Note 11 - Capital Resources

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

11.       Capital Resources

The Company 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 paid 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. 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 exercise price equal to $38.7 million, 15% of the senior preferred stock amount that U.S. Treasury invested. In 2013, the Company redeemed all $258 million Series B Preferred Stock issued under the U.S. Treasury's TARP Capital Purchase Program. On December 9, 2013, the U.S. Treasury sold all of the warrants that it held for $13.1 million, or $7.20 per warrant, through a secondary public offering.

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. The per annum interest rate on the subordinated debt was 3.61% at December 31, 2012. In December 2013, the subordinated debt was repaid in full with a prepayment penalty of $2,000.

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. 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. Interest expense on the Junior Subordinated Notes was $4.5 million for 2014, $3.0 million for 2013, and $3.2 million for 2012.

The table below summarizes the outstanding Junior Subordinated Notes issued by the Company to each trust as of December 31, 2014:

		Principal		Not			Current			Date of	Payable/
	Issuance	Balance of		Redeemable	Stated	Annualized	Interest			Rate	Distribution
Trust Name	Date	Notes		Until	Maturity	Coupon Rate	Rate			Change	Date
(Dollars in thousands)
Cathay Capital Trust I	June 26, 2003	$	20,619	June 30, 2008	June 30, 2033	3-month LIBOR+ 3.15%		3.41	%	December 30, 2014	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%		3.24	%	December 17, 2014	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%		3.16	%	December 30, 2014	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%		1.72	%	December 15, 2014	March 15 June 15 September 15 December 15
Cathay Capital Trust IV	May 31, 2007		18,619	September 6, 2012	September 6, 2037	3-month LIBOR + 1.4%		1.64	%	December 8, 2014	March 6 June 6 September 6 December 6
Total Junior Subordinated Notes		$	119,136