16,740		22,611		1,164,358		1,186,969
Installment and other loans		-		-		-		-		-		17,699		17,699
Total loans	$	41,507	$	20,277	$	6,726	$	201,197	$	269,707	$	6,789,505	$	7,059,212

The determination of the amount of the allowance for credit losses for problem loans is based on management’s current judgment about the credit quality of the loan portfolio and takes into consideration known relevant internal and external factors that affect collectibility when determining the appropriate level for the allowance for credit losses.   The nature of the process by which the Bank determines the appropriate allowance for credit losses requires the exercise of considerable judgment.   This allowance evaluation process is also applied to TDRs since TDRs are considered to be impaired loans.   As a result of adopting the amendments in ASU 2012-02, the Company reassessed all restructurings that occurred on or after January 1, 2011, for identification as TDRs.

At December 31, 2012, accruing TDRs were $144.7 million and non-accrual TDRs were $47.7 million compared to accruing TDRs of $120.0 million and non-accrual TDRs of $50.9 million at December 31, 2011.  The Company has allocated specific reserves of $1.1 million to accruing TDRs and $7.8 million to non-accrual TDRs at December 31, 2012, and $1.4 million to accruing TDRs and $1.6 million to non-accrual TDRs at December 31, 2011.  The following table presents TDRs that were modified during 2012, their specific reserve at December 31, 2012, and charge-off during 2012:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		9	$	3,646	$	3,646	$	1,213	$	-
Commercial mortgage loans		20		62,118		58,393		27		3,725
Residential mortgage and equity lines		14		4,305		4,223		162		82
Total		43	$	70,069	$	66,262	$	1,402	$	3,807

The following table presents TDRs that were modified during 2011, their specific reserve at December 31, 2011, and charge-off during 2011:

	No. of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Specific Reserve		Charge-off
	(Dollars in thousands)
Commercial loans		7	$	15,025	$	15,025	$	104	$	-
Real estate construction loans		3		33,669		21,522		-		12,147
Commercial mortgage loans		6		17,343		14,294		1		3,049
Residential mortgage and equity lines		3		1,574		1,574		114		-
Total		19	$	67,611	$	52,415	$	219	$	15,196

A summary of TDRs by type of concession and by type of loans is shown below:

		December 31, 2012
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	531	$	3,020	$	-	$	413	$	3,964
Real estate construction loans			-		-		-		5,834		5,834
Commercial mortgage loans			27,003		16,656		739		85,783		130,181
Residential mortgage loans			1,461		1,024		-		2,231		4,716
Total accruing TDRs		$	28,995	$	20,700	$	739	$	94,261	$	144,695

	December 31, 2012
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	912	$	-	$	1,518	$	-	$	2,430
Real estate construction loans		-		16,767		9,579		-		-		26,346
Commercial mortgage loans		1,685		2,817		5,746		-		5,076		15,324
Residential mortgage loans		275		2,010		586		-		760		3,631
Total non-accrual TDRs	$	1,960	$	22,506	$	15,911	$	1,518	$	5,836	$	47,731

	As of December 31, 2011
Accruing TDRs		Principal Deferral		Rate Reduction		Rate Reduction and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans		$	12,933	$	1,756	$	-	$	431	$	15,120
Real estate construction loans			16,820		9,659		-		5,776		32,255
Commercial mortgage loans			471		37,796		2,071		28,935		69,273
Residential mortgage loans			1,294		587		-		1,487		3,368
Total accruing TDRs		$	31,518	$	49,798	$	2,071	$	36,629	$	120,016

	As of December 31, 2011
Non-accrual TDRs	Interest Deferral		Principal Deferral		Rate Reduction		Rate Reduction  and Forgiveness of Principal		Rate Reduction and Payment Deferral		Total
	(In thousands)
Commercial loans	$	-	$	616	$	1,859	$	1,506	$	-	$	3,981
Real estate construction loans		-		13,579		12,376		-		-		25,955
Commercial mortgage loans		2,633		9,727		-		-		5,076		17,436
Residential mortgage loans		311		2,427		449		-		311		3,498
Total non-accrual TDRs	$	2,944	$	26,349	$	14,684	$	1,506	$	5,387	$	50,870

Troubled debt restructurings on accrual status totaled $144.7 million at December 31, 2012, and were comprised of 61 loans, an increase of $24.7 million, compared to 32 loans totaling $120.0 million at December 31, 2011.  TDRs at December 31, 2012, were comprised of sixteen retail shopping and commercial use building loans of $68.1 million, fifteen office and commercial use building loans of $40.4 million, two hotel loans of $12.4 million, seventeen single family residential loans of $19.1 million, two land loans of $2.3 million, six commercial loans of $1.3 million, and three multi-family residential loans of $1.1 million.  We expect that the troubled debt restructuring loans on accruing status as of December 31, 2012, which are all performing in accordance with their restructured terms, will continue to comply with the restructured terms because of the reduced principal or interest payments on these loans.  The comparable TDRs at December 31, 2011, were comprised of eleven retail shopping and commercial use building loans of $74.4 million, seven office and commercial use building loans of $23.8 million, one hotel loan of $7.9 million, ten single family residential loans of $13.3 million, one land loan of $635,000 and two commercial loans of $39,000.  The activity within our TDR loans for 2012 and 2011 are shown below:

Accruing TDRs	2012			2011
	(In thousands)
Beginning balance	$	120,016		$	136,800
New restructurings		53,958			60,863
Restructured loans restored to accrual status		8,356			709
Charge-offs		(251	)		(2,341	)
Payments		(5,159	)		(46,313	)
Restructured loans placed on nonaccrual		(32,225	)		(28,969	)
Expiration of loan concession		-			(733	)
Ending balance	$	144,695		$	120,016

Non-accrual TDRs	2012			2011
	(In thousands)
Beginning balance	$	50,870		$	28,146
New restructurings		12,304			13,269
Restructured loans placed on non-accrual		32,225			28,969
Charge-offs		(4,182	)		(7,303	)
Payments		(33,931	)		(3,355	)
Foreclosures		(1,199	)		(8,147	)
Restructured loans restored to accrual status		(8,356	)		(709	)
Ending balance	$	47,731		$	50,870

A loan is considered to be in payment default once it is 60 to 90 days contractually past due under the modified terms.  Two commercial real estate construction TDRs of $26.3 million, four commercial real estate TDRs of $12.2 million, and two mortgage TDRs of $1.6 million had payments defaults within the previous twelve months ended December 31, 2012.  One of the TDRs that subsequently defaulted incurred a charge-off of $46,000 during 2012.

Under the Company’s internal underwriting policy, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification in order to determine whether a borrower is experiencing financial difficulty. As of December 31, 2012, there were no commitments to lend additional funds to those borrowers whose loans have been restructured, were considered impaired, or were on non-accrual status.

As part of the on-going monitoring of the credit quality of our loan portfolio, the Company utilizes a risk grading matrix to assign a risk grade to each loan.  Loans are risk rated based on analysis of the current state of the borrower’s credit quality.  The analysis of credit quality includes a review of all sources of repayment, the borrower’s current financial and liquidity status and all other relevant information. The risk rating categories can be generally described by the following grouping for non-homogeneous loans:

· Pass/Watch – These loans range from minimal credit risk to lower than average, but still acceptable, credit risk.

· Special Mention – Borrower is fundamentally sound and the loan is currently protected but adverse trends are apparent, that if not corrected, may affect ability to repay. Primary source of loan repayment remains viable but there is increasing reliance on collateral or guarantor support.

· Substandard – These loans are inadequately protected by current sound worth, paying capacity or pledged collateral. Well-defined weaknesses exist that could jeopardize repayment of debt. Loss may not be imminent, but if weaknesses are not corrected, there is a good possibility of some loss.

· Doubtful – The possibility of loss is extremely high, but due to identifiable and important pending events (which may strengthen the loan) a loss classification is deferred until the situation is better defined.

· Loss – These loans are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

The following table presents loan portfolio by risk rating as of December 31, 2012, and as of December 31, 2011:

	As of December 31, 2012
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	1,944,989	$	76,776	$	94,077	$	11,265	$	2,127,107
Real estate construction loans		109,269		18,000		45,171		8,510		180,950
Commercial mortgage loans		3,344,783		162,455		261,214		-		3,768,452
Residential mortgage and equity lines		1,322,768		816		16,084		414		1,340,082
Installment and other loans		12,556		-		-		-		12,556
Total gross loans	$	6,734,365	$	258,047	$	416,546	$	20,189	$	7,429,147

	As of December 31, 2011
	Pass/Watch		Special Mention		Substandard		Doubtful		Total
Commercial loans	$	1,689,842	$	64,290	$	108,858	$	5,285	$	1,868,275
Real estate construction loans		115,538		23,555		90,132		8,147		237,372
Commercial mortgage loans		3,275,431		69,925		403,541		-		3,748,897
Residential mortgage and equity lines		1,149,225		4,439		33,160		145		1,186,969
Installment and other loans		17,636		63		-		-		17,699
Total gross loans		6,247,672		162,272		635,691		13,577		7,059,212
Loans held for sale		-	$	-	$	260	$	500	$	760

The allowance for loan losses and the reserve for off-balance sheet credit commitments are significant estimates that can and do change based on management’s process in analyzing the loan portfolio and on management’s assumptions about specific borrowers, underlying collateral, and applicable economic and environmental conditions, among other factors.

The following table presents the balance in the allowance for loan losses by portfolio segment and based on impairment method as of December 31, 2012, and as of December 31, 2011.

	Commercial Loans		Real Estate Construction Loans		Commercial Mortgage Loans		Residential mortgage and equity line		Consumer and Other		Total
	(In thousands)
December 31, 2012
Loans individually evaluated for impairment
Allowance	$	1,467	$	8,158	$	1,336	$	1,222	$	-	$	12,183
Balance	$	23,922	$	42,133	$	165,885	$	16,657	$	-	$	248,597
Loans collectively evaluated for impairment
Allowance	$	64,634	$	14,859	$	81,137	$	10,481	$	28	$	171,139
Balance	$	2,103,185	$	138,817	$	3,602,567	$	1,323,425	$	12,556	$	7,180,550
Total allowance	$	66,101	$	23,017	$	82,473	$	11,703	$	28	$	183,322
Total balance	$	2,127,107	$	180,950	$	3,768,452	$	1,340,082	$	12,556	$	7,429,147
December 31, 2011
Loans individually evaluated for impairment
Allowance	$	3,336	$	-	$	2,969	$	1,247	$	-	$	7,552
Balance	$	45,781	$	78,766	$	177,058	$	20,368	$	-	$	321,973
Loans collectively evaluated for impairment
Allowance	$	62,322	$	21,749	$	105,052	$	9,548	$	57	$	198,728
Balance	$	1,822,494	$	158,606	$	3,571,839	$	1,166,601	$	17,699	$	6,737,239
Total allowance	$	65,658	$	21,749	$	108,021	$	10,795	$	57	$	206,280
Total balance	$	1,868,275	$	237,372	$	3,748,897	$	1,186,969	$	17,699	$	7,059,212

The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2012 and 2011.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Commercial Loans			Real Estate Construction Loans			Commercial Mortgage Loans			Residential mortgage and equity line			Installment and Other Loans			Total
	(In thousands)
2011 Beginning Balance	$	63,918		$	43,262		$	128,348		$	9,668		$	35		$	245,231
Provision for possible loan losses		11,711			11,514			1,454			2,392			197			27,268
Charge-offs		(11,745	)		(37,500	)		(26,750	)		(1,456	)		(175	)		(77,626	)
Recoveries		1,774			4,473			4,969			191			-			11,407
Net Charge-offs		(9,971	)		(33,027	)		(21,781	)		(1,265	)		(175	)		(66,219	)
2011 Ending Balance	$	65,658		$	21,749		$	108,021		$	10,795		$	57		$	206,280
Reserve to impaired loans	$	3,336		$	-		$	2,969		$	1,247		$	-		$	7,552
Reserve to non-impaired loans	$	62,322		$	21,749		$	105,052		$	9,548		$	57		$	198,728
Reserve for off-balance sheet credit commitments	$	816		$	1,103		$	113		$	34		$	3		$	2,069
2012 Beginning Balance	$	65,658		$	21,749		$	108,021		$	10,795		$	57		$	206,280
Provision/(reversal) for possible loan losses		16,201			(3,720	)		(23,128	)		2,360			(7	)		(8,294	)
Charge-offs		(17,707	)		(1,165	)		(11,762	)		(2,132	)		(25	)		(32,791	)
Recoveries		1,949			6,153			9,342			680			3			18,127
Net Charge-offs		(15,758	)		4,988			(2,420	)		(1,452	)		(22	)		(14,664	)
2012 Ending Balance	$	66,101		$	23,017		$	82,473		$	11,703		$	28		$	183,322
Reserve to impaired loans	$	1,467		$	8,158		$	1,336		$	1,222		$	-		$	12,183
Reserve to non-impaired loans	$	64,634		$	14,859		$	81,137		$	10,481		$	28		$	171,139
Reserve for off-balance sheet credit commitments	$	837		$	390		$	98		$	34		$	3		$	1,362

An analysis of the activity in the allowance for credit losses for the year ended 2012, 2011, and 2010 is as follows:

	December 31,
	2012			2011			2010
Allowance for Loan Losses	(In thousands)
Balance at beginning of year	$	206,280		$	245,231		$	211,889
(Reversal)/provision for credit losses		(9,000	)		27,000			156,900
Transfers from reserve for off-balance sheet credit commitments		706			268			2,870
Loans charged off		(32,791	)		(77,626	)		(138,755	)
Recoveries of charged off loans		18,127			11,407			12,327
Balance at end of year	$	183,322		$	206,280		$	245,231
Reserve for Off-balance Sheet Credit Commitments
Balance at beginning of year	$	2,069		$	2,337		$	5,207
Provision for credit losses/transfers		(706	)		(268	)		(2,870	)
Balance at end of year	$	1,363		$	2,069		$	2,337

XML

Note 4 - Investment Securities

12 Months Ended

Dec. 31, 2012

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

4.     Investment Securities

Investment Securities.  The following table reflects the amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment securities as of December 31, 2012, and December 31, 2011:

	At December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Securities Held-to-Maturity
State and municipal securities	$	129,037	$	9,268	$	-	$	138,305
Mortgage-backed securities		634,757		40,801		-		675,558
Corporate debt securities		9,974		69		-		10,043
Total securities held-to-maturity	$	773,768	$	50,138	$	-	$	823,906
Securities Available-for-Sale
U.S. treasury securities	$	509,748	$	228	$	5	$	509,971
Mortgage-backed securities		404,505		12,194		5		416,694
Collateralized mortgage obligations		9,772		430		34		10,168
Asset-backed securities		145		-		4		141
Corporate debt securities		349,973		106		14,102		335,977
Mutual funds		6,000		79		-		6,079
Preferred stock of government sponsored entities		569		1,766		-		2,335
Trust preferred securities		9,964		151		-		10,115
Total securities available-for-sale	$	1,290,676	$	14,954	$	14,150	$	1,291,480
Total investment securities	$	2,064,444	$	65,092	$	14,150	$	2,115,386

	At December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held-to-Maturity	(In thousands)
U.S. government sponsored entities	$	99,966	$	1,406	$	-	$	101,372
State and municipal securities		129,577		7,053		-		136,630
Mortgage-backed securities		913,990		42,351		-		956,341
Corporate debt securities		9,971		-		337		9,634
Total securities held-to-maturity	$	1,153,504	$	50,810	$	337	$	1,203,977
Securities Available-for-Sale
U.S. government sponsored entities	$	500,007	$	1,226	$	7	$	501,226
State and municipal securities		1,869		59		-		1,928
Mortgage-backed securities		325,706		12,361		436		337,631
Collateralized mortgage obligations		16,184		540		238		16,486
Asset-backed securities		172		-		6		166
Corporate debt securities		412,045		113		31,729		380,429
Mutual funds		6,000		48		13		6,035
Preferred stock of government sponsored entities		569		1,085		-		1,654
Trust preferred securities		45,501		486		24		45,963
Other equity securities		1,468		1,492		-		2,960
Total securities available-for-sale	$	1,309,521	$	17,410	$	32,453	$	1,294,478
Total investment securities	$	2,463,025	$	68,220	$	32,790	$	2,498,455

The amortized cost and fair value of investment securities at December 31, 2012, by contractual maturities are shown below.  Actual maturities may differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or repayment penalties.   

	Securities Available-for-Sale				Securities Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	349,899	$	349,940	$	-	$	-
Due after one year through five years		375,041		370,241		-		-
Due after five years through ten years		194,901		190,047		62,235		66,523
Due after ten years (1)		370,835		381,252		711,533		757,383
Total	$	1,290,676	$	1,291,480	$	773,768	$	823,906

(1) Equity securities are reported in this category

Proceeds from sales of mortgage-backed securities were $501.1 million and repayments, maturities and calls of mortgage-backed securities were $118.1 million during 2012 compared to proceeds from sales of $759.7 million and repayments, maturities and calls of $108.4 million during 2011, and proceeds from sales of $1.04 billion and repayments, maturities and calls of $308.2 million during 2010.  Proceeds from sales of other investment securities were $61.0 million during 2012 compared to $525.0 million during 2011 and $65.1 million during 2010.  Proceeds from maturity and calls of investment securities were $552.1 million during 2012 compared to $435.0 million during 2011 and $2.88 billion in 2010.  In 2012, gains of $18.6 million and losses of $607,000 were realized on sales and calls of investment securities compared with $21.1 million in gains and no losses realized in 2011, and $19.3 million in gains and $67,000 in losses realized in 2010.

The Company's unrealized loss on investments in corporate bonds relates to a number of investments in bonds of financial institutions, all of which were investment grade at the date of acquisition and as of December 31, 2012.  The unrealized losses were primarily caused by the widening of credit spreads since the dates of acquisition. The contractual terms of those investments do not permit the issuers to settle the security at a price less than the amortized cost of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that these bonds would not be settled at a price less than the amortized cost of the investment. Because the Company does not intend to sell and would not be required to sell these investments until a recovery of fair value, which may be maturity, it does not consider its investments in these corporate bonds to be other-than-temporarily impaired at December 31, 2012.

The temporarily impaired securities represent 16.9% of the fair value of investment securities as of December 31, 2012.  Unrealized losses for securities with unrealized losses for less than twelve months represent 2.4%, and securities with unrealized losses for twelve months or more represent 4.4%, of the historical cost of these securities.  Unrealized losses on these securities generally resulted from increases in interest rate spreads subsequent to the date that these securities were purchased.  At December 31, 2012, 34 issues of securities had unrealized losses for 12 months or longer and 7 issues of securities had unrealized losses of less than 12 months.

At December 31, 2012, management believed the impairment was temporary and, accordingly, no impairment loss has been recognized in our consolidated statements of operations.  We expect to recover the amortized cost basis of our debt securities, and have no intent to sell and will not be required to sell available-for-sale debt securities that have declined below their cost before their anticipated recovery.  The table below shows the fair value, unrealized losses, and number of issuances of the temporarily impaired securities in our investment securities portfolio as of December 31, 2012, and December 31, 2011:

	As of December 31, 2012
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Total securities held-to-maturity	$	-	$	-		-	$	-	$	-		-	$	-	$	-		-
Securities Available-for-Sale
U.S. treasury securities	$	49,969	$	5		1	$	-	$	-		-	$	49,969	$	5		1
Mortgage-backed securities		231		1		2		170		1		6		401		2		8
Mortgage-backed securities-Non-agency		-		-		-		96		2		1		96		2		1
Collateralized mortgage obligations		-		-		-		439		35		4		439		35		4
Asset-backed securities		-		-		-		141		4		1		141		4		1
Corporate debt securities		52,468		2,532		4		253,430		11,570		22		305,898		14,102		26
Total securities available-for-sale	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41
Total investment securities	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41

	As of December 31, 2011
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Corporate debt securities	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Total securities held-to-maturity	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Securities Available-for-Sale
U.S. government sponsored entities	$	49,993	$	7		1	$	-	$	-		-	$	49,993	$	7		1
Mortgage-backed securities		564		4		8		35		1		2		599		5		10
Mortgage-backed securities-Non-agency		-		-		-		6,719		431		2		6,719		431		2
Collateralized mortgage obligations		-		-		-		570		238		4		570		238		4
Asset-backed securities		-		-		-		166		6		1		166		6		1
Corporate debt securities		185,577		14,201		17		172,857		17,528		19		358,434		31,729		36
Mutual funds		1,987		13		1		-		-		-		1,987		13		1
Trust preferred securities		5,674		24		2		-		-		-		5,674		24		2
Total securities available-for-sale	$	243,795	$	14,249		29	$	180,347	$	18,204		28	$	424,142	$	32,453		57
Total investment securities	$	253,430	$	14,586		30	$	180,347	$	18,204		28	$	433,777	$	32,790		58

Investment securities having a carrying value of $1.45 billion at December 31, 2012, and $1.68 billion at December 31, 2011, were pledged to secure public deposits, other borrowings, treasury tax and loan, Federal Home Loan Bank advances, securities sold under agreements to repurchase, and foreign exchange transactions.

XML

Note 16 - Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value, Measurement Inputs, Disclosure [Text Block]

16.   Fair Value Measurements

The Company adopted ASC Topic 820 on January 1, 2008, and determined the fair values of our financial instruments based on the following:

· Level 1 – Quoted prices in active markets for identical assets or liabilities.

· Level 2 – Observable prices in active markets for similar assets or liabilities; prices for identical or similar assets or liabilities in markets that are not active; directly observable market inputs for substantially the full term of the asset and liability; market inputs that are not directly observable but are derived from or corroborated by observable market data.

· Level 3 – Unobservable inputs based on the Company’s own judgments about the assumptions that a market participant would use.

The Company uses the following methodologies to measure the fair value of its financial assets and liabilities on a recurring basis:

Securities Available for Sale. For certain actively traded agency preferred stocks, mutual funds, and U.S. Treasury securities, the Company measures the fair value based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement.  The Company also measures securities by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement.  This category generally includes U.S. Government agency securities, state and municipal securities, mortgage-backed securities (“MBS”), commercial MBS, collateralized mortgage obligations, asset-backed securities, corporate bonds and trust preferred securities.

Trading Securities. The Company measures the fair value of trading securities based on quoted market prices in active exchange markets at the reporting date, a Level 1 measurement. The Company also measures the fair value for other trading securities based on quoted market prices for similar securities or dealer quotes, a Level 2 measurement.

Warrants. The Company measures the fair value of warrants based on unobservable inputs based on assumption and management judgment, a Level 3 measurement.

Currency Option Contracts and Foreign Exchange Contracts. The Company measures the fair value of currency option and foreign exchange contracts based on dealer quotes on a recurring basis, a Level 2 measurement.

Interest Rate Swaps. Fair value of interest rate swaps was derived from observable market prices for similar assets on a recurring basis, a Level 2 measurement.

The valuation techniques for the assets and liabilities valued on a nonrecurring basis are as follows:

Impaired Loans. The Company does not record loans at fair value on a recurring basis.  However, from time to time, nonrecurring fair value adjustments to collateral dependent impaired loans are recorded based on either the current appraised value of the collateral, a Level 2 measurement, or management’s judgment and estimation of value reported on old appraisals which are then adjusted based on recent market trends, a Level 3 measurement.   

Loans Held for sale.  The Company records loans held for sale at fair value based on quoted prices from third party sale analysis, existing sale agreements, or appraisal reports adjusted by sales commission assumption, a Level 3 measurement.

Goodwill.  The Company completes “step one” of the impairment test by comparing the fair value of each reporting unit (as determined based on the discussion below) with the recorded book value (or “carrying amount”) of its net assets, with goodwill included in the computation of the carrying amount.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of that reporting unit is not considered impaired, and “step two” of the impairment test is not necessary.  If the carrying amount of a reporting unit exceeds its fair value, step two of the impairment test is performed to determine the amount of impairment.  Step two of the impairment test compares the carrying amount of the reporting unit’s goodwill to the “implied fair value” of that goodwill.  The implied fair value of goodwill is computed by assuming all assets and liabilities of the reporting unit would be adjusted to the current fair value, with the offset as an adjustment to goodwill.  This adjusted goodwill balance is the implied fair value used in step two.  An impairment charge is then recognized for the amount by which the carrying amount of goodwill exceeds its implied fair value. In connection with the determination of fair value, certain data and information was utilized, including earnings forecast at the reporting unit level for the next four years.  Other key assumptions include terminal values based on future growth rates and discount rates for valuing the cash flows, which have inputs for the risk-free rate, market risk premium and adjustments to reflect inherent risk and required market returns.  Because of the significance of unobservable inputs in the valuation of goodwill impairment, goodwill subject to nonrecurring fair value adjustments is classified as Level 3 measurement.

Core Deposit Intangibles. Core deposit intangibles is initially recorded at fair value based on a valuation of the core deposits acquired and is amortized over its estimated useful life to its residual value in proportion to the economic benefits consumed.  The Company assesses the recoverability of this intangible asset on a nonrecurring basis using the core deposits remaining at the assessment date and the fair value of cash flows expected to be generated from the core deposits, a Level 3 measurement.

Other Real Estate Owned. Real estate acquired in the settlement of loans is initially recorded at fair value based on the appraised value of the property on the date of transfer, less estimated costs to sell, a Level 2 measurement.  From time to time, nonrecurring fair value adjustments are made to other real estate owned based on the current updated appraised value of the property, also a Level 2 measurement, or management’s judgment and estimation of value reported on old appraisals which are then adjusted based on recent market trends, a Level 3 measurement.

Investments in Venture Capital.  The Company periodically reviews for OTTI on a nonrecurring basis.  Investments in venture capital were written down to their fair value based on available financial reports from venture capital partnerships and management’s judgment and estimation, a Level 3 measurement.

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis at December 31, 2012, and at December 31, 2011:

As of December 31, 2012	Fair Value Measurements Using						Total at
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets
Securities available-for-sale
U.S. Treasury securities	$	509,971	$	-	$	-	$	509,971
Mortgage-backed securities		-		416,694		-		416,694
Collateralized mortgage obligations		-		10,168		-		10,168
Asset-backed securities		-		141		-		141
Corporate debt securities		-		335,977		-		335,977
Mutual funds		6,079		-		-		6,079
Preferred stock of government sponsored entities		-		2,335		-		2,335
Trust preferred securities		10,115		-		-		10,115
Total securities available-for-sale		526,165		765,315		-		1,291,480
Trading securities		-		4,703		-		4,703
Warrants		-		-		104		104
Option contracts		-		0		-		0
Foreign exchange contracts		-		2,924		-		2,924
Total assets	$	16,194	$	1,282,913	$	104	$	1,299,211
Liabilities
Option contracts	$	-	$	2	$	-	$	2
Foreign exchange contracts		-		1,586		-		1,586
Total liabilities	$	-	$	1,588	$	-	$	1,588

As of December 31, 2011	Fair Value Measurements Using						Total at
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets
Securities available-for-sale
U.S. government sponsored entities	$	-	$	501,226	$	-	$	501,226
State and municipal securities		-		1,928		-		1,928
Mortgage-backed securities		-		337,631		-		337,631
Collateralized mortgage obligations		-		16,486		-		16,486
Asset-backed securities		-		166		-		166
Corporate debt securities		-		380,429		-		380,429
Mutual funds		6,035		-		-		6,035
Preferred stock of government sponsored entities		-		1,654		-		1,654
Trust preferred securities		45,963		-		-		45,963
Other equity securities		2,960		-		-		2,960
Total securities available-for-sale		54,958		1,239,520		-		1,294,478
Trading securities		2		4,540		-		4,542
Warrants		-		-		218		218
Option contracts		-		34		-		34
Foreign exchange contracts		-		2,151		-		2,151
Total assets	$	54,960	$	1,246,245	$	218	$	1,301,423
Liabilities
Interest rate swaps	$	-	$	2,634	$	-	$	2,634
Option contracts		-		5		-		5
Foreign exchange contracts		-		486		-		486
Total liabilities	$	-	$	3,125	$	-	$	3,125

The Company measured the fair value of its warrants on a recurring basis using significant unobservable inputs.  The fair value of warrants was $104,000 at December 31, 2012, compared to $218,000 at December 31, 2011.  The fair value adjustment of warrants was included in other operating income of 2012.

For financial assets measured at fair value on a nonrecurring basis that were still reflected in the balance sheet at December 31, 2012, the following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets at December 31, 2012, and at December 31, 2011, and the total losses for the periods indicated:

	As of December 31, 2012								Total Losses
	Fair Value Measurements Using						Total at		For the Twelve Months Ended
	Level 1		Level 2		Level 3		Fair Value		December 31, 2012		December 31, 2011
Assets	(In thousands)
Impaired loans by type:
Commercial loans	$	-	$	-	$	3,492	$	3,492	$	-	$	877
Commercial mortgage loans		-		-		11,295		11,295		440		-
Construction- residential		-		-		500		500		-		-
Construction- other		-		-		46,153		46,153		65		-
Residential mortgage and equity lines		-		-		11,206		11,206		605		820
Land loans		-		-		297		297		162		46
Total impaired loans		-		-		72,943		72,943		1,272		1,743
Other real estate owned (1		-		27,149		4,841		31,990		10,904		7,003
Investments in venture capital		-		-		9,001		9,001		309		379
Equity investments		142		-		-		142		181		200
Total assets	$	142	$	27,149	$	86,785	$	114,076	$	12,666	$	9,325

(1) Other real estate owned balance of $46.4 million in the consolidated balance sheet is net of estimated disposal costs.

	As of December 31, 2011								Total Losses
	Fair Value Measurements Using						Total at		For the Twelve Months Ended
	Level 1		Level 2		Level 3		Fair Value		December 31, 2011		December 31, 2010
Assets	(In thousands)
Impaired loans by type:
Commercial loans	$	-	$	-	$	4,251	$	4,251	$	877	$	3,411
Construction- residential		-		-		-		-		-		1,295
Real estate loans		-		-		35,576		35,576		820		1,407
Land loans		-		-		611		611		46		1,003
Total impaired loans		-		-		40,438		40,438		1,743		7,116
Loans held-for-sale		-		-		760		760		-		3,160
Other real estate owned (1		-		79,029		1,093		80,122		7,003		20,139
Investments in venture capital		-		-		8,693		8,693		379		760
Equity investments		323		-		-		323		200		304
Total assets	$	323	$	79,029	$	50,984	$	130,336	$	9,325	$	31,479

(1) Other real estate owned balance of $71.0 million in the consolidated balance sheet is net of estimated disposal costs.

The significant unobservable (Level 3) inputs used in the fair value measurement of collateral for collateral-dependent impaired loans was primarily based on the appraised value of collateral adjusted by estimated sales cost and commissions.  The Company generally obtains new appraisal reports every six months.  As the Company’s primary objective in the event of default would be to monetize the collateral to settle the outstanding balance of the loan, less marketable collateral would receive a larger discount. During the reported periods, collateral discounts ranged from 45% in the case of accounts receivable collateral to 65% in the case of inventory collateral.

The significant unobservable inputs used in the fair value measurement of loans held for sale was primarily based on the quoted price or sale price adjusted by estimated sales cost and commissions.  The significant unobservable inputs used in the fair value measurement of other real estate owned (“OREO”) was primarily based on the appraised value of OREO adjusted by estimated sales cost and commissions.

The Company applies estimated sales cost and commission ranging from 3% to 6% to collateral value of impaired loans, quoted price or loan sale price of loans held for sale, and appraised value of OREOs.

The significant unobservable inputs in the Black-Scholes option pricing model for the fair value of warrants are the expected life of warrant ranging from 1 to 4 years, risk-free interest rate from 0.25% to 0.54%, and stock volatility of the Company from 13.7% to 18.6%.

XML

Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

12.   Income Taxes

For the years ended December 31, 2012, 2011, and 2010, the current and deferred amounts of the income tax expense are summarized as follows:

	2012		2011		2010
	(In thousands)
Current:
Federal	$	44,263	$	26,548	$	16,496
State		17,081		10,905		7,379
	$	61,344	$	37,453	$	23,875
Deferred:
Federal		3,755		10,133		(28,600	)
State		1,029		3,675		(9,904	)
	$	4,784	$	13,808	$	(38,504	)
Total income tax expense/(benefit	$	66,128	$	51,261	$	(14,629	)

Temporary differences between the amounts reported in the financial statements and the tax basis of assets and liabilities give rise to deferred taxes.  Net deferred tax assets at December 31, 2012, and at December 31, 2011, are included in other assets in the accompanying Consolidated Balance Sheets and are as follows:

Deferred Tax Assets
Loan loss allowance, due to differences in computation of bad debts	$	100,774		$	109,686
Write-down on equity securities		3,374			3,609
Stock option compensation expense		16,120			16,048
State tax		4,479			3,744
Non-accrual interest		3,208			2,048
Write-down on other real estate owned		10,302			14,148
Accural for litigation		2,415			-
Unrealized loss on interest rate swaps		-			1,097
Unrealized loss on securities available-for-sale, net		-			6,311
Other, net		3,544			3,536
Gross deferred tax assets		144,216			160,227
Deferred Tax Liabilities
Core deposit intangibles		(1,632	)		(3,919	)
Investment in aircraft financing trust and venture capital partnerships		(19,684	)		(21,628	)
Unrealized gain on securities available-for-sale, net		(338	)		-
Dividends on Federal Home Loan Bank common stock		(3,071	)		(2,788	)
Other, net		(5,084	)		(5,646	)
Gross deferred tax liabilities		(29,809	)		(33,981	)
Valuation allowance		(2,125	)		(2,533	)
Net deferred tax assets	$	112,282		$	123,713

Amounts for the current year are based upon estimates and assumptions and could vary from amounts shown on the tax returns as filed.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible.  Management considers the projected future taxable income and tax planning strategies in making this assessment.  Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize all benefits related to these deductible temporary differences except for $2.1 million of state deferred taxes for a portion of the capital losses related to the Company’s former investments in the preferred stock of Fannie Mae and Freddie Mac.

As of December 31, 2012, the Company had income tax refunds receivable of $12.4 million. As of December 31, 2011, the Company had income tax receivables of approximately $39.3 million, of which $11.2 million relates to the carryback of the Company’s net operating loss for 2009 to the 2007 tax year and $9.1 million relates to the carryback of the Company’s low income housing tax credits for 2009 to the 2008 tax year. These income tax receivables are included in other assets in the accompanying Consolidated Balance Sheets.

At December 31, 2012, the Company had Federal net operating loss carry forwards of approximately $1.6 million which expire through 2022.  The Federal net operating loss carry-forwards were acquired in connection with the Company’s acquisition of United Heritage Bank.

At December 31, 2012 and 2011, the amount of unrecognized tax benefits was none and $508,000, respectively. During 2012, the Company reversed its unrecognized tax benefits during the filing of the Company’s 2011 tax returns, During 2011, the Company paid $0.1 million of state taxes previously recorded in unrecognized tax benefits. The Company had accrued interest and penalties of less than $0.1 million at December 31, 2012 and 2011.

The Company’s tax returns are open for audits by the Internal Revenue Service back to 2010 and by the FTB of the State of California back to 2003.  The Company is under audit by the CaliforniaFranchise Tax Board for the years 2003 to 2007.  As the Company is presently under audit by a number of tax authorities, it is reasonably possible that unrecognized tax benefits could change significantly over the next twelve months. The Company does not expect that any such changes would have a material impact on its annual effective tax rate.

        Income tax expense results in effective tax rates that differ from the statutory Federal income tax rate for the years indicated as follows:

	2012					2011					2010
	(In thousands)
Tax provision at Federal statutory rate	$	64,248		35.0	%	$	52,994		35.0	%	$	(1,072	)	35.0	%
State income taxes, net of Federal income tax benefit		11,772		6.4			9,477		6.3			(1,641	)	53.5
Interest on obligations of state and political subdivisions, which are exempt from Federal taxation		(1,456	)	(0.8	)		(1,476	)	(1.0	)		(299	)	9.8
Low income housing and other tax credits		(9,353	)	(5.1	)		(10,087	)	(6.6	)		(11,220	)	366.2
Other, net		917		0.5			353		0.2			(397	)	13.0
Total income tax expense/(benefit)	$	66,128		36.0	%	$	51,261		33.9	%	$	(14,629	)	477.5	%

XML

Note 9 - Deposits (Detail) - Interest Expense on Time Deposits (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Interest bearing demand	$ 792	$ 756	$ 927
Money market accounts	5,938	7,351	8,733
Saving accounts	365	482	694
Time deposits	40,278	53,625	73,808
Total	$ 47,373	$ 62,214	$ 84,162

XML

Note 8 - Premises and Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment Disclosure [Text Block]

8.      Premises and Equipment

      Premises and equipment consisted of the following at December 31, 2012, and December 31, 2011:

	2012		2011
	(In thousands)
Land and land improvements	$	33,429	$	33,429
Building and building improvements		73,723		72,608
Furniture, fixtures and equipment		39,701		37,445
Leasehold improvement		12,391		12,494
Construction in process		38		1,314
		159,282		157,290
Less: Accumulated depreciation/amortization		56,669		51,329
Premises and equipment, net	$	102,613	$	105,961

The amount of depreciation/amortization included in operating expense was $5.9 million in 2012, $6.1 million in 2011, and $4.6 million in 2010.

XML

Note 5 - Loans (Detail) (USD $)	1 Months Ended		12 Months Ended												12 Months Ended				12 Months Ended										12 Months Ended																		12 Months Ended
	Mar. 31, 2012	Jul. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Loans Sold [Member]	Dec. 31, 2012 Held For Sale [Member]	Dec. 31, 2011 New Loan [Member]	Dec. 31, 2012 Nonaccrual Loans [Member]	Dec. 31, 2011 Nonaccrual Loans [Member]	Dec. 31, 2010 Nonaccrual Loans [Member]	Dec. 31, 2012 Accruing Troubled Debt Restructuring Member	Dec. 31, 2011 Accruing Troubled Debt Restructuring Member	Dec. 31, 2011 Nonaccrual Loans Held For Sale [Member]	Dec. 31, 2012 Commercial Real Estate Other Receivable [Member]	Dec. 31, 2012 Land Loan Member	Dec. 31, 2012 Residential Mortgage Loans [Member] Accruing Troubled Debt Restructuring Member	Dec. 31, 2011 Residential Mortgage Loans [Member] Accruing Troubled Debt Restructuring Member	Dec. 31, 2012 Residential Mortgage Loans [Member]	Dec. 31, 2011 Commercial Construction Loans [Member]	Dec. 31, 2012 Residential Mortgage Loans [Member]	Dec. 31, 2011 Residential Mortgage Loans [Member]	Dec. 31, 2012 Real Estate Loans [Member]	Dec. 31, 2011 Real Estate Loans [Member]	Dec. 31, 2012 Commercial Loans Member	Dec. 31, 2011 Commercial Loans Member	Dec. 31, 2012 Commercial Real Estate Loans [Member]	Dec. 31, 2012 Construction [Member]	Dec. 31, 2012 Accruing Troubled Debt Restructuring Member	Dec. 31, 2011 Accruing Troubled Debt Restructuring Member	Dec. 31, 2012 Non Accruing Troubled Debt Restructuring Member	Dec. 31, 2011 Non Accruing Troubled Debt Restructuring Member	Dec. 31, 2012 Retail Shopping And Commercial Use Building Member	Dec. 31, 2011 Retail Shopping And Commercial Use Building Member	Dec. 31, 2012 Office And Commercial Use Building Member	Dec. 31, 2011 Office And Commercial Use Building Member	Dec. 31, 2012 Hotel Loan Member	Dec. 31, 2011 Hotel Loan Member	Dec. 31, 2012 Single Family Residential Loan Member	Sep. 30, 2012 Single Family Residential Loan Member	Dec. 31, 2011 Single Family Residential Loan Member	Sep. 30, 2012 Land Loan Member	Dec. 31, 2011 Land Loan Member	Sep. 30, 2012 Commercial Loans Member	Dec. 31, 2011 Commercial Loans Member	Sep. 30, 2012 Multi-Family Residences [Member]	Dec. 31, 2012 Minimum [Member]	Dec. 31, 2012 Maximum [Member]
Loans Receivable Held-for-sale, Amount			$ 0	$ 760,000	$ 2,900,000															$ 500,000		$ 260,000
Transfer of Portfolio Loans and Leases to Held-for-sale			15,986,000	4,399,000	4,332,000
Increase (Decrease) in Loans Held-for-sale				3,600,000		16,200,000		4,400,000
Gain (Loss) on Sale of Loans and Leases				88,000			26,000
Transfer of Loans Held-for-sale to Portfolio Loans			500,000
Decrease In Loans Held For Sale				2,100,000
Transfer to Other Real Estate				2,874,000	21,473,000
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged																							1,600,000,000	2,000,000,000
Loans Pledged with Federal Reserve Bank																									211,600,000	250,900,000
Servicing Asset at Fair Value, Amount			201,400,000																		93,500,000				42,100,000		62,200,000	3,600,000
Mortgage Loans on Real Estate, Cost of Mortgages Sold	7,900,000	24,500,000
Percentage of Loan Participation to Contractual Balance	92.50%	98.00%
Impaired Financing Receivable, Recorded Investment			248,597,000	321,973,000					103,900,000	201,200,000		144,700,000	120,000,000	760,000																				74,400,000
Impaired Financing Receivable, Average Recorded Investment			277,776,000	361,353,000
Impaired Financing Receivable, Interest Income, Accrual Method			9,305,000	5,330,000					6,621,000	13,049,000	17,304,000
Percentage Of Charge-Off To Contractual Balances For Impaired Loans			23.20%	25.60%
Troubled Debt Restructurings, Total																													144,700,000	120,000,000	47,700,000	50,900,000	68,100,000		40,400,000		12,400,000			19,100,000		2,300,000		1,300,000
Impaired Financing Receivable, Modifications, Related Allowance																													1,100,000	1,400,000	7,800,000	1,600,000
Financing Receivable, Modifications, Number of Contracts			61	32													14	3															16	11	15	7	2	1	17		10	2	1	6	2	3
undefined			24,700,000																										53,958,000	60,863,000	12,304,000	13,269,000
Financing Receivable, Modifications, Recorded Investment			144,695,000	120,016,000																	4,716,000	3,368,000			3,964,000	15,120,000										23,800,000		7,900,000			13,300,000		635,000		39,000	1,100,000
Period Loan Is In Payment Default																																															60	90
Financing Receivable Modification Number Of Contracts Defaulted Within 12 Months															2	4			2
Financing Receivable Modifications Recorded Investment Defaulted Within 12 Months															26,300,000	12,200,000			1,600,000
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			$ 46,000														$ 82,000												$ (251,000)	$ (2,341,000)	$ (4,182,000)	$ (7,303,000)

XML

Note 19 - Equity Incentive Plans (Detail) - Stock Options (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended
	Dec. 31, 2009	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Balance, December 31, 2009	5,169,653	4,356,985	4,947,348
Balance, December 31, 2009 (in Dollars per share)	$ 27.71	$ 28.86	$ 27.93
Balance, December 31, 2009	4 years 219 days	2 years 73 days	3 years	3 years 255 days
Balance - shares		3,996,630	4,356,985	4,947,348
Balance - weighted-average exercise price (in Dollars per share)		$ 29.45	$ 28.86	$ 27.93
Balance - weighted-average remaining contractual life	4 years 219 days	2 years 73 days	3 years	3 years 255 days
Balance - aggregate intrinisc value (in Dollars)			$ 37	$ 334
Exercisable, December 31, 2012		3,889,514
Exercisable, December 31, 2012 (in Dollars per share)		$ 29.61
Exercisable, December 31, 2012		2 years 73 days
Exercised - shares		(50,024)	(86,860)
Exercised - weighted average exercise price (in Dollars per share)		$ 15.27	$ 15.05
Forfeited - shares		(310,331)	(503,503)	(222,305)
Forfeited - weighted average exercise price (in Dollars per share)		$ 23.75	$ 22.72	$ 23.23

XML

Note 6 - Other Real Estate Owned

12 Months Ended

Dec. 31, 2012

Real Estate Owned [Text Block]

6.      Other Real Estate Owned

At December 31, 2012, the net carrying value of other real estate owned decreased $46.3 million, or 50.0%, to $46.4 million from $92.7 million at December 31, 2011. OREO located in California was $12.2 million and was comprised primarily of six parcels of land zoned for residential purpose of $9.1 million, three office and commercial use buildings of $1.7 million, one commercial building construction projects of $740,000, one residential construction project of $530,000, and one single family residential properties of $179,000.  OREO located in Texas was $29.6 million and was comprised of four office and commercial use buildings of $14.4 million, four parcels of land zoned for residential purposes of $12.6 million, two commercial building construction projects of $1.3 million, one parcel of land zoned for non-residential purposes of $1.1 million, and one single family residential properties of $169,000.  OREO located in the state of Washington was $1.6 million and was comprised one parcels of land zoned for residential purpose of $733,000 and one commercial construction project of $870,000.  OREO located in the state of New York was a retail store of $1.2 million.  OREO located in the state of Nevada was $1.1 million and was comprised of a commercial use building.  OREO in all other states was $752,000 and was comprised of a commercial use property and a retail store.

For 2011, OREO located in California was $32.3 million and was comprised primarily of five parcels of land zoned for residential purpose of $9.9 million, four parcels of land zoned for commercial purpose properties of $4.8 million, two commercial building construction projects of $3.5 million, one residential construction project of $588,000, twelve office and commercial use buildings of $13.2 million, two single family residential properties of $395,000.  OREO located in Texas was $48.6 million and was comprised of eight commercial use buildings of $33.5 million, three parcels of land zoned for residential purpose of $11.7 million, three commercial building construction projects of $2.4 million, and three single family residential properties of $959,000.  OREO located in the state of Washington was $3.9 million and was comprised of two retail stores $1.6 million, three parcels of land zoned for residential purpose of $1.2 million, one commercial construction project of $658,000, and three single family residential properties of $531,000.  OREO located in the state of Nevada was $4.8 million and was comprised of a parcel of land zoned for residential purpose of $3.5 million and one commercial use building of $1.3 million.  OREO in all other states was $3.0 million and was comprised of three commercial use properties of $2.1 million and four single family residential properties of $878,000.

An analysis of the activity in the valuation allowance for other real estate losses for the years ended on December 31, 2012, 2011, and 2010 is as follows:

	2012			2011			2010
	(In thousands)
Balance, beginning of year	$	26,422		$	25,310		$	22,743
Provision for losses		10,668			10,385			20,139
OREO disposal		(17,534	)		(9,273	)		(17,572	)
Balance, end of year	$	19,556		$	26,422		$	25,310

The following table presents the components of other real estate owned expense for the year ended:

	2012			2011			2010
	(In thousands)
Operating expense	$	4,817		$	5,441		$	5,849
Provision for losses		10,668			10,385			20,139
Net gain on transfer and disposal		(369	)		(5,243	)		(9,977	)
Total other real estate owned expense	$	15,116		$	10,583		$	16,011

XML

Note 7 - Investments in Affordable Housing

12 Months Ended

Dec. 31, 2012

Investments In Affordable Housing [Text Block]

7.      Investments in Affordable Housing

      The Company has invested in certain limited partnerships that were formed to develop and operate housing for lower-income tenants throughout the United States.  The Company’s investments in these partnerships were $85.0 million at December 31, 2012, and $78.4 million at December 31, 2011.  At December 31, 2012, and December 31, 2011, six of the limited partnerships in which the Company has an equity interest were determined to be variable interest entities for which the Company is the primary beneficiary.  The consolidation of these limited partnerships in the Company’s Consolidated Financial Statements increased total assets and liabilities by $22.9 million at December 31, 2012, and by $22.8 million at December 31, 2011.   Other borrowings for affordable housing limited partnerships were $18.7 million at December 31, 2012, and $18.9 million at December 31, 2011; recourse is limited to the assets of the limited partnerships.  Unfunded commitments for affordable housing limited partnerships of $10.6 million as of December 31, 2012, and $1.5 million as of December 31, 2011, were recorded under other liabilities.

       Each of the partnerships must meet regulatory requirements for affordable housing for a minimum 15-year compliance period to fully utilize the tax credits.  If the partnerships cease to qualify during the compliance period, the credits may be denied for any period in which the projects are not in compliance and a portion of the credits previously taken is subject to recapture with interest.  The remaining tax credits to be utilized over a multiple-year period are $45.3 million for Federal and $1.7 million for state at December 31, 2012.  The Company’s usage of tax credits approximated $9.2 million in 2012, $9.5 million in 2011, and $10.5 million in 2010.  For the year ended December 31, operations of investments in affordable housing resulted in pretax losses of $6.3 million for 2012, $8.2 million for 2011, and $7.6 million for 2010.  Losses in excess of the Bank’s investment in two limited partnerships have not been recorded in the Company’s Consolidated Financial Statements because the Company had fully satisfied all capital commitments required under the respective limited partnership agreements.

XML

Note 9 - Deposits

12 Months Ended

Dec. 31, 2012

Deposit Liabilities Disclosures [Text Block]

9.     Deposits

The following table displays deposit balances as of December 31, 2012, and December 31, 2011:

	2012		2011
	(In thousands)
Demand	$	1,269,455	$	1,074,718
NOW accounts		593,133		451,541
Money market accounts		1,186,771		951,516
Saving accounts		473,805		420,030
Time deposits under $100,000		644,191		832,997
Time deposits of $100,000 or more		3,215,870		3,498,329
Total	$	7,383,225	$	7,229,131

Time deposits outstanding as of December 31, 2012, mature as follows.

	Expected Maturity Date at December 31,
	2013		2014		2015		2016		2017		Thereafter		Total
	(In thousands)
Time deposits, $100,000 and over	$	2,895,712	$	238,836	$	60,309	$	1,344	$	19,669	$	-	$	3,215,870
Other time deposits		610,364		25,011		7,426		155		1,232		3		644,191
	$	3,506,076	$	263,847	$	67,735	$	1,499	$	20,901	$	3	$	3,860,061

Accrued interest payable on customer deposits was $2.1 million at December 31, 2012, $4.2 million at December 31, 2011, and $5.2 million at December 31, 2010.  The following table summarizes the interest expense on deposits by account type for the years ended December 31, 2012, 2011, and 2010:

	Year Ended December 31,
	2012		2011		2010
	(In thousands)
Interest bearing demand	$	792	$	756	$	927
Money market accounts		5,938		7,351		8,733
Saving accounts		365		482		694
Time deposits		40,278		53,625		73,808
Total	$	47,373	$	62,214	$	84,162

XML

Note 5 - Loans (Detail) - Average Balance And Interest Income Recognized Related To Impaired Loans (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Impaired Loans - Average Recorded Investment	$ 277,776	$ 361,353
Impaired Loans - Interest Income Recognized	9,305	5,330
Commercial Loans Member
Impaired Loans - Average Recorded Investment	31,798	48,349
Impaired Loans - Interest Income Recognized	580	1,053
Real Estate Construction Loans [Member]
Impaired Loans - Average Recorded Investment	49,094	82,529
Impaired Loans - Interest Income Recognized	265	940
Commercial Mortgage Loans [Member]
Impaired Loans - Average Recorded Investment	178,822	212,555
Impaired Loans - Interest Income Recognized	8,221	3,101
Residential Mortgage And Equity Lines Member
Impaired Loans - Average Recorded Investment	18,062	17,920
Impaired Loans - Interest Income Recognized	$ 239	$ 236

XML

Note 22 - Regulatory Matters (Detail) - Capital and Leverage Ratios (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Company [Member]
Tier I Capital (to risk-weighted assets)	$ 1,426,566		$ 1,318,948
Tier I Capital (to risk-weighted assets)	17.36%		15.97%
Tier I Capital minimum requirement	328,713		330,355
Tier I Capital minimum requirement	4.00%		4.00%
Excess	1,097,853		988,593
Excess	13.36%		11.97%
Total Capital (to risk-weighted assets)	1,571,060		1,474,496
Total Capital (to risk-weighted assets)	19.12%		17.85%
Total Capital minimum requirement	657,426		660,710
Total Capital minimum requirement	8.00%		8.00%
Excess	913,634		813,786
Excess	11.12%		9.85%
Tier I Capital (to average assets)Leverage ratio	1,426,566		1,318,948
Tier I Capital (to average assets)Leverage ratio	13.82%		12.93%
Minimum leverage requirement	412,844		408,146
Minimum leverage requirement	4.00%		4.00%
Excess	1,013,722		910,802
Excess	9.82%		8.93%
Total average assets (1)	10,321,104	[1]	10,203,647	[1]
Risk-weighted assets	8,217,821		8,258,878
Bank [Member]
Tier I Capital (to risk-weighted assets)	1,259,005		1,289,747
Tier I Capital (to risk-weighted assets)	15.33%		15.64%
Tier I Capital minimum requirement	328,440		329,928
Tier I Capital minimum requirement	4.00%		4.00%
Excess	930,565		959,819
Excess	11.33%		11.64%
Total Capital (to risk-weighted assets)	1,402,691		1,444,165
Total Capital (to risk-weighted assets)	17.08%		17.51%
Total Capital minimum requirement	656,880		659,855
Total Capital minimum requirement	8.00%		8.00%
Excess	745,811		784,310
Excess	9.08%		9.51%
Tier I Capital (to average assets)Leverage ratio	1,259,005		1,289,747
Tier I Capital (to average assets)Leverage ratio	12.22%		12.66%
Minimum leverage requirement	412,272		407,643
Minimum leverage requirement	4.00%		4.00%
Excess	846,733		882,104
Excess	8.22%		8.66%
Total average assets (1)	10,306,790	[1]	10,191,078	[1]
Risk-weighted assets	$ 8,211,004		$ 8,248,190

[1] Average assets represent average balances for the fourth quarter of each year presented.

XML

Note 10 - Borrowed Funds (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2005	Dec. 31, 2004	May 31, 2011
Federal Funds Purchased		$ 27,000
Securities Sold under Agreements to Repurchase	1,250,000,000	1,400,000,000
Prepaid Security Sold Under Repurchase Agreement	150,000,000	50,000,000
Rate of Prepaid Security Sold Under Repurchase Agreements	4.43%	4.83%
Prepayment Penalty Security Sold Under Agreements To Repurchase	9,400,000					1,700,000
Average Rate Reduction on Modified Repurchase Agreements (in Basis Points)	1.68%
Number Of Fixed-To-Floating Security Sold Under Agreements To Repurchase	13
Total Fixed To Floating Rate Agreements	650,000,000
Minimum Initial Fixed Rate	1.00%
Maximum Initial Fixed Rate	3.50%
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum	0.00%
Advances from Federal Home Loan Banks	146,200,000	225,000,000
Federal Home Loan Bank Prepaid Advances	100,000,000	450,000,000
Weighted Average Rate for Prepaying Federal Home Loan Bank Advances	4.60%	4.39%
Prepayment Fees on Advances, Net	2,800,000	18,500,000
Other Borrowings		880,000
Weighted Average Rate for Borrowing From Other Financial Institutions		0.55%
Threshold for Deferred Bonus				225,000
AmountOfDeferredBonusAccruedInOtherLiabilities					610,000
Accrued Interest On Deferred Bonus	7.00%
Debt Instrument Basis Spread (in Basis Points)	2.75%
Interest Expense, Other	71,000	67,000	62,000
Accrued Bonuses	1,100,000	995,000
Federal Funds Purchased [Member]
Debt Instrument, Interest Rate, Stated Percentage		1.29%
Securities Sold under Agreements to Repurchase [Member]
Line of Credit Facility, Interest Rate at Period End	3.84%	4.14%	4.18%
Investment Securities Pledged As Collateral	1,400,000,000	1,600,000,000
Terms Modified in Current Year [Member]
Securities Sold under Agreements to Repurchase						200,000,000
Floating to Fixed Rate Agreements Totaling $400 Million [Member] | Minimum [Member]
Debt Instrument, Interest Rate, Stated Percentage	4.52%
Floating to Fixed Rate Agreements Totaling $400 Million [Member] | Maximum [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.07%
Floating to Fixed Rate Agreements Totaling $400 Million [Member]
Number Of Floating-To-Fixed Rate Agreements	7
Total Floating To Fixed Rate	400,000,000
LIBOR Minus Three Hundred and Forty Basis Points	LIBOR minus 340
Federal Home Loan Bank Advances [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank, Weighted Average Interest Rate	0.44%	2.08%
Floating to Fixed Rate Agreements Totaling $400 Million [Member]
LIBOR Minus Hundred Basis Point	LIBOR minus 200
Callable Securities [Member]
Securities Sold under Agreements to Repurchase	$ 1,050,000,000
Minimum [Member]
Debt Instrument, Interest Rate, Stated Percentage	8.00%
Debt Instrument, Basis Spread on Variable Rate (in Basis Points)	3.25%
Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate (in Basis Points)	3.79%

XML

Note 5 - Loans (Detail) - Aging of Loan Portfolio (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Total	$ 7,429,147	$ 7,059,212
Commercial Loans Member
30-59 Days Past Due	16,832	1,683
60-89 Days Past Due	1,610	0
Greater than 90 Days Past Due	630	0
Non-accrual Loans	19,958	30,661
Total Past Due	39,030	32,344
Loans Not Past Due	2,088,077	1,835,931
Total	2,127,107	1,868,275
Real Estate Construction Loans [Member]
30-59 Days Past Due		20,326
60-89 Days Past Due	1,471	0
Greater than 90 Days Past Due	0	0
Non-accrual Loans	36,299	46,012
Total Past Due	37,770	66,338
Loans Not Past Due	143,180	171,034
Total	180,950	237,372
Commercial Mortgage Loans [Member]
30-59 Days Past Due	21,570	13,627
60-89 Days Past Due	3,627	20,277
Greater than 90 Days Past Due	0	6,726
Non-accrual Loans	35,704	107,784
Total Past Due	60,901	148,414
Loans Not Past Due	3,707,551	3,600,483
Total	3,768,452	3,748,897
Residential Mortgage And Equity Lines Member
30-59 Days Past Due	5,324	5,871
60-89 Days Past Due	1,972	0
Greater than 90 Days Past Due	0	0
Non-accrual Loans	11,941	16,740
Total Past Due	19,237	22,611
Loans Not Past Due	1,320,845	1,164,358
Total	1,340,082	1,186,969
Installment And Other Loans Member
30-59 Days Past Due	0	0
60-89 Days Past Due		0
Greater than 90 Days Past Due	0	0
Non-accrual Loans	0	0
Total Past Due		0
Loans Not Past Due	12,556	17,699
Total	12,556	17,699
Total [Member]
30-59 Days Past Due	43,726	41,507
60-89 Days Past Due	8,680	20,277
Greater than 90 Days Past Due	630	6,726
Non-accrual Loans	103,902	201,197
Total Past Due	156,938	269,707
Loans Not Past Due	7,272,209	6,789,505
Total	$ 7,429,147	$ 7,059,212

XML

Note 15 - Financial Derivatives (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Number Of Swap Agreements		5
Interest Rate Swaps Notional Amount		$ 300,000,000
Net Accrued On Interest Rate Swaps	288,000	4,900,000
Positive Fair Value Member
Notional Amount Of Option Contract	209,000,000,000	4,300,000
Open Option Contracts Written, at Fair Value	2,000	29,000
Sum of Spot and Forward Contract Notional Amount	188,100,000	238,600,000
Increase Decrease in Fair Value	2,900,000	2,200,000
Negative Fair Value Member
Sum of Spot and Forward Contract Notional Amount	133,700,000	128,200,000
Increase Decrease in Fair Value	$ 1,600,000	$ 486,000,000,000

XML

Note 5 - Loans (Detail) - Impaired Loans and Related Allowance For Credit Losses (USD $)	Dec. 31, 2012	Dec. 31, 2011
With allocated allowance
Allowance	$ 12,183,000	$ 7,554,000
Total impaired loans	323,786,000	432,973,000
Total impaired loans	248,597,000	321,973,000
Total impaired loans	12,183,000	7,554,000
Commercial Loans Member
With no allocated allowance
Loans with no related allowance unpaid principal balance	29,359,000	46,671,000
Loans with no related allowance recorded investment	18,963,000	38,194,000
Real Estate Construction Loans [Member]
With no allocated allowance
Loans with no related allowance unpaid principal balance	9,304,000	134,837,000
Loans with no related allowance recorded investment	7,277,000	78,767,000
Commercial Mortgage Loans [Member]
With no allocated allowance
Loans with no related allowance unpaid principal balance	189,871,000	187,580,000
Loans with no related allowance recorded investment	152,957,000	149,034,000
Residential Mortgage And Equity Lines Member
With no allocated allowance
Loans with no related allowance unpaid principal balance	4,303,000	8,555,000
Loans with no related allowance recorded investment	4,229,000	7,987,000
With No Allocated Allowance Member
With no allocated allowance
Loans with no related allowance unpaid principal balance	232,837,000	377,643,000
Loans with no related allowance recorded investment	183,426,000	273,982,000
Commercial Loans Member
With allocated allowance
Loans with related allowance unpaid principal balance	7,804,000	11,795,000
Loans with related allowance recorded investment	4,959,000	7,587,000
Allowance	1,467,000	3,336,000
Total impaired loans	1,467,000	3,336,000
Real Estate Construction Loans [Member]
With allocated allowance
Loans with related allowance unpaid principal balance	54,718,000
Loans with related allowance recorded investment	34,856,000
Allowance	8,158,000
Total impaired loans	8,158,000
Commercial Mortgage Loans [Member]
With allocated allowance
Loans with related allowance unpaid principal balance	14,163,000	29,722,000
Loans with related allowance recorded investment	12,928,000	28,023,000
Allowance	1,336,000	2,969,000
Total impaired loans	1,336,000	2,969,000
Residential Mortgage And Equity Lines Member
With allocated allowance
Loans with related allowance unpaid principal balance	14,264,000	13,813,000
Loans with related allowance recorded investment	12,428,000	12,381,000
Allowance	1,222,000	1,249,000
Total impaired loans	1,222,000	1,249,000
With Allocated Allowance Member
With allocated allowance
Loans with related allowance unpaid principal balance	90,949,000	55,330,000
Loans with related allowance recorded investment	65,171,000	47,991,000
Allowance	12,183,000	7,554,000
Total impaired loans	$ 12,183,000	$ 7,554,000

XML

Note 12 - Income Taxes (Detail) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	$ 2,100,000
Income Tax Refund Receivable	12,400,000
Income Taxes Receivable	39,300,000
Operating Loss Carryforwards	1,600,000
Unrecognized Tax Benefits		508,000
Unrecognized Tax Benefits, Period Increase (Decrease)	100,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	100,000
Net Operating Loss For Two Thousand Nine To Two Thousand Seven Tax Years Member
Income Taxes Receivable	11,200,000
Low Income Housing Tax Credits For Two Thousand Nine To Two Thousand Eight Tax Years Member
Income Taxes Receivable	$ 9,100,000

XML

Note 4 - Investment Securities (Tables)

12 Months Ended

Dec. 31, 2012

	At December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Securities Held-to-Maturity
State and municipal securities	$	129,037	$	9,268	$	-	$	138,305
Mortgage-backed securities		634,757		40,801		-		675,558
Corporate debt securities		9,974		69		-		10,043
Total securities held-to-maturity	$	773,768	$	50,138	$	-	$	823,906
Securities Available-for-Sale
U.S. treasury securities	$	509,748	$	228	$	5	$	509,971
Mortgage-backed securities		404,505		12,194		5		416,694
Collateralized mortgage obligations		9,772		430		34		10,168
Asset-backed securities		145		-		4		141
Corporate debt securities		349,973		106		14,102		335,977
Mutual funds		6,000		79		-		6,079
Preferred stock of government sponsored entities		569		1,766		-		2,335
Trust preferred securities		9,964		151		-		10,115
Total securities available-for-sale	$	1,290,676	$	14,954	$	14,150	$	1,291,480
Total investment securities	$	2,064,444	$	65,092	$	14,150	$	2,115,386

	At December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities Held-to-Maturity	(In thousands)
U.S. government sponsored entities	$	99,966	$	1,406	$	-	$	101,372
State and municipal securities		129,577		7,053		-		136,630
Mortgage-backed securities		913,990		42,351		-		956,341
Corporate debt securities		9,971		-		337		9,634
Total securities held-to-maturity	$	1,153,504	$	50,810	$	337	$	1,203,977
Securities Available-for-Sale
U.S. government sponsored entities	$	500,007	$	1,226	$	7	$	501,226
State and municipal securities		1,869		59		-		1,928
Mortgage-backed securities		325,706		12,361		436		337,631
Collateralized mortgage obligations		16,184		540		238		16,486
Asset-backed securities		172		-		6		166
Corporate debt securities		412,045		113		31,729		380,429
Mutual funds		6,000		48		13		6,035
Preferred stock of government sponsored entities		569		1,085		-		1,654
Trust preferred securities		45,501		486		24		45,963
Other equity securities		1,468		1,492		-		2,960
Total securities available-for-sale	$	1,309,521	$	17,410	$	32,453	$	1,294,478
Total investment securities	$	2,463,025	$	68,220	$	32,790	$	2,498,455

	Securities Available-for-Sale				Securities Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	349,899	$	349,940	$	-	$	-
Due after one year through five years		375,041		370,241		-		-
Due after five years through ten years		194,901		190,047		62,235		66,523
Due after ten years (1)		370,835		381,252		711,533		757,383
Total	$	1,290,676	$	1,291,480	$	773,768	$	823,906

	As of December 31, 2012
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Total securities held-to-maturity	$	-	$	-		-	$	-	$	-		-	$	-	$	-		-
Securities Available-for-Sale
U.S. treasury securities	$	49,969	$	5		1	$	-	$	-		-	$	49,969	$	5		1
Mortgage-backed securities		231		1		2		170		1		6		401		2		8
Mortgage-backed securities-Non-agency		-		-		-		96		2		1		96		2		1
Collateralized mortgage obligations		-		-		-		439		35		4		439		35		4
Asset-backed securities		-		-		-		141		4		1		141		4		1
Corporate debt securities		52,468		2,532		4		253,430		11,570		22		305,898		14,102		26
Total securities available-for-sale	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41
Total investment securities	$	102,668	$	2,538		7	$	254,276	$	11,612		34	$	356,944	$	14,150		41

	As of December 31, 2011
	Temporarily Impaired Securities
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances		Fair Value		Unrealized Losses		No. of Issuances
	(Dollars in thousands)
Securities Held-to-Maturity
Corporate debt securities	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Total securities held-to-maturity	$	9,635	$	337		1	$	-	$	-		-	$	9,635	$	337		1
Securities Available-for-Sale
U.S. government sponsored entities	$	49,993	$	7		1	$	-	$	-		-	$	49,993	$	7		1
Mortgage-backed securities		564		4		8		35		1		2		599		5		10
Mortgage-backed securities-Non-agency		-		-		-		6,719		431		2		6,719		431		2
Collateralized mortgage obligations		-		-		-		570		238		4		570		238		4
Asset-backed securities		-		-		-		166		6		1		166		6		1
Corporate debt securities		185,577		14,201		17		172,857		17,528		19		358,434		31,729		36
Mutual funds		1,987		13		1		-		-		-		1,987		13		1
Trust preferred securities		5,674		24		2		-		-		-		5,674		24		2
Total securities available-for-sale	$	243,795	$	14,249		29	$	180,347	$	18,204		28	$	424,142	$	32,453		57
Total investment securities	$	253,430	$	14,586		30	$	180,347	$	18,204		28	$	433,777	$	32,790		58

XML

Note 1 - Summary of Significant Accounting Policies (Detail) - Premises and Equipment	12 Months Ended
	Dec. 31, 2012
Building [Member] | Minimum [Member]
Estimated useful life	15 years
Building [Member] | Maximum [Member]
Estimated useful life	45 years
Building Improvements [Member] | Minimum [Member]
Estimated useful life	5 years
Building Improvements [Member] | Maximum [Member]
Estimated useful life	20 years
Furniture, Fixtures, and Equipment [Member] | Minimum [Member]
Estimated useful life	3 years
Furniture, Fixtures, and Equipment [Member] | Maximum [Member]
Estimated useful life	25 years
Leasehold Improvements [Member] | Minimum [Member]
Leasehold improvements	Shorter of useful lives or the terms of the leases

XML

Note 14 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Text Block]

14.   Commitments and Contingencies

        Litigation.  The Company is involved in various litigation concerning transactions entered into during the normal course of business.  Management, after consultation with legal counsel, does not believe that the resolution of such litigation will have a material effect upon its consolidated financial condition, results of operations, or liquidity taken as a whole.

        Lending.  In the normal course of business, the Company becomes a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers.  These financial instruments include commitments to extend credit in the form of loans or through commercial or standby letters of credit and financial guarantees.  Those instruments represent varying degrees of exposure to risk in excess of the amounts included in the accompanying Consolidated Balance Sheets.  The contractual or notional amount of these instruments indicates a level of activity associated with a particular class of financial instrument and is not a reflection of the level of expected losses, if any.

        The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.  Unless noted otherwise, the Company does not require collateral or other security to support financial instruments with credit risk.

        Financial instruments whose contract amounts represent the amount of credit risk include the following:

	2012		2011
	(In thousands)
Commitments to extend credit	$	1,740,463	$	1,626,523
Standby letters of credit		44,672		62,076
Commercial letters of credit		71,073		64,233
Bill of lading guarantees		77		187
Total	$	1,856,285	$	1,753,019

        Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the commitment agreement.  These commitments generally have fixed expiration dates and are expected to expire without being drawn upon.  The total commitment amounts do not necessarily represent future cash requirements.  The Company evaluates each customer’s creditworthiness on a case-by-case basis.  The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the borrowers.

        As of December 31, 2012, the Company does not have fixed-rate or variable-rate commitments with characteristics similar to options, which provide the holder, for a premium paid at inception to the Company, the benefits of favorable movements in the price of an underlying asset or index with limited or no exposure to losses from unfavorable price movements.

As of December 31, 2012, commitments to extend credit of $1.7 billion include commitments to fund fixed rate loans of $115.4 million and adjustable rate loans of $1.6 billion.

Commercial letters of credit and bill of lading guarantees are issued to facilitate domestic and foreign trade transactions while standby letters of credit are issued to make payments on behalf of customers if certain specified future events occur.  The credit risk involved in issuing letters of credit and bill of lading guarantees is essentially the same as that involved in making loans to customers.

        Leases.  The Company is obligated under a number of operating leases for premises and equipment with terms ranging from one to 50 years, many of which provide for periodic adjustment of rentals based on changes in various economic indicators.  Rental expense was $7.4 million for 2012, $6.7 million for 2011, and $6.6 million for 2010.   The following table shows future minimum payments under operating leases with terms in excess of one year as of December 31, 2012.

Year Ending December 31,	Commitments
	(In thousands)
2013	$	6,084
2014		4,939
2015		3,009
2016		2,028
2017		617
Thereafter		661
Total minimum lease payments	$	17,338

      Rental income was $0.3 million for 2012, $0.2 million for 2011, and $0.3 million for 2010.  The following table shows future rental payments to be received under operating leases with terms in excess of one year as of December 31, 2012:

Year Ending December 31,	Commitments
	(In thousands)
2013	$	108
2014		60
2015		11
Thereafter		-
Total minimum lease payments to be received	$	179

XML

Note 20 - Condensed Financial Information of Cathay General Bancorp (Detail) - Balance Sheets (Parentheticals) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Preferred stock, shares authorized (in Shares)	10,000,000	10,000,000
Preferred stock, shares issued (in Shares)	258,000	258,000
Preferred stock, shares outstanding (in Shares)	258,000	258,000
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in Shares)	100,000,000	100,000,000
Common stock, shares issued (in Shares)	82,985,853	82,860,122
Common stock, shares outstanding (in Shares)	78,778,288	78,652,557
Treasury stock, shares (in Shares)	4,207,565	4,207,565
Parent Company [Member]
Preferred stock, shares authorized (in Shares)	10,000,000	10,000,000
Preferred stock, shares issued (in Shares)	258,000	258,000
Preferred stock, shares outstanding (in Shares)	258,000	258,000
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in Shares)	100,000,000	100,000,000
Common stock, shares issued (in Shares)	82,985,853	82,860,122
Common stock, shares outstanding (in Shares)	78,778,288	78,652,557
Treasury stock, shares (in Shares)	4,207,565	4,207,565

XML

Note 19 - Equity Incentive Plans

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

19.   Equity Incentive Plans

In 1998, the Board adopted the Cathay Bancorp, Inc. Equity Incentive Plan.  Under the Equity Incentive Plan, as amended in September, 2003, directors and eligible employees may be granted incentive or non-statutory stock options and/or restricted stock units, or awarded non-vested stock, for up to 7,000,000 shares of the Company’s common stock on a split adjusted basis.  In May 2005, the stockholders of the Company approved the 2005 Incentive Plan which provides that 3,131,854 shares of the Company’s common stock may be granted as incentive or non-statutory stock options, or as restricted stock, or as restricted stock units.  In conjunction with the approval of the 2005 Incentive Plan, the Bancorp agreed to cease granting awards under the Equity Incentive Plan.  As of December 31, 2012, the only options granted by the Company under the 2005 Incentive Plan were non-statutory stock options to selected bank officers and non-employee directors at exercise prices equal to the fair market value of a share of the Company’s common stock on the date of grant.  Such options have a maximum ten-year term and vest in 20% annual increments (subject to early termination in certain events) except certain options granted to the Chief Executive Officer of the Company in 2005 and 2008.  If such options expire or terminate without having been exercised, any shares not purchased will again be available for future grants or awards.  Stock options are typically granted in the first quarter of the year.  There were no options granted in 2012, in 2011, or in 2010.  The Company expects to issue new shares to satisfy stock option exercises and the vesting of restricted stock units.

Cash received from exercises of stock options totaled $764,000 for 50,024 shares in 2012 compared to $1.3 million for 86,860 shares in 2011.  The fair value of stock options vested in 2012 was $745,000 compared to $2.6 million in 2011.  Aggregate intrinsic value for options exercised was $103,000 in 2012 compared to $172,000 in 2011.

A summary of stock option activity for 2012, 2011, and 2010 follows:

	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2009		5,169,653		$	27.71		4.6	$	-
Forfeited		(222,305	)		23.23
Balance, December 31, 2010		4,947,348			27.93		3.7	$	334
Exercised		(86,860	)	$	15.05
Forfeited		(503,503	)		22.72
Balance, December 31, 2011		4,356,985			28.86		3.0	$	37
Exercised		(50,024	)	$	15.27
Forfeited		(310,331	)		23.75
Balance, December 31, 2012		3,996,630			29.45		2.2	$	-
Exercisable, December 31, 2012		3,889,514		$	29.61		2.2	$	-

At December 31, 2012, 2,364,947 shares were available under the 2005 Incentive Plan for future grants.  The following table shows stock options outstanding and exercisable as of December 31, 2012, the corresponding exercise prices, and the weighted-average contractual life remaining:

		Outstanding
Exercise Price		Shares		Weighted-Average Remaining Contractual Life (in Years)		Exercisable Shares
$	19.93		319,240		0.1		319,240
	23.37		637,680		5.1		530,564
	24.80		811,956		0.9		811,956
	28.70		453,000		1.1		453,000
	32.26		10,000		1.5		10,000
	32.47		245,060		2.2		245,060
	33.54		264,694		2.4		264,694
	37.00		582,650		2.1		582,650
	38.38		15,000		1.9		15,000
	36.90		231,120		3.1		231,120
	36.24		414,230		3.0		414,230
	38.26		12,000		3.3		12,000
			3,996,630		2.2		3,889,514

In addition to stock options, the Company also grants restricted stock units to eligible employees.  On February 21, 2008, restricted stock units for 82,291 shares were granted.  Upon vesting of restricted stock units, the Company issued 15,006 shares of common stock at the closing price of $9.64 per share on February 21, 2010, and 12,633 shares of common stock at the closing price of $18.79 per share on February 21, 2011.  Restricted stock units granted in 2008 have a maximum term of five years and vest in approximately 20% annual increments subject to continued employment with the Company.

The Company granted restricted stock units for 125,133 shares at an average closing price of $18.24 per share in 2012 and for 147,661 shares at an average closing price of $14.78 in 2011. The restricted stock units granted in 2012 and 2011 are scheduled to vest two years from grant date.

 The following table presents restricted stock unit activity for 2012, 2011, and 2010:

	Units
Balance at December 31, 2009		60,021
Vested		(15,006	)
Cancelled or forfeited		(6,055	)
Balance at December 31, 2010		38,960
Granted		147,661
Vested		(12,633	)
Cancelled or forfeited		(2,578	)
Balance at December 31, 2011		171,410
Granted		125,133
Vested		(11,814	)
Cancelled or forfeited		(28,113	)
Balance at December 31, 2012		256,616

The compensation expense recorded related to the restricted stock units above was $1.3 million in 2012, $758,000 in 2011, and $327,000 in 2010.  Unrecognized stock-based compensation expense related to restricted stock units was $2.7 million at December 31, 2012, and is expected to be recognized over the next 1.5 years.

The following table summarizes the tax benefit from options exercised:

	2012			2011			2010
	(In thousands)
(Short-fall)/benefit of tax deductions in excess of grant-date fair value	$	(620	)	$	(290	)	$	(539	)
Benefit of tax deductions on grant-date fair value		747			362			539
Total benefit of tax deductions	$	127		$	72		$	-

In 2012, 45,937 shares of the Company’s common stock at the average price of $17.16 per share were issued to six executive officers and recorded as compensation expense.

XML

Note 12 - Income Taxes (Detail) - Income Tax Reconciliation (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Tax provision at Federal statutory rate (in Dollars)									$ 64,248	$ 52,994	$ (1,072)
Tax provision at Federal statutory rate									35.00%	35.00%	35.00%
State income taxes, net of Federal income tax benefit (in Dollars)									11,772	9,477	(1,641)
State income taxes, net of Federal income tax benefit									6.40%	6.30%	53.50%
Interest on obligations of state and political subdivisions, which are exempt from Federal taxation (in Dollars)									(1,456)	(1,476)	(299)
Interest on obligations of state and political subdivisions, which are exempt from Federal taxation									(0.80%)	(1.00%)	9.80%
Low income housing and other tax credits (in Dollars)									(9,353)	(10,087)	(11,220)
Low income housing and other tax credits									(5.10%)	(6.60%)	366.20%
Other, net (in Dollars)									917	353	(397)
Other, net									0.50%	0.20%	13.00%
Total income tax expense/(benefit) (in Dollars)	$ 15,276	$ 17,686	$ 16,619	$ 16,547	$ 14,459	$ 14,162	$ 10,906	$ 11,734	$ 66,128	$ 51,261	$ (14,629)
Total income tax expense/(benefit)									36.00%	33.90%	477.50%

XML

Note 23 - Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Quarterly Financial Information [Table Text Block]

	Summary of Operations
	2012												2011
	Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			First Quarter
	(In thousands, except per share data)
Interest income	$	105,281		$	106,747		$	107,581		$	110,135		$	111,076		$	114,379		$	114,339		$	113,777
Interest expense		24,216			26,330			28,461			29,484			31,759			33,426			36,024			38,672
Net interest income		81,065			80,417			79,120			80,651			79,317			80,953			78,315			75,105
(Reversal)/provision for credit losses		-			-			(5,000	)		(4,000	)		2,000			9,000			10,000			6,000
Net-interest income after provision for loan losses		81,065			80,417			84,120			84,651			77,317			71,953			68,315			69,105
Non-interest income		12,202			15,622			9,852			8,831			8,986			16,827			12,453			12,626
Non-interest expense		49,532			47,844			47,342			47,871			43,990			48,383			45,410			47,783
Income before income tax expense		43,735			48,195			46,630			45,611			42,313			40,397			35,358			33,948
Income tax expense		15,276			17,686			16,619			16,547			14,459			14,162			10,906			11,734
Net income		28,459			30,509			30,011			29,064			27,854			26,235			24,452			22,214
Less: net income attributable to noncontrolling interest		153			151			150			151			153			151			150			151
Net income attributable to Cathay General Bancorp		28,306			30,358			29,861			28,913			27,701			26,084			24,302			22,063
Dividends on preferred stock		(4,127	)		(4,123	)		(4,121	)		(4,117	)		(4,114	)		(4,111	)		(4,107	)		(4,105	)
Net income available to common stockholders	$	24,179		$	26,235		$	25,740		$	24,796		$	23,587		$	21,973		$	20,195		$	17,958
Basic net income attributable to common stockholders per common share	$	0.31		$	0.33		$	0.33		$	0.32		$	0.30		$	0.28		$	0.26		$	0.23
Diluted net income attributable to commonstockholders per common share	$	0.31		$	0.33		$	0.33		$	0.32		$	0.30		$	0.28		$	0.26		$	0.23

XML

Note 16 - Fair Value Measurements (Detail) - Financial Asset and Liabilities Measured on a Non-Recurring Basis (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Commercial Loans Member | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	$ 0		$ 877
Commercial Loans Member | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	877		3,411
Commercial Loans Member | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Commercial Loans Member | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Commercial Loans Member | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	3,492		4,251
Commercial Loans Member | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	3,492		4,251
Commercial Mortgage Loans [Member] | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	440
Commercial Mortgage Loans [Member] | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	0
Commercial Mortgage Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0
Commercial Mortgage Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0
Commercial Mortgage Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	11,295
Commercial Mortgage Loans [Member] | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	11,295
Construction Residential Member | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	0		0
Construction Residential Member | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	0		1,295
Construction Residential Member | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Construction Residential Member | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Construction Residential Member | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	500		0
Construction Residential Member | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	500		0
Construction - Other Loans [Member] | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	65
Construction - Other Loans [Member] | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	0
Construction - Other Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0
Construction - Other Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0
Construction - Other Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	46,153
Construction - Other Loans [Member] | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	46,153
Residential Mortgage And Equity Lines Member | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	605
Residential Mortgage And Equity Lines Member | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	820
Residential Mortgage And Equity Lines Member | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0
Residential Mortgage And Equity Lines Member | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0
Residential Mortgage And Equity Lines Member | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	11,206
Residential Mortgage And Equity Lines Member | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	11,206
Land Loans Member | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	162		46
Land Loans Member | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	46		1,003
Land Loans Member | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Land Loans Member | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Land Loans Member | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	297		611
Land Loans Member | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	297		611
Real Estate Loans [Member] | Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year			820
Real Estate Loans [Member] | Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year			1,407
Real Estate Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			0
Real Estate Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			0
Real Estate Loans [Member] | Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			35,576
Real Estate Loans [Member] | Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			35,576
Current Period [Member] | Impaired Loans [Member]
Total Losses for the Year	1,272		1,743
Current Period [Member] | Other Real Estate Owned [Member]
Total Losses for the Year	10,904	[1]	7,003	[2]
Current Period [Member] | Investments in Venture Capital [Member]
Total Losses for the Year	309		379
Current Period [Member] | Equity Investments [Member]
Total Losses for the Year	181		200
Current Period [Member] | Loans Held-for-Sale [Member]
Total Losses for the Year			0
Current Period [Member]
Total Losses for the Year	12,666		9,325
Prior Year [Member] | Impaired Loans [Member]
Total Losses for the Year	1,743		7,116
Prior Year [Member] | Other Real Estate Owned [Member]
Total Losses for the Year	7,003	[1]	20,139	[2]
Prior Year [Member] | Investments in Venture Capital [Member]
Total Losses for the Year	379		760
Prior Year [Member] | Equity Investments [Member]
Total Losses for the Year	200		304
Prior Year [Member] | Loans Held-for-Sale [Member]
Total Losses for the Year			3,160
Prior Year [Member]
Total Losses for the Year	9,325		31,479
Impaired Loans [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	72,943		40,438
Impaired Loans [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	72,943		40,438
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0	[1]	0	[2]
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	27,149	[1]	79,029	[2]
Other Real Estate Owned [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	4,841	[1]	1,093	[2]
Other Real Estate Owned [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	31,990	[1]	80,122	[2]
Investments in Venture Capital [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Investments in Venture Capital [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Investments in Venture Capital [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	9,001		8,693
Investments in Venture Capital [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	9,001		8,693
Equity Investments [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	142		323
Equity Investments [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Equity Investments [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	0		0
Equity Investments [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	142		323
Loans Held-for-Sale [Member] | Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			0
Loans Held-for-Sale [Member] | Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			0
Loans Held-for-Sale [Member] | Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			760
Loans Held-for-Sale [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis			760
Fair Value, Inputs, Level 1 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	142		323
Fair Value, Inputs, Level 2 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	27,149		79,029
Fair Value, Inputs, Level 3 [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	86,785		50,984
Estimate of Fair Value, Fair Value Disclosure [Member]
Assets Measured at Fair Value on a Nonrecurring Basis	$ 114,076		$ 130,336

[1] Other real estate owned balance of $46.4 million in the consolidated balance sheet is net of estimated disposal costs.

[2] Other real estate owned balance of $71.0 million in the consolidated balance sheet is net of estimated disposal costs.

XML

Note 12 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	2012		2011		2010
	(In thousands)
Current:
Federal	$	44,263	$	26,548	$	16,496
State		17,081		10,905		7,379
	$	61,344	$	37,453	$	23,875
Deferred:
Federal		3,755		10,133		(28,600	)
State		1,029		3,675		(9,904	)
	$	4,784	$	13,808	$	(38,504	)
Total income tax expense/(benefit	$	66,128	$	51,261	$	(14,629	)

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Deferred Tax Assets
Loan loss allowance, due to differences in computation of bad debts	$	100,774		$	109,686
Write-down on equity securities		3,374			3,609
Stock option compensation expense		16,120			16,048
State tax		4,479			3,744
Non-accrual interest		3,208			2,048
Write-down on other real estate owned		10,302			14,148
Accural for litigation		2,415			-
Unrealized loss on interest rate swaps		-			1,097
Unrealized loss on securities available-for-sale, net		-			6,311
Other, net		3,544			3,536
Gross deferred tax assets		144,216			160,227
Deferred Tax Liabilities
Core deposit intangibles		(1,632	)		(3,919	)
Investment in aircraft financing trust and venture capital partnerships		(19,684	)		(21,628	)
Unrealized gain on securities available-for-sale, net		(338	)		-
Dividends on Federal Home Loan Bank common stock		(3,071	)		(2,788	)
Other, net		(5,084	)		(5,646	)
Gross deferred tax liabilities		(29,809	)		(33,981	)
Valuation allowance		(2,125	)		(2,533	)
Net deferred tax assets	$	112,282		$	123,713

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	2012					2011					2010
	(In thousands)
Tax provision at Federal statutory rate	$	64,248		35.0	%	$	52,994		35.0	%	$	(1,072	)	35.0	%
State income taxes, net of Federal income tax benefit		11,772		6.4			9,477		6.3			(1,641	)	53.5
Interest on obligations of state and political subdivisions, which are exempt from Federal taxation		(1,456	)	(0.8	)		(1,476	)	(1.0	)		(299	)	9.8
Low income housing and other tax credits		(9,353	)	(5.1	)		(10,087	)	(6.6	)		(11,220	)	366.2
Other, net		917		0.5			353		0.2			(397	)	13.0
Total income tax expense/(benefit)	$	66,128		36.0	%	$	51,261		33.9	%	$	(14,629	)	477.5	%

XML

Note 17 - Fair Value of Financial Instruments (Detail) - Fair Value of Financial Instruments (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financial Assets
Securities available-for-sale	$ 1,291,480
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial Assets
Cash and due from banks	144,909	117,888
Short-term investments	411,983	294,956
Securities held-to-maturity	823,906	1,203,977
Securities available-for-sale	1,291,480	1,294,478
Trading securities	4,703	4,542
Loans held-for-sale		760
Loans, net	7,169,732	6,825,571
Investment in Federal Home Loan Bank stock	41,272	52,989
Warrants	104	218
Financial Liabilities
Deposits	7,389,015	7,240,857
Securities sold under agreement to repurchase	1,361,585	1,547,900
Advances from Federal Home Loan Bank	146,789	227,825
Other borrowings	14,573	19,801
Long-term debt	98,392	98,676
Fair Value, Inputs, Level 1 [Member]
Financial Assets
Cash and due from banks	144,909	117,888
Short-term investments	411,983	294,956
Securities available-for-sale	526,165	54,958
Trading securities		2
Fair Value, Inputs, Level 2 [Member]
Financial Assets
Securities held-to-maturity	823,906	1,203,977
Securities available-for-sale	765,315	1,239,520
Trading securities	4,703	4,540
Loans held-for-sale		760
Investment in Federal Home Loan Bank stock	41,272	52,989
Financial Liabilities
Securities sold under agreement to repurchase	1,361,585	1,547,900
Advances from Federal Home Loan Bank	146,789	227,825
Long-term debt	98,392	98,676
Fair Value, Inputs, Level 3 [Member]
Financial Assets
Loans, net	7,169,732	6,825,571
Warrants	104	218
Financial Liabilities
Deposits	7,389,015	7,240,857
Other borrowings	$ 14,573	$ 19,801

XML

Consolidated Statements of Changes in Stockholders' Equity (USD $)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Noncontrolling Interest [Member]	Parent [Member]	Total
Balance at Dec. 31, 2009	$ 243,967,000	$ 677,000	$ 634,623,000	$ (875,000)	$ 551,588,000	$ (125,736,000)	$ 8,500,000	$ 1,312,744,000
Balance (in Shares) at Dec. 31, 2009	258,000	63,459,590
Common stock issuance		150,000	124,778,000					124,928,000
Common stock issuance (in Shares)		15,028,409							15,028,409
Dividend Reinvestment Plan			310,000					310,000	310,000
Dividend Reinvestment Plan (in Shares)		28,778							28,778
Restricted stock units vested (in Shares)		15,006
Tax short-fall from stock options			(539,000)					(539,000)
Stock -based compensation			3,337,000					3,337,000	3,337,000
Cash dividends of $0.04/$0.04/$0.04 per share					(3,140,000)			(3,140,000)
Discount accretion and other adjustment on preferred stock	3,488,000				(3,488,000)
Dividends on preferred stock					(12,900,000)		(610,000)	(13,510,000)	16,388,000
Redemption of noncontrolling interest							(53,000)	(53,000)
Change in other comprehensive loss				(147,000)				(147,000)
Net income					11,565,000		610,000	12,175,000	11,565,000
Balance at Dec. 31, 2010	247,455,000	827,000	762,509,000	(1,022,000)	543,625,000	(125,736,000)	8,447,000	1,436,105,000
Balance (in Shares) at Dec. 31, 2010	258,000	78,531,783
Dividend Reinvestment Plan		1,000	286,000					287,000	287,000
Dividend Reinvestment Plan (in Shares)		21,281							21,281
Restricted stock units vested (in Shares)		12,633
Stock options exercised		1,000	1,306,000					1,307,000
Stock options exercised (in Shares)		86,860							86,860
Tax short-fall from stock options			(218,000)					(218,000)
Stock -based compensation			1,758,000					1,758,000	1,758,000
Cash dividends of $0.04/$0.04/$0.04 per share					(3,146,000)			(3,146,000)
Discount accretion and other adjustment on preferred stock	3,537,000				(3,537,000)
Dividends on preferred stock					(12,900,000)		(605,000)	(13,505,000)	16,437,000
Change in other comprehensive loss				(7,710,000)				(7,710,000)
Net income					100,150,000		605,000	100,755,000	100,150,000
Balance at Dec. 31, 2011	250,992,000	829,000	765,641,000	(8,732,000)	624,192,000	(125,736,000)	8,447,000	1,515,633,000	1,507,186,000
Balance (in Shares) at Dec. 31, 2011	258,000	78,652,557
Dividend Reinvestment Plan			291,000					291,000	291,000
Dividend Reinvestment Plan (in Shares)		17,956							17,956
Restricted stock units vested (in Shares)		11,814
Stock salary			788,000					788,000
Stock salary (in Shares)		45,937
Stock options exercised		1,000	763,000					764,000
Stock options exercised (in Shares)		50,024							50,024
Tax benefits from stock options			(620,000)					(620,000)
Stock -based compensation			2,062,000					2,062,000	2,062,000
Cash dividends of $0.04/$0.04/$0.04 per share					(3,149,000)			(3,149,000)
Discount accretion and other adjustment on preferred stock	3,588,000				(3,588,000)
Dividends on preferred stock					(12,900,000)		(605,000)	(13,505,000)	16,488,000
Change in other comprehensive loss				9,197,000				9,197,000
Net income					117,438,000		605,000	118,043,000	117,438,000
Balance at Dec. 31, 2012	$ 254,580,000	$ 830,000	$ 768,925,000	$ 465,000	$ 721,993,000	$ (125,736,000)	$ 8,447,000	$ 1,629,504,000	$ 1,621,057,000
Balance (in Shares) at Dec. 31, 2012	258,000	78,778,288

XML

Note 10 - Borrowed Funds (Detail) - Comparative Data for Securities Sold Under Agreements to Repurchase (Securities Sold under Agreements to Repurchase [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Securities Sold under Agreements to Repurchase [Member]
Average amount outstanding during the year (1)	$ 1,361,475	[1]	$ 1,448,363	[1]	$ 1,560,215	[1]
Maximum amount outstanding at month-end (2)	1,400,000	[2]	1,559,000	[2]	1,566,000	[2]
Balance, December 31	$ 1,250,000		$ 1,400,000		$ 1,561,000
Rate, December 31	3.84%		4.14%		4.18%
Weighted average interest rate for the year	4.09%		4.19%		4.24%

[1] Average balances were computed using daily averages.

[2] Highest month-end balances were January 2012, January 2011, September 2010, and February 2009.

XML

Note 3 - Securities Purchased Under Agreements to Resell

12 Months Ended

Dec. 31, 2012

Repurchase Agreements, Resale Agreements, Securities Borrowed, and Securities Loaned Disclosure [Text Block]

3.     Securities Purchased under Agreements to Resell

Securities purchased under agreements to resell are usually collateralized by U.S. government agency and mortgage-backed securities.  The counter-parties to these agreements are nationally recognized investment banking firms that meet creditrequirements of the Company and with whom a master repurchase agreement has been duly executed.  There were no resale agreements at December 31, 2012, and at December 31, 2011.

The following table sets forth information with respect to securities purchased under agreements to resell.

	2012			2011
	(In thousands)
Balance, December 31	$	-		$	-
Annualized weighted-average interest rate, December 31		0.00	%		0.00	%
Daily average amount outstanding during the year	$	14,986		$	84,493
Weighted-average interest rate for the year		0.12	%		0.10	%
Maximum amount outstanding at any month end	$	50,000		$	255,000

        For those securities obtained under the resale agreements, the collateral is either held by a third party custodian or by the counter party and is segregated under written agreements that recognize the Company’s interest in the securities.  Interest income associated with securities purchased under resale agreements was $18,000 for 2012, $83,000 for 2011, and $14,000 for 2010.

XML

Note 4 - Investment Securities (Detail) - Investments by Contractual Maturity Date (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Due in one year or less	$ 349,899
Due in one year or less	349,940
Due in one year or less	0
Due in one year or less	0
Due after one year through five years	375,041
Due after one year through five years	370,241
Due after one year through five years	0
Due after one year through five years	0
Due after five years through ten years	194,901
Due after five years through ten years	190,047
Due after five years through ten years	62,235
Due after five years through ten years	66,523
Due after ten years (1)	370,835	[1]
Due after ten years (1)	381,252	[1]
Due after ten years (1)	711,533	[1]
Due after ten years (1)	757,383	[1]
Total	1,290,676		1,309,521
Total	1,291,480
Total	773,768
Total	$ 823,906

[1] Equity securities are reported in this category

XML

Note 9 - Deposits (Detail) - Deposit Balances (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Demand	$ 1,269,455	$ 1,074,718
NOW accounts	593,133	451,541
Money market accounts	1,186,771	951,516
Saving accounts	473,805	420,030
Time deposits under $100,000	644,191	832,997
Time deposits of $100,000 or more	3,215,870	3,498,329
Total	$ 7,383,225	$ 7,229,131

XML

Note 17 - Fair Value of Financial Instruments (Detail) - Fair Value of Financial Instruments (USD $)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Financial Assets
Cash and due from banks	$ 144,909,000	$ 117,888,000	$ 87,347,000	$ 100,124,000
Securities held-to-maturity	773,768,000	1,153,504,000
Securities available-for-sale	1,291,480,000	1,294,478,000
Securities available-for-sale	1,291,480,000
Loans held-for-sale		760,000
Investment in Federal Home Loan Bank stock	41,272,000	52,989,000
Deposits	7,383,225,000	7,229,131,000
Securities sold under agreement to repurchase	1,250,000,000	1,400,000,000
Advances from Federal Home Loan Bank	146,200,000	225,000,000
Other borrowings		880,000
Long-term debt	171,136,000	171,136,000
Carrying Amount [Member]
Financial Assets
Cash and due from banks	144,909,000	117,888,000
Short-term investments	411,983,000	294,956,000
Short-term investments	411,983,000	294,956,000
Securities held-to-maturity	773,768,000	1,153,504,000
Securities available-for-sale	1,291,480,000	1,294,478,000
Trading securities	4,703,000	4,542,000
Loans held-for-sale		760,000
Loans, net	7,235,587,000	6,844,483,000
Investment in Federal Home Loan Bank stock	41,272,000	52,989,000
Warrants	104,000	218,000
Option contracts	105,000	3,026,000
Foreign exchange contracts	188,145,000	238,581,000
Deposits	7,383,225,000	7,229,131,000
Securities sold under agreement to repurchase	1,250,000,000	1,400,000,000
Advances from Federal Home Loan Bank	146,200,000	225,000,000
Other borrowings	18,713,000	19,800,000
Long-term debt	171,136,000	171,136,000
Option contracts	104,000	1,282,000
Interest rate swaps		300,000,000
Foreign exchange contracts	133,669,000	128,215,000
Off-Balance Sheet Financial Instruments
Commitments to extend credit	1,740,463,000	1,626,523,000
Standby letters of credit	44,672,000	62,076,000
Other letters of credit	71,073,000	64,233,000
Bill of lading guarantees	77,000	187,000
Fair Value [Member]
Financial Assets
Cash and due from banks	144,909,000	117,888,000
Short-term investments	411,983,000	294,956,000
Short-term investments	411,983,000	294,956,000
Securities held-to-maturity	823,906,000	1,203,977,000
Securities available-for-sale	1,291,480,000	1,294,478,000
Trading securities	4,703,000	4,542,000
Loans held-for-sale		760,000
Loans, net	7,169,732,000	6,825,571,000
Investment in Federal Home Loan Bank stock	41,272,000	52,989,000
Warrants	104,000	218,000
Option contracts		34,000
Foreign exchange contracts	2,924,000	2,151,000
Deposits	7,389,015,000	7,240,857,000
Securities sold under agreement to repurchase	1,361,585,000	1,547,900,000
Advances from Federal Home Loan Bank	146,789,000	227,825,000
Other borrowings	14,573,000	19,801,000
Long-term debt	98,392,000	98,676,000
Option contracts	2,000	5,000
Interest rate swaps		2,634,000
Foreign exchange contracts	1,586,000	486,000
Off-Balance Sheet Financial Instruments
Commitments to extend credit	(1,875,000)	(1,253,000)
Standby letters of credit	(204,000)	(367,000)
Other letters of credit	(34,000)	(38,000)
Bill of lading guarantees		$ 0

XML

Note 5 - Loans (Detail) - Non-accrual Troubled Debt Restructurings (USD $)	Dec. 31, 2012	Dec. 31, 2011
Non-accrual TDRs	$ 144,695,000	$ 120,016,000
Non Accruing Troubled Debt Restructuring Member | Interest Deferral [Member] | Commercial Mortgage Loans [Member]
Non-accrual TDRs	1,685,000	2,633,000
Non Accruing Troubled Debt Restructuring Member | Interest Deferral [Member] | Residential Mortgage Loans [Member]
Non-accrual TDRs	275,000	311,000
Non Accruing Troubled Debt Restructuring Member | Interest Deferral [Member]
Non-accrual TDRs	1,960,000	2,944,000
Non Accruing Troubled Debt Restructuring Member | Real Estate Construction Loans [Member] | Commercial Loans Member
Non-accrual TDRs	912,000	616,000
Non Accruing Troubled Debt Restructuring Member | Real Estate Construction Loans [Member] | Real Estate Construction Loans [Member]
Non-accrual TDRs	16,767,000	13,579,000
Non Accruing Troubled Debt Restructuring Member | Real Estate Construction Loans [Member] | Commercial Mortgage Loans [Member]
Non-accrual TDRs	2,817,000	9,727,000
Non Accruing Troubled Debt Restructuring Member | Real Estate Construction Loans [Member] | Residential Mortgage Loans [Member]
Non-accrual TDRs	2,010,000	2,427,000
Non Accruing Troubled Debt Restructuring Member | Real Estate Construction Loans [Member]
Non-accrual TDRs	22,506,000	26,349,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Commercial Loans Member
Non-accrual TDRs		1,859,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Real Estate Construction Loans [Member]
Non-accrual TDRs	9,579,000	12,376,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Commercial Mortgage Loans [Member]
Non-accrual TDRs	5,746,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction [Member] | Residential Mortgage Loans [Member]
Non-accrual TDRs	586,000	449,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction [Member]
Non-accrual TDRs	15,911,000	14,684,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction and Forgiveness of Principal [Member] | Commercial Loans Member
Non-accrual TDRs	1,518,000	1,506,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction and Forgiveness of Principal [Member]
Non-accrual TDRs	1,518,000	1,506,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member] | Commercial Mortgage Loans [Member]
Non-accrual TDRs	5,076,000	5,076,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member] | Residential Mortgage Loans [Member]
Non-accrual TDRs	760,000	311,000
Non Accruing Troubled Debt Restructuring Member | Rate Reduction and Payment Deferral [Member]
Non-accrual TDRs	5,836,000	5,387,000
Non Accruing Troubled Debt Restructuring Member | Commercial Loans Member
Non-accrual TDRs	2,430,000	3,981,000
Non Accruing Troubled Debt Restructuring Member | Real Estate Construction Loans [Member]
Non-accrual TDRs	26,346,000	25,955,000
Non Accruing Troubled Debt Restructuring Member | Commercial Mortgage Loans [Member]
Non-accrual TDRs	15,324,000	17,436,000
Non Accruing Troubled Debt Restructuring Member | Residential Mortgage Loans [Member]
Non-accrual TDRs	3,631,000	3,498,000
Non Accruing Troubled Debt Restructuring Member
Non-accrual TDRs	47,731,000	50,870,000
Commercial Loans Member
Non-accrual TDRs	3,964,000	15,120,000
Real Estate Construction Loans [Member]
Non-accrual TDRs	5,834,000	32,255,000
Commercial Mortgage Loans [Member]
Non-accrual TDRs	130,181,000	69,273,000
Residential Mortgage Loans [Member]
Non-accrual TDRs	$ 4,716,000	$ 3,368,000

XML

Note 20 - Condensed Financial Information of Cathay General Bancorp

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

20.      Condensed Financial Information of Cathay General Bancorp

The condensed financial information of the Bancorp as of December 31, 2012, and December 31, 2011, and for the years ended December 31, 2012, 2011, and 2010 is as follows:

Balance Sheets

	Year Ended December 31,
	2012			2011
	(In thousands, except share and per share data)
Assets
Cash	$	639		$	809
Short-term certificates of deposit		161,300			19,000
Investment in bank subsidiaries		1,569,902			1,593,831
Investment in non-bank subsidiaries		2,598			2,615
Other assets		9,936			14,189
Total assets	$	1,744,375		$	1,630,444
Liabilities
Junior subordinated debt	$	121,136		$	121,136
Other liabilities		2,182			2,122
Total liabilities		123,318			123,258
Commitments and contingencies		-			-
Stockholders' equity
Preferred stock, 10,000,000 shares authorized, 258,000 issued and outstanding at December 31, 2012, and December 31, 2011		254,580			250,992
Common stock, $0.01 par value, 100,000,000 shares authorized, 82,985,853 issued and 78,778,288 outstanding    at December 31, 2012, and 82,860,122 issued and 78,652,557 outstanding at December 31, 2011		830			829
Additional paid-in-capital		768,925			765,641
Accumulated other comprehensive loss, net		465			(8,732	)
Retained earnings		721,993			624,192
Treasury stock, at cost (4,207,565 shares at December 31, 2012, and at December 31, 2011)		(125,736	)		(125,736	)
Total stockholders' equity		1,621,057			1,507,186
Total liabilities and stockholders' equity	$	1,744,375		$	1,630,444

Statements of Operations

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash dividends from Cathay Bank	$	154,700		$	-		$	-
Interest income		196			259			227
Interest expense		3,228			3,038			3,075
Non-interest income/(loss)		3,718			286			(782	)
Non-interest expense		2,064			1,548			1,308
Income/(loss) before income tax benefit		153,322			(4,041	)		(4,938	)
Income tax benefit		(579	)		(1,699	)		(2,076	)
Loss before undistributed earnings of subsidiaries		153,901			(2,342	)		(2,862	)
Undistributed (loss)/earnings of subsidiaries		(36,463	)		102,492			14,427
Net income	$	117,438		$	100,150		$	11,565

Statements of Cash Flows

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Cash flows from Operating Activities
Net income/(loss)	$	117,438		$	100,150		$	11,565
Adjustments to reconcile net income to net cash provided by operating activities:
Dividends in excess of earnings of subsidiaries		36,463			-			-
Equity in undistributed earnings of subsidiaries		-			(102,492	)		(14,427	)
Gains on sale of securities		(3,380	)		-			-
Increase in accrued expense		12			24			3
Write-downs on venture capital and other investments		262			321			521
Write-downs on impaired securities		181			200			492
Loss/(gains) in fair value of warrants		114			(215	)		29
Excess tax short-fall from stock options		620			290			539
(Decrease)/increase in other assets		1,820			(121	)		1,040
Increase/(decrease) in other liabilities		59			(221	)		(607	)
Net cash used in operating activities		153,589			(2,064	)		(845	)
Cash flows from Investment Activities
Additional investment in subsidiary		-			-			(94,000	)
Decrease/(increase) in short-term investment		(142,300	)		17,500			(12,000	)
Proceeds from sale/(purchase) of available-for-sale securities		4,849			-			(418	)
Venture capital investments		(694	)		(671	)		(1,056	)
Net cash provided by/(used in) investment activities		(138,145	)		16,829			(107,474	)
Cash flows from Financing Activities
Cash dividends		(16,049	)		(16,046	)		(16,041	)
Issuance of common stock		-			-			124,928
Proceeds from shares issued under the Dividend Reinvestment Plan		291			287			310
Proceeds from exercise of stock options		764			1,306			-
Excess tax short-fall from share-based payment arrangements		(620	)		(290	)		(539	)
Net cash (used in)/provided by financing activities		(15,614	)		(14,743	)		108,658
Increase in cash and cash equivalents		(170	)		22			339
Cash and cash equivalents, beginning of year		809			787			448
Cash and cash equivalents, end of year	$	639		$	809		$	787

XML

Note 20 - Condensed Financial Information of Cathay General Bancorp (Detail) - Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from Operating Activities
Net income/(loss)	$ 117,438	$ 100,150	$ 11,565
Write-downs on venture capital and other investments	309	379	515
Write-downs on impaired securities	181	200	492
Excess tax short-fall from stock options	620	290	539
(Decrease)/increase in other assets	37,093	(534)	34,594
Increase/(decrease) in other liabilities	(2,256)	3,746	(13,368)
Net cash used in operating activities	164,576	174,050	168,505
Cash flows from Investment Activities
Proceeds from sale/(purchase) of available-for-sale securities	(517,513)	(571,093)	(3,366,780)
Net cash provided by/(used in) investment activities	(46,536)	127,050	596,595
Cash flows from Financing Activities
Issuance of common stock			124,928
Proceeds from exercise of stock options	764	1,306
Excess tax short-fall from share-based payment arrangements	(620)	(290)	(539)
Net cash (used in)/provided by financing activities	(91,019)	(270,559)	(777,877)
Increase in cash and cash equivalents	27,021	30,541	(12,777)
Cash and cash equivalents,	144,909	117,888	87,347
Parent Company [Member] | Beginning of Period [Member]
Cash flows from Financing Activities
Cash and cash equivalents,	809	787	448
Parent Company [Member] | End of Period [Member]
Cash flows from Financing Activities
Cash and cash equivalents,	639	809	787
Parent Company [Member]
Cash flows from Operating Activities
Net income/(loss)	117,438	100,150	11,565
Dividends in excess of earnings of subsidiaries	36,463
Equity in undistributed earnings of subsidiaries	36,463	(102,492)	(14,427)
Gains on sale of securities	(3,380)
Increase in accrued expense	12	24	3
Write-downs on venture capital and other investments	262	321	521
Write-downs on impaired securities	181	200	492
Loss/(gains) in fair value of warrants	114	(215)	29
Excess tax short-fall from stock options	620	290	539
(Decrease)/increase in other assets	1,820	(121)	1,040
Increase/(decrease) in other liabilities	59	(221)	(607)
Net cash used in operating activities	153,589	(2,064)	(845)
Cash flows from Investment Activities
Additional investment in subsidiary			(94,000)
Decrease/(increase) in short-term investment	(142,300)	17,500	(12,000)
Proceeds from sale/(purchase) of available-for-sale securities	4,849		(418)
Venture capital investments	(694)	(671)	(1,056)
Net cash provided by/(used in) investment activities	(138,145)	16,829	(107,474)
Cash flows from Financing Activities
Cash dividends	(16,049)	(16,046)	(16,041)
Issuance of common stock			124,928
Proceeds from shares issued under the Dividend Reinvestment Plan	291	287	310
Proceeds from exercise of stock options	764	1,306
Excess tax short-fall from share-based payment arrangements	(620)	(290)	(539)
Net cash (used in)/provided by financing activities	(15,614)	(14,743)	108,658
Increase in cash and cash equivalents	(170)	22	339
Cash and cash equivalents,	$ 639	$ 809

XML

Note 5 - Loans (Detail) - Activity in the Allowance for Credit Losses (USD $) In Thousands, unless otherwise specified	3 Months Ended						12 Months Ended
	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
(Reversal)/provision for credit losses	$ (5,000)	$ (4,000)	$ 2,000	$ 9,000	$ 10,000	$ 6,000	$ (9,000)	$ 27,000	$ 156,900
Transfers from reserve for off-balance sheet credit commitments							706	268	2,870
Loans charged off							(32,791)	(77,626)	(138,755)
Recoveries of charged off loans							18,127	11,407	12,327
Reserve for Off-Balance Sheet Credit Commitments [Member] | Beginning of Period [Member]
Balance			2,337				2,069	2,337	5,207
Reserve for Off-Balance Sheet Credit Commitments [Member] | End of Period [Member]
Balance			2,069				1,363	2,069	2,337
Reserve for Off-Balance Sheet Credit Commitments [Member]
(Reversal)/provision for credit losses							(706)	(268)	(2,870)
Beginning of Period [Member]
Balance			245,231				206,280	245,231	211,889
End of Period [Member]
Balance			$ 206,280				$ 183,322	$ 206,280	$ 245,231

XML

Note 9 - Deposits (Tables)

12 Months Ended

Dec. 31, 2012

Summary Of Deposits [Table Text Block]

	2012		2011
	(In thousands)
Demand	$	1,269,455	$	1,074,718
NOW accounts		593,133		451,541
Money market accounts		1,186,771		951,516
Saving accounts		473,805		420,030
Time deposits under $100,000		644,191		832,997
Time deposits of $100,000 or more		3,215,870		3,498,329
Total	$	7,383,225	$	7,229,131

Schedule Of Maturities For Time Deposits [Table Text Block]

	Expected Maturity Date at December 31,
	2013		2014		2015		2016		2017		Thereafter		Total
	(In thousands)
Time deposits, $100,000 and over	$	2,895,712	$	238,836	$	60,309	$	1,344	$	19,669	$	-	$	3,215,870
Other time deposits		610,364		25,011		7,426		155		1,232		3		644,191
	$	3,506,076	$	263,847	$	67,735	$	1,499	$	20,901	$	3	$	3,860,061

SummaryOfInterestExpenseOnDepositsTableTextBlock

	Year Ended December 31,
	2012		2011		2010
	(In thousands)
Interest bearing demand	$	792	$	756	$	927
Money market accounts		5,938		7,351		8,733
Saving accounts		365		482		694
Time deposits		40,278		53,625		73,808
Total	$	47,373	$	62,214	$	84,162

XML

Note 13 - Stockholders' Equity and Earnings per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Text Block]

13.   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, 2012, is restricted to approximately $80.8 million.

During 2003, the Bank formed Cathay Real Estate Investment Trust (“Trust”) to provide the Bank flexibility in raising capital.  In 2003 and 2004, the Trust sold to accredited investors $8.6 million of its 7.0% Series A Non-Cumulative preferred stock which pays dividends, if declared, at the end of each quarter.  This preferred stock qualifies as Tier 1 capital under current regulatory guidelines.  The Company paid dividends of $605,000 in 2012, $605,000 in 2011, and $611,000 in 2010.  For the years ended and as of December 31, 2012, December 31, 2011, and December 31, 2010, the net income and assets of the Trust were eliminated in consolidation.

       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.

        On November 16, 2000, the Bancorp’s Board of Directors adopted a Rights Agreement between the Bancorp and American Stock Transfer and Trust Company, as Rights Agent, and declared a dividend of one preferred share purchase right for each outstanding share of the Bancorp common stock.  The dividend was payable on January 19, 2001, to stockholders of record at the close of business on the record date, December 20, 2000.  Each preferred share purchase right entitles the registered holder to purchase from the Bancorp one one-thousandth of a share of the Bancorp’s Series A junior participating preferred stock at a price of $200, subject to adjustment.  In general, the rights become exercisable if, after December 20, 2000, a person or group acquires 15% or more of the Bancorp’s common stock or announces a tender offer for 15% or more of the common stock.  The Board of Directors is entitled to redeem the rights at one cent per right at any time before any such person acquires 15% or more of the outstanding common stock.  The Rights Agreement expired at the close of business on November 16, 2010, and was not renewed.

Pursuant to the U.S. Treasury’s Troubled Asset Relief Program Capital Purchase Program under the Emergency Economic Stabilization Act of 2008, on December 5, 2008, the U.S. Treasury purchased 258,000 shares of the Company’s Series B Preferred Stock in the amount of $258.0 million.  The Series B Preferred Stock pays cumulative compounding dividends at a rate of 5% per year for the first five years, and thereafter at a rate of 9% per year.  In conjunction with the purchase of senior preferred shares, the U.S. Treasury received warrants to purchase 1,846,374 shares of common stock at the exercise price of $20.96 per share with an aggregate market price equal to $38.7 million, or 15%, of the senior preferred stock amount that the U.S. Treasury invested.  The exercise price of $20.96 on warrants was calculated based on the average of closing prices of the Company’s common stock on the 20 trading days ending on the last trading day prior to November 17, 2008, the date that the Company received the preliminary approval of the purchase from the U.S. Treasury.

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,
	2012							2011							2010
	Income (Numerator)			Shares (Denominator)		Per Share Amount		Income (Numerator)			Shares (Denominator)		Per Share Amount		Income (Numerator)			Shares (Denominator)		Per Share Amount
	(In thousands, except shares and per share data)
Net income	$	117,438						$	100,150						$	11,565
Dividends on preferred stock		(16,488	)						(16,437	)						(16,388	)
Basic EPS, income/(loss)	$	100,950			78,719,133	$	1.28	$	83,713			78,633,317	$	1.06	$	(4,823	)		77,073,954	$	(0.06	)
Effect of dilutive stock options					4,164							7,335							-
Diluted EPS, income/(loss)	$	100,950			78,723,297	$	1.28	$	83,713			78,640,652	$	1.06	$	(4,823	)		77,073,954	$	(0.06	)

Options to purchase an additional 4.0 million shares, and warrants to purchase an additional 1.8 million shares at December 31, 2012, were not included in the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect.  Options to purchase an additional 4.4 million shares, restricted stock units for an additional 103,000 shares, and warrants to purchase an additional 1.8 million shares at December 31, 2011, were not included in the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect.

XML

Note 14 - Commitments and Contingencies (Detail) - Future Rental Income under Operating Leases (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
2013	$ 108
2014	60
2015	11
Total minimum lease payments to be received	$ 179